ITO, WD-2(4), KOLKATA, Kolkata V. M/s Suvridhi Capital Markets Ltd., Kolkata

ITA 2315/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1257 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S HALDER
• Assessee Lawyers: A RUSTOGI
• Section: 143(3); 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI S.S. VISWANETHRA RAVI, JM ] I.T.A NO. 2315/KOL/20 17 ASSESSMENT YEAR : 2011-1 2 ITO, WARD-2(4), KOLKATA -VS- M/S SUVRIDHI CAPI TAL MARKETS LTD. [PAN: AAECS 4092 F] (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI S. HALDER, ADDL. CIT FOR THE REVENUE : SHRI A. RUSTOGI, FCA DATE OF HEARING : 01.11.2018 DATE OF PRONOUNCEMENT : 28.11.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE LD. CIT(A)-19, KOLKATA PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO ALLO W SET-OFF BEFORE APPLYING EXPLANATION TO SECTION 13, WHEN THE CONDITION AS DI SCUSSED IN THE ASSESSMENT ORDER FAVOUR THE APPLICATION OF THE SAID EXPLANATIO N? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES IN T HE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN IGNORING THE POINTS RAIS ED IN THE ASSESSMENT ORDER IN FAVOUR OF THE APPLICATION OF EXPLANATION TO SECT ION 73 OF THE INCOME TAX ACT,1961? 3. THAT IT IS PRAYED TO SET ASIDE THE ORDER PASSED BY THE LD.CIT(A)-19 AND RESTORE THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER IN THIS CASE. 2 ITA NO.2315/KOL/2017 M/S SUVRIDHI CAPITAL MARKETS LT D. A.YR .2011-12 2 4. DEPARTMENT CRAVES LEAVE TO ADD, ALTER OR MODIFY AN Y OR ALL OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF THE APPEAL. 2. AFTER HEARING RIVAL SUBMISSIONS AND ON A CAREFU L CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, A PERUSAL OF PAPERS ON R ECORD AND ORDERS OF THE LOWER AUTHORITIES BELOW, AS WELL AS CASE LAW CITED, WE HO LD AS FOLLOWS. 3. WE FIND THAT THE LD. FIRST APPELLATE AUTHORITY H AS AT PARA 4.3 OF HIS ORDER FOLLOWED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF BALJIT SECURITIES PVT. LTD. (SUPRA). FOR THE ASSESSMENT YEAR 2008-09, IN THE A SSESSEES OWN CASE, THE LD. CIT(A) HAD GRANTED RELIEF AND CONSISTENT WITH THAT VIEW T AKEN BY HIS PREDECESSOR FOR THE ASSESSMENT YEAR 2008-09, HE GRANTED RELIEF. 4.WE FIND THAT B BENCH OF ITAT IN I.T.A. NOS. 830 & 831/KOL/2015 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 AND 2010-11 HA D UPHELD THIS ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IT WAS HELD A S FOLLOWS: 7.2 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT BOTH PROFIT / LOSS FROM ALL THE SHARE DELIVERY TRANSACTIONS AND DERIVATIVE TRANSACTIONS ARE HAVING THE SAME MEANING , SO FAR AS SEC. 43(5) OF THE ACT IS CONCERNED. AGAIN, IN VIEW OF THE FACT THAT BOTH DEL IVERY BASED TRANSACTIONS AND DERIVATIVE TRANSACTION ARE NON-SPECULATIVE AS FAR A S SEC. 43(5) IS CONCERNED, IT FOLLOWS THAT BOTH WILL HAVE THE SAME TREATMENT AS FAR AS AP PLICATION OF EXPLANATION TO SEC. 73 IS CONCERNED. THEREFORE AGGREGATION OF THE SHARE TRADI NG LOSS AND PROFIT FROM DERIVATIVE TRANSACTIONS SHOULD BE DONE BEFORE THE EXPLANATION TO SECTION 73 OF THE ACT, IS APPLIED. THIS VIEW HAS BEEN AFFIRMED BY THE KOLKATA HIGH COU RT IN GA NO. 3481 OF 2013 ITAT NO. 215 OF 2013 COMMISSIONER OF INCOME TAX, KOL III VERSUS M/S BALJIT SECURITIES PVT. LTD. THEREFORE, IT IS CLEAR THAT THE PROFITS FROM D ERIVATIVES AND SHARE TRADING SHOULD BE SET OFF AGAINST EACH OTHER BEFORE APPLYING THE SETO FF AND CARRY FORWARD PROVISIONS OF SECTION 73 OF THE INCOME TAX ACT, 1961. IN THE PRESENT CASE, ASSESSEE IS A SHARE BROKER. TH E ASSESSEE IS ALSO IN THE BUSINESS OF BUYING AND SELLING OF SHARES FOR SELF WHERE ACTUAL DELIVERY IS TAKEN AND GIVEN AND ALSO IN BUYING AND SELLING OF SHARES WHERE ACTUAL DELIVE RY WAS NOT INTENDED TO BE TAKEN OR GIVEN. THEREFORE, THE ENTIRE TRANSACTION CARRIED OU T BY THE ASSESSEE, INDICATED ABOVE, WAS WITHIN THE UMBRELLA OF NON-SPECULATIVE TRANSACT IONS. THERE WAS, AS SUCH, NO BAR IN 3 ITA NO.2315/KOL/2017 M/S SUVRIDHI CAPITAL MARKETS LT D. A.YR .2011-12 3 SETTING OFF THE LOSS ARISING OUT OF DERIVATIVES FRO M THE INCOME ARISING OUT OF BUYING AND SELLING OF SHARES. THE CASE OF THE ASSESSEE CLEARLY FALLS WITHIN THE AMBIT OF THE JUDICIAL RULINGS OF THE KOLKATA TRIBUNAL AND KOLKATA HIGH CO URT IN THE CASE OF M/S BALJIT SECURITIES PVT. LTD (SUPRA). THUS, THERE SHOULD BE NO REASON FOR DISALLOWING THE ADJUSTMENT OF LOSSES ON SHARE TRADING WITH OTHER BU SINESS INCOME. BASED ON THE ABOVE CITED REASONING AND FACTUAL POSITION, WE CONFIRM TH E ORDER OF CIT(A). CONSISTENT VIEW TAKEN WE UPHOLD THE ORDER OF THE CO MMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THIS APPEAL OF THE REVENUE. 5.IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 28.11.2018 SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAK AR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 28.11.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-2(4), KOLKATA, P-7, CHOWRINGHEE SQUARE , 7 TH FLOOR, KOLKATA-700069. 2. M/S SUVRIDHI CAPITAL MARKETS LTD., 516, KAMALALA YA CENTRE, 156A, LENIN SARANI, KOLKATA-700013. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSISTANT REGISTRAR ITAT , KOLKATA BENCHES