Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 9874 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 11 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-03-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
29-06-2015
Assessment Year
2009-2010
Appeal Filed On
26-03-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2388/MUM/2013 (ASSESSMENT YEAR- 2009-10) BLUEBERRY TRADING COMPANY PVT. LTD., 373, KONARK HOUSE, VEER SAVARKAR ROAD, GROUND FLOOR, NEAR SIDDHI VINAYAK TEMPLE, PRABHADEVI, DADAR (WEST), MUMBAI-400028 PAN:AABCB5512E VS. DCIT -3(1) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JOSHI (AR) REVENUE BY : SHRI SUMAN KUMAR (DR) DATE OF HEARING : 31.01.2018 DATE OF PRONOUNCEMENT : 14.03.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-5, MUMBAI, [FOR SHORT THE LD. CIT(A)] DATED 14.12.2012 FOR ASSESSMENT YEAR 2009-2010. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS STATED TO BE ENGAGED IN BUSINESS OF REAL ESTATE, DEVELOPING & LEASING OF CONSTRUCTED PREMISES AND INVESTMENT & TRADING IN SHARES & SECURITIES. TH E ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 30 .09.2009. THE ASSESSEE AGAIN ON 22.01.2010 FILED REVISE RETURN OF INCOME D ECLARING LOSS OF RS. 19,23,31,589/-. THE ASSESSMENT WAS COMPLETED ON 27. 12.2011. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R TREATED THE LOSS OF RS. ITA NO. 2388/MUM/2013- BLUEBERRY TRADING COMPANY PVT. LTD. 2 4,84,58,752/- IN SHARE TRADING AS SPECULATION LOSS AND FURTHER ADDED RS. 10,00,000/- AS EXPENSES RELATED WITH SHARE SPECULAT ION BUSINESS. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSI NG OFFICER WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL, R AISING THE FOLLOWING GROUNDS OF APPEAL: 1) (A) THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME-TAX, MUMBAI (HEREIN AFTER REFERRED TO AS 'THE ASSESSING OFFICER'), IN TREATING LOSS ON SALE OF SHARES AMOUNTING A SUM OF RS. 4,84,58,752/- AS LOSS FROM SPECULATION BUSINESS AS AGAINST BUSINE SS LOSS TREATED BY THE APPELLANT ON THE GROUND THAT EXPLANATION TO SEC TION 73 IS APPLICABLE TO THE APPELLANT. (B) WITHOUT PREJUDICE TO WHAT HAS BEEN STATED ABOVE , THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER FAILED TO APPREC IATE THE FACT THAT APPELLANT FALLS WITHIN THE EXCEPTION AS STIPULATED IN EXPLANATION TO SECTION 73 OF THE ACT. (C) WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER ERRED IN INCLUDING LOSS OF RS. 4,84,58,752/- IN BUSINESS INCOME TO DETERMINE GROSS TOTAL INCOME FOR APPLICABILITY OF EXPLANATION TO SECTION 73 OF THE A CT. 2) THE ASSESSING OFFICER ERRED IN ADDING A SUM OF R S. 10,00,000/- ON AN ADHOC BASIS BEING EXPENSES RELATED TO SPECULATION B USINESS INCOME. 3) THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED: (A) TO TREAT LOSS OF A SUM OF RS. 4,84,58,752/- ARI SING ON SALE OF SHARES AS BUSINESS INCOME. (B) WITHOUT PREJUDICE TO WHAT HAS BEEN STATED ABOVE , TO EXCLUDE LOSS ON SALE OF SHARES AMOUNTING TO RS. 4,84,58,752/- FO R DETERMINING GROSS TOTAL INCOME OF THE APPELLANT. (C) TO DELETE ADDITIONS OF AD HOC EXPENSES AMOUNTIN G TO RS. 10,00,000/- AND TO MODIFY THE ASSESSMENT AS PER THE PROVISIONS OF THE ACT. 4) THE APPELLANT CRAVES LIBERTY TO ADD, TO ALTER AN D/OR AMEND THE GROUNDS OF APPEAL AS AND WHEN GIVEN. ITA NO. 2388/MUM/2013- BLUEBERRY TRADING COMPANY PVT. LTD. 3 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND GONE THROUGH THE ORDER OF LOWER AUTHORITIES. THE LD. AR OF ASSES SEE ARGUED THAT THE PRIMARY OBJECT OF THE ASSESSEE-COMPANY IS TO EARN I NCOME BY LETTING OF THE PREMISES. THE TOTAL GROSS RECEIPT CONSIST MAINLY OF INCOME FROM HOUSE PROPERTY OF RS. 5,41,88,829/- AND CAPITAL GAIN O F RS. 6,99,58,575/-. THE ASSESSEE SUFFERED LOSS OF RS. 4,84,58,752/- ON ACCOUNT OF SHARE TRANSACTION. THE MAIN INCOME OF ASSESSEE CONSISTS O F OTHER THAN THE BUSINESS, THUS, THE ASSESSEE FALLS UNDER THE EXCEPT ION PROVIDED UNDER EXPLANATION TO SECTION 73 OF THE ACT. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT IN CASE, THE GROUND NO.1 IS ALLOWED IN FAVOUR OF ASSESSEE. THE GROUND NO.2 IS CONSEQUENTIAL IN NATURE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR FOR THE ASSESSEE RELIED ON THE DECISION OF H ON'BLE BOMBAY HIGH COURT IN CIT VS. HSBC SECURITIES & CAPITAL MARKETS INDIA (P) LTD. [2012] 23 TAXMAN.COM 377 (BOM.) AND DELHI TRIBUNAL IN A.K. CAPITAL MARKETS LTD. VS. DCIT [2016] 156 ITD 528/65 TAXMAN.COM 62 ( DEL. TRIB.). 4. ON THE CONTRARY, THE LD. DR FOR THE REVENUE SUPPORT ED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE SUBMI TS THAT DURING THE ASSESSMENT, THE ASSESSEE WAS ASKED TO EXPLAIN, AS T O WHY THE LOSS SHOULD NOT BE TREATED AS SPECULATION LOSS. THE ASSESSEE FA ILED TO FILE ANY REPLY AND SUBSTANTIATED THE CONTENTION, AND THEREFORE, THE AS SESSING OFFICER TREATED THE LOSS ON SHARE BUSINESS AS SPECULATION LOSS. THE LD. DR FOR THE REVENUE ITA NO. 2388/MUM/2013- BLUEBERRY TRADING COMPANY PVT. LTD. 4 RELIED ON THE DECISION OF MUMBAI TRIBUNAL IN YUCCA FINVEST (P.) LTD. VS. DCIT 258 ITR 198 (MUM. TRIB.). THE LD. DR FOR THE R EVENUE FURTHER SUBMITS THAT WHILE CONSIDERING THE EXPLANATION TO S ECTION 73, ONE HAS TO SEE THE NATURE OF BUSINESS CARRIED BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS SHOWN RECEIPT OF INCOME FROM HOUSE PROPERTY OF RS. 5,41,88,829/- AND CAPITA L LOSS OF RS. 6,99,58,755/-. THE ASSESSEE HAS ALSO SHOWN THE LOSS OF RS. 4,84,58,752/- ON ACCOUNT OF SHARE BUSINESS. THE ASSESSING OFFICER DE NIED THE SET OFF OF LOSS ON ACCOUNT OF SHARE BUSINESS HOLDING IT TO BE A SPE CULATIVE LOSS AS PER EXPLANATION TO SECTION 73 OF THE ACT. THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENSES OF RS. 10,00,000/- ON SUCH SPECULATIVE BUSINESS. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER HO LDING THAT THE BUSINESS LOSS IS IN EXCESS OF THE INCOME DERIVED UNDER OTHER HEADS, THEREFORE, THE PROVISIONS OF SECTION 73 ARE SQUARELY APPLICABLE. T HE HONBLE BOMBAY HIGH COURT IN CIT VS. HSBC SECURITIES & CAPITAL MAR KET LTD. (SUPRA), WHILE RELYING UPON THE ITS EARLIER DECISION IN DARS HAN SECURITIES PVT. LTD. (2012) 206 TAXMAN 68/18 TAXMAN.COM 142 (BOM.) HELD THAT EXPLANATION TO SECTION 73 DOES NOT OPERATE AGAINST THE COMPANY WHO SE GROSS TOTAL INCOME CONSIST MAINLY OF INCOME WHICH IS CHARGEABLE UNDER HEADS INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAIN & INCOME FROM OTHER SOURCES. FURTHER, THE CO-ORDINATE BENCH OF D ELHI TRIBUNAL IN A.K. ITA NO. 2388/MUM/2013- BLUEBERRY TRADING COMPANY PVT. LTD. 5 CAPITAL MARKETS LTD. VS. DCIT [2016] 65 TAXMAN.COM 62 (DEL. TRIB.) HELD THAT WHEN THE ASSESSEE DURING THE YEAR EARNED DIVID END INCOME AND INTEREST INCOME AND CLAIMED SET OFF OF LOSS ARISING OUT OF T RADING IN FUTURE & OPTIONS/DERIVATIVES AGAINST OTHER INCOME, THE ASSES SEES CASE WOULD FALL WITHIN PURVIEW OF EXCEPTION CARVED OUT IN EXPLANATI ON TO SECTION 73 AND, THEREFORE, THE ASSESSEE IS ENTITLED TO SET OFF OF L OSS AGAINST OTHER INCOME. THERE IS NO DISPUTE THAT THE ASSESSEE SHOWN INCOME FROM HOUSE PROPERTY, SHORT TERM & LONG TERM CAPITAL LOSS. IN OUR VIEW, T HE ASSESSEE-COMPANY HAS INCOME FROM OTHER HEADS LIKE INCOME FROM HOUSE PROPERTY, CAPITAL GAIN, THEN THE TOTAL INCOME FALLS UNDER ALL THE SPE CIFIED HEADS, THAN THE ASSESSEE WILL FALL WITHIN THE PURVIEW OF EXCEPTION CARVED OUT IN THE EXPLANATION TO SECTION 73 AND THE ASSESSEE WOULD BE ENTITLED TO SET OFF OF LOSS SUFFERED ON SHARE TRANSACTIONS AND CANNOT BE T ERMED AS CARRYING ON SPECULATIVE BUSINESS. THE RATIO OF DECISION RELIED BY LD. DR FOR THE REVENUE IN YUCCA FINVEST (P.) LTD. (SUPRA) IS DIFFER ON THE FACTS. IN THAT CASE THE TRIBUNAL HELD THAT UNDER EXPLANATION OF SECTION 73 TWO EXCEPTIONS HAVE BEEN PROVIDED. IF THE CASE OF A COMPANY FALLS IN EI THER OF THESE TWO EXCEPTIONS THEN, IT WILL NOT HIT BY THE EXPLANATION . FIRST EXCEPTION IS ABOUT THOSE COMPANIES WHOSE GROSS TOTAL INCOME CONSISTS O F INCOME CHARGEABLE UNDER THE HEADS 'INCOME FROM HOUSE PROPERTY', 'CAPI TAL GAINS' AND 'INCOME FROM OTHER SOURCES'. THE SECTION PROVIDES T HRUST ON COMPOSITION OF GROSS TOTAL INCOME. THUS, IF GROSS TOTAL INCOME COMPRISES OF MAINLY OF ITA NO. 2388/MUM/2013- BLUEBERRY TRADING COMPANY PVT. LTD. 6 INCOMES, CHARGEABLE UNDER THESE HEADS, THEN EXPLANA TION TO SECTION 73 WILL NOT APPLY . THUS, THE CASE LAW RELIED BY LD. DR IS NOT HELPFU L TO THE REVENUE. EVEN OTHERWISE THE DECISION OF JURISDICTIO NAL HIGH COURT HAS BINDING PRECEDENT ON THE TRIBUNAL. THE DECISION OF HONBLE BOMBAY HIGH COURT IN HSBC SECURITIES & CAPITAL MARKETS INDIA (P .) LTD. (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE PRESENT CAS E. IN OUR VIEW, THE LOWER AUTHORITIES FAILED TO APPRECIATE THAT THE ASSESSEE FALLS WITHIN THE EXCEPTION PROVIDED IN EXPLANATION TO SECTION 73 OF THE ACT. T HUS, IN VIEW OF OUR DISCUSSION, THE ASSESSEE IS ENTITLED FOR SET OFF OF LOSS. IN THE RESULT, THE GROUND NO.1 OF THE APPEAL IS ALLOWED. 6. THE GROUND NO.2 IS CONSEQUENTIAL IN NATURE. AS WE H AVE ALLOWED THE GROUND NO.1 OF THE APPEAL, THE ADDITION OF RS. 10,00,000/- ON ACCOUNT OF EXPENSES ON SPECULATION BUSINESS LOSS IS ALSO DELETED. 7. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF MARCH 2018. SD/- SD/- ( B.R.BASKARAN ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 14/03/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C
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