VINOD K NEVATIA, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 2398/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83873 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITEN KUMAR
• Assessee Lawyers: S C TIWARI; NATASHA MANGAT
• Keywords: Business income; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 2398/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) VINOD K. NEVATIA 206, KAKAD CHAMBERS, DR. A. B. ROAD, WORLI, MUMBAI-400 018 / VS. ASST. CIT-4(2), AAYAKAR BHAVAN, ROOM NO. 647, M. K. ROAD, MUMBAI-400 020 ! ./' ./PAN/GIR NO. AAEPN 8175 H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !# & ' / APPELLANT BY : SHRI S. C. TIWARI & MS. NATASHA MANGAT $%!# & ' / RESPONDENT BY : SHRI JITEN KUMAR ( )*+ & ,- / DATE OF HEARING : 18.09.2014 DATE OF ORDER : 23.09.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMBAI (CIT(A) FOR SHO RT) DATED 12.01.2012, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 06.12.2010. 2. THE APPEAL COMPRISING EIGHT GROUNDS, RAISES, IN EFFECT, TWO ISSUES, WITH GD. # 6 TO 8 BEING GENERAL IN NATURE, WARRANTING NO ADJUDICATI ON. WE SHALL PROCEED ISSUE-WISE. 2 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT 3. THE FIRST ISSUE, PROJECTED PER GROUNDS 1 TO 3, I S IN RESPECT OF THE CONFIRMATION OF THE DISALLOWANCE U/S.14A AT RS.17,93,668/-. THE BRIEF F ACTS ARE THAT THE ASSESSEE, IN THE BUSINESS OF SHARE BROKING, WAS OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO HAVE EARNED DIVIDEND INCOME AT RS.84.70 LACS, WHICH WAS CLAIMED TAX-EXEMPT. FURTHER, AS NO EXPENDITURE THERE-AGAINST HAD BEEN DISALLOWED U/S.14A, THE ASSESSING OFFICER (A.O.) PROCEEDED TO WORK THE SAME IN TERMS OF RULE 8D, MANDATORY FOR THE CURRENT YEAR, AND WHICH WORKED TO THE IMPUGNED DISALLOWANCE OF RS .17.94 LACS. THE MATTER WAS EXAMINED BY THE LD. CIT(A) IN APPEAL AT LENGTH WITH REFERENCE TO THE SEVERAL OBJECTIONS RAISED BY THE ASSESSEE BEFORE HIM. THE ASSESSEE HAD NOT MAINTAINED ANY SEPARATE ACCOUNTS FOR EXPENSES, I.E., IN RELATION TO THE INCOME/S NOT FORMING PART OF THE TOTAL INCOME, FOR THE A.O. TO BE ABLE TO EXAMINE THE VERACITY OF THE ASSE SSEES CLAIM OF HAVING NOT INCURRED ANY EXPENDITURE IN RELATION TO THE SAID INCOME. THE PRO VISION OF RULE 8D, WHICH IS ESSENTIALLY A RULE OF APPORTIONMENT, WOULD THEREFORE COME INTO PLAY. THERE WAS ACCORDINGLY NO MERIT IN THE ASSESSEES ARGUMENT THAT THE SAME WOULD NOT IN-AS-MUCH AS SECTION 14A DOES NOT PROVIDE FOR APPORTIONMENT OF EXPENSES, AS (SAY) S.8 0HHC. THE ASSESSEES ACCOUNTS BEING COMBINED, I.E., FOR THE INCOME/S FORMING PART OF, A ND NOT SO, OF THE TOTAL INCOME, THE A.O. WAS JUSTIFIED IN APPLYING THE PROPORTIONATE METHOD AS PRESCRIBED BY RULE 8D, CONFIRMED AS MANDATORY BY THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 (BOM) W.E.F. AY 2008-09, THE CUR RENT YEAR. 4. THE ASSESSEES CASE BEFORE US, PLACING RELIANCE ON THE DECISIONS IN THE CASE OF CCI LTD. VS. JT. CIT (IN ITA NO. 359 OF 2011 DATED 28.02.2012/PB PGS. 1 -8) AND CIT VS. SMT. LEENA RAMACHANDRAN [2011] 339 ITR 296 (KER) (PB PGS.9-12), WAS THAT SE CTION 14A WOULD NOT APPLY IN-AS-MUCH AS THE SHARES ARE HELD B Y THE ASSESSEE AS STOCK-IN-TRADE, OR AT LEAST TO THE EXTENT THEY ARE SO HELD, I.E., AS STOC K-IN-TRADE; THE ASSESSEE HAVING ALSO RETURNED CAPITAL GAINS, BOTH LONG TERM AND SHORT TE RM, ON THE SALE OF THE SHARES. THE LD. AUTHORIZED REPRESENTATIVE (AR) WOULD IN THIS REGARD CONTEND THAT THE ENTIRE DIVIDEND INCOME, SHARE-WISE DETAILS OF WHICH ARE AVAILABLE, STANDS RECEIVED ON SHARES HELD AS STOCK-IN-TRADE. ON THE DECISION BY THE TRIBUNAL IN THE CASE OF D. H. SECURITIES (P.) LTD. VS. 3 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT DY. CIT [2014] 146 ITD 1 (MUM) (TM), WHICH IS BY ITS LARGE R BENCH, AS ALSO DY. CIT VS. DAMANI ESTATES & FINANCE (P.) LTD. [2013] 25 ITR 683 (MUM)(TRIB) BEING BROUGHT TO HIS NOTICE BY THE BENCH, HE PLEADED IGNORANCE, THOU GH CONFIRMED OF BEING AWARE OF THE DECISION BY THE SPECIAL BENCH IN THE CASE OF CHEMINVEST LTD. VS. ITO [2009] 121 ITD 318 (DEL)(SB), WHICH HE WOULD THOUGH CONTEND OF BEING N O CONSEQUENCE IN VIEW OF THE DECISIONS BY THE HONBLE HIGH COURTS IN THE CASE OF CCI LTD. (SUPRA) AND LEENA RAMACHANDRAN (SUPRA). THE LD. DEPARTMENTAL REPRESENTATIVE (DR), WOULD ON THE OTHER HAND RELY ON THE ORDERS BY THE REVENUE AUTHORITIES. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIRSTLY FIND THE ARGUMENTS BY THE LD. CIT(A) IN MEETING THE ASSESSEES CASE, AS MADE BEFORE HIM, AS UNEXCEPTIONAL. IN FACT, THE ASS ESSEE BEFORE US DID NOT RAISE ANY OF THE ISSUES HE DID BEFORE THE FIRST APPELLATE AUTHORITY. COMING TO THE ASSESSEES CASE, I.E., AS MADE BEFORE US, WE FIND IT AS UNTENABLE BOTH ON FACTS AND IN LAW. EARNING OF INCOME IS NOT A CON DITION PRECEDENT FOR THE CLAIM OF EXPENDITURE, EITHER U/SS. 36(1)(III) AND 37(1), I.E ., QUA BUSINESS INCOME, OR S.57(III), I.E., QUA INCOME FROM OTHER SOURCES. AS SUCH, THE EXTENT OF I NCOME, OR EVEN IT BEING AT NIL, WOULD NOT BE A RELEVANT CONSIDERATION FOR THE PURPO SE OF ALLOWANCE OF EXPENDITURE AND, THUS, FOR ITS DISALLOWANCE U/S.14A WHERE IT IS IN R ELATION TO INCOME/S NOT FORMING PART OF THE TOTAL INCOME, EVEN AS CLARIFIED BY THE TRIBUNAL PER ITS LARGER BENCH DECISION IN CHEMINVEST LTD. (SUPRA) APPLYING CIT VS. RAJENDRA PRASAD MOODY [1978] 115 ITR 519 (SC) . THIS WOULD ALSO AT ONCE RESOLVE THE ISSUE OF S. 14A BEING INAPPLICABLE ON ACCOUNT OF SOME SHARES BEING HELD AS STOCK-IN-TRADE, OR AS ALS O SO, I.E., APART FROM AS INVESTMENT, AS WAS ALSO THE CASE IN CHEMINVEST LTD. (SUPRA). THE ASSESSEES CLAIM OF THE DIVIDEND EARNE D BEING ON SHARES HELD AS STOCK-IN-TRADE, WHICH DOES NOT APPEAR TO HAVE BEEN MADE BEFORE THE AUTHORITIES BELOW IN-AS-MUCH AS THERE IS NO FIN DING THEREON BY THEM, IS THUS OF NO CONSEQUENCE. EXPENDITURE, WHETHER ON ADMINISTRATION /MANAGEMENT OR ON INTEREST, IS INCURRED ON THE BASIS OF AND WITH REFERENCE TO INVE STMENT/HOLDING, AND IS THEREFORE ALLOWED OR DISALLOWED, AS THE CASE MAY BE, IN COMPU TING THE TOTAL INCOME, ON THAT BASIS. 4 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT THE STATUTORY DISALLOWANCE U/S.14A, I.E., QUA INCOME NOT FORMING PART OF THE TOTAL INCOME, WOULD THEREFORE AGAIN BE ON THAT BASIS. WHY, IF EXP ENDITURE WERE TO BE INCURRED ONLY ON THE INCOME BEING EARNED, I.E., IS A FUNCTION OF INC OME, THERE WOULD BE NO OCCASION TO AND, THUS, INCURRING OF LOSS AND, RATHER, INCOME WOULD S TAND TO EARNED AT A PREDETERMINED LEVEL (I.E., VIS--VIS THE EXPENDITURE INCURRED), EVEN AS EXPLAINED BY THE TRIBUNAL IN D. H. SECURITIES (P.) LTD. (SUPRA) AND DAMANI ESTATES & FINANCE (P.) LTD. (SUPRA). IT IS THUS IMMATERIAL WHETHER THE DIVIDEND INCOME STANDS EARNE D ON SHARES HELD AS STOCK-IN-TRADE OR AS INVESTMENT OR AS BOTH; IT BEING DECIDEDLY AN INC IDENT OF SHARE-HOLDING, THE NATURE OF WHICH (HOLDING) IS RELEVANT ONLY FOR DETERMINING TH E CLASSIFICATION OF INCOME THAT INURES ON THEIR SALE, I.E., AS CAPITAL GAINS OR AS BUSI NESS INCOME. THE ASSESSEES NEXT ARGUMENT IS OF SECTION 14A BEIN G NOT ATTRACTED AS THE SHARES YIELDING DIVIDEND INCOME, OR PART THEREOF, ARE HELD AS STOCK-IN-TRADE IN VIEW OF THE DECISION IN CCI LTD. (SUPRA) AND LEENA RAMACHANDRAN (SUPRA), WHICH WOULD TAKE PRECEDENCE OVER THE DECISIONS BY THE TRIBUNAL. THE ARGUMENT IS NOT WITHOUT MERIT. HOWEVER, EVEN AS POINTED OUT DURING THE HEARING ITS ELF, THE QUESTION EXAMINED BY THE TRIBUNAL IN D. H. SECURITIES (P.) LTD. (SUPRA) WAS IF THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA), EXPLAINING THE PRINCIPLES OF APPORTIONMENT GOVERNING THE APPLICATI ON OF SECTION 14A, WOULD COVER A CASE WHERE SHARES YIELDING EXEMPT DIVIDEND INCOME WERE H ELD AS STOCK-IN-TRADE OF THE ASSESSEES BUSINESS. THIS WAS CONFIRMED AS SO BY TH E THIRD MEMBER; RATHER, HOLDING THE ISSUE AS SQUARELY COVERED BY THE DECISION IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA), AS ALSO BY, FOLLOWING IT, DHANUKA & SONS VS. CIT [2011] 339 ITR 319 (CAL), EVEN AS WAS FOUND EARLIER BY THE TRIBUNAL IN DAMANI ESTATES & FINANCE (P.) LTD. (SUPRA). WE ARE UNDER THE CIRCUMSTANCES UNABLE TO OBSERVE ANY CONTROVERSY , AT-LEAST IN-SO-FAR AS THIS TRIBUNAL IS CONCERNED. THE DECISION IN THE CASE OF CCI LTD. (SUPRA) AND LEENA RAMACHANDRAN (SUPRA) STOOD RENDERED WITHOUT NOTICING THE DECISIO N IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA), EVEN AS OBSERVED BY THE THIRD MEMBER. THE ASSESSEES SAID ARGUMENT THUS FAILS. SO, HOWEVER, AS ALSO OBSERVED DURING HEARING, THE T RIBUNAL IN D. H. SECURITIES (P.) LTD. (SUPRA) AS WELL AS IN DAMANI ESTATES & FINANCE (P.) LTD. (SUPRA), HAS HELD THAT THE 5 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT DISALLOWANCE OF INTEREST U/S.14A QUA SHARES YIELDING TAX EXEMPT INCOME WOULD BE AT TWENTY PER CENT (20%) OF THE INTEREST ATTRIBUTABLE THERETO, I.E., IN TERMS OF RULE 8D(2), WHERE THE SHARES ARE HELD AS STOCK-IN-TRADE. THIS, IT WAS EXPLAINED, IS FOR THE REASON THAT THE SAID SHARES YIELD BOTH INCOME FORMING PART OF T HE TOTAL INCOME (BY WAY OF SHARE TRADING INCOME) AS WELL AS THAT NOT FORMING PART TH EREOF (BY WAY OF DIVIDEND INCOME), SO THAT ASCRIBING THE ENTIRE INTEREST REFERABLE TO SUC H SHARE-HOLDING TO DIVIDEND INCOME WOULD IMPLY NO INTEREST EXPENDITURE AGAINST SHARE TRADING INCOME AND, THUS, BE AGAINST THE VERY PRINCIPLES OF APPORTIONMENT WHICH S. 14A AND, THERE BY, R. 8D, STAND BY AND SEEK TO MANDATE. THE RELEVANT DISCUSSION IS AT PGS. 697-698 OF THE REPORTS IN DAMANI ESTATES & FINANCE (P.) LTD. (SUPRA). THE LD. AR WOULD, UPON THIS, SIGNIFY HIS A CCEPTANCE OF THE SAID DECISIONS. IN THE FACTS OF THE INSTANT CASE, IN-SO-FAR AS IT A PPEARS TO US, THE ASSESSEE HOLDS SHARES BOTH BY WAY OF INVESTMENT AND STOCK-IN-TRADE , EVEN AS CONTENDED BY HIM PER GROUND # 3 OF ITS APPEAL. MAINTENANCE OF TWO PORTFOLIOS BY THE ASSESSEE, WHIC H HE IS WELL ENTITLED TO, WOULD IMPLY CLASSIFYING ALL THE SHARES INTO ONE OR THE OTHER CATEGORY, I.E., AS INVESTMENT OR STOCK-IN-TRADE, ON ACQUISITION. THOUG H THE LD. AR WAS UNABLE TO EXHIBIT THE SAME BEFORE US, THE VERY FACT THAT THE ASSESSEE RET URNS INCOME ON SALE OF SHARES ALSO BY WAY OF CAPITAL GAINS BOTH SHORT-TERM AND LONG-TER M, WHICH STANDS ACCEPTED BY THE REVENUE, CLEARLY INDICATES SO. THE TRADING ACCOUNT OF THE ASSESSEES PROPRIETARY FIRM, M/S. GAURAV TRADING CO., FOR THE RELEVANT ACCOUNTING PER IOD SHOWS AN OPENING AND CLOSING STOCK (OF SHARES AND DEBENTURES) AT RS.195.76 LACS AND RS.65.72 LACS RESPECTIVELY AS ON 31.03.2008, THE YEAR-END (PB PG.12), YIELDING AN AV ERAGE HOLDING OF RS.130.74 LACS. THE SAME, HOWEVER, DOES NOT AGREE WITH THE TOTAL VALUE OF INVESTMENT (RS.700.40 LACS) AND STOCK-IN-TRADE (AT RS. 531 LACS) HELD BY THE ASSESS EE AS AT THE YEAR-END (PB PG. 4), AS ALSO WITH THE AVERAGE VALUE OF SHARES FOR THE YEAR ADOPT ED BY THE A.O. (RS. 945.70 LACS) (PARA 5 OF THE ASSESSMENT ORDER), ON WHICH WE AGAIN OBSER VE NO DISPUTE. WE HAVE ALREADY CLARIFIED OF THE SHARES FORMING PAR T OF THE ASSESSEES TRADING STOCK AS BEING LIABLE TO INTEREST DISALLOWANCE U/R. 8-D(2 ) AT A FRACTION OF THE INTEREST ATTRIBUTABLE THERETO. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER 6 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR DET ERMINING ( WITH REFERENCE TO THE ASSESSEES ANNUAL ACCOUNTS FOR THE CURRENT AND IMMEDIATELY PRE CEDING YEAR) THE INTEREST DISALLOWANCE U/R. 8D(2) SEPARATELY FOR SHARES HELD AS INVESTMENT AND STOCK-IN-TRADE, AND RESTRICT THE DISALLOWANCE RELATABLE TO THE LATTER TO TWENTY PER CENT THEREOF, WHILE RETAINING THAT IN RESPECT OF THE FORMER. THE DISALLOWANCE U/R. 8-D(2) (III), ON WHICH IN FACT NO SPECIFIC ARGUMENTS WERE MADE, WOULD STAND UNDISTURBED. WE DE CIDE ACCORDINGLY. 6. THE SECOND ISSUE, RAISED PER GROUNDS # 4 AND 5, IS QUA DISALLOWANCE OF LOSS OF RS.21,71,097/- CLAIMED BY THE ASSESSEE ON THE BASIS OF MARK TO MARKET, OF CONTRACTS (I.E., FUTURES AND OPTIONS) IN WHICH HE DEALS, AS OUTSTAND ING AS AT THE YEAR-END (31.03.2008). WHILE THE ASSESSEE STAKES ITS CLAIM RELYING ON THE DECISION IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P. LTD [2009] 312 ITR 254 (SC), IN THE VIEW OF THE REVENUE THE SAID RELIANCE IS MISPLACED IN THE FACTS OF THE CASE. THIS IS AS THE ASSESSEE IS ONLY DEBITING THE LOSS AND NOT ACCOUNTING FOR THE PROFIT ON ACCOUNT OF MARK TO MARKET VALUATION, SO THAT ITS CLAIM IS INCONSISTENT WITH C ONDITIONS (III) & (IV) OF THE SIX CONDITIONS SPECIFIED BY WAY OF GUIDELINES BY THE APEX COURT PE R PARA 21 OF ITS SAID DECISION. THE LD. AR BEFORE US WOULD CONTEND OF IT BEING IN FACT SO, WITH THE ASSESSEE HAVING RATHER DISCLOSED PROFIT ON ACCOUNT OF SUCH EXERCISE, I.E., MARKING THE OUTSTANDING CONTRACTS AS AT THE YEAR-END TO MARKET, BEING FOLLOWED CONSISTENTLY FROM YEAR TO YEAR, FOR THE EARLIER YEARS, TO IN FACT ITS ACCEPTANCE BY THE REVENUE. T HE NON-ACCEPTANCE BY THE REVENUE FOR THE CURRENT YEAR IS FOR THE REASON THAT THE SAME RE SULTS IN A LOSS. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ISSUE, THEREFORE, BEFORE US IS OF THE ASSESSEE S METHOD OF ACCOUNTING BEING CONSISTENT WITH THE GUIDELINES ISSUED BY THE APEX C OURT IN THE CASE OF WOODWARD GOVERNOR INDIA P. LTD. (SUPRA); THE REVENUE FINDING IT AS NOT SO, WITH THE RELEVANT FINDINGS BY THE LD. CIT(A) BEING AT PARA 3.11 OF HI S ORDER. IN THIS REGARD WE OBSERVE THAT THE BOOKING OF LOSS, WHICH IS ONLY THE RESULTANT FI GURE OF MARKING THE OUTSTANDING CONTRACTS TO MARKET, IS IN TERMS OF THE ACCOUNTING STANDARD (AS) 11 BY THE ICAI, SO THAT THERE IS NO QUESTION OF IT BEING A NOTIONAL LOSS. 7 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT OUR SECOND OBSERVATION IN THE MATTER IS THAT THE LO SS FOR THE CURRENT YEAR, AS PER ITS DETAILS SUBMITTED BEFORE THE A.O., WHICH IS AT RS.2 1,69,696/- (PB PG. 19), IS THE NET OF THE POSITIVE AND NEGATIVE FIGURES ARISING ON THE MARKIN G OF THE CONTRACTS TO MARKET. AS SUCH, THERE IS NO GRAIN IN THE LD. CIT(A) STATING OF THE ASSESSEE HAVING DONE SO IGNORING THE PROFITS. THERE IS HOWEVER NOTHING ON RECORD TO SHOW THAT THE ASSESSEE IS FOLLOWING THIS METHOD CONSISTENTLY FROM YEAR TO YEAR. UNDER THE CI RCUMSTANCES, THEREFORE, WE ONLY CONSIDER IT FIT AND PROPER, EVEN AS STATED DURING T HE COURSE OF HEARING ITSELF, THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. TO VERIFY THE ASSESSEES CLAIM IN THIS REGARD AND DECIDE THE MATTER BY ISSUING DEFINITE FINDINGS OF F ACT IN ACCORDANCE WITH LAW. WE MAY ALSO CLARIFY THAT THIS COULD HOWEVER NOT LEAD TO OR RESULT, IN ANY CASE, A DOUBLE CLAIM, SO THAT THE ACCOUNTING TREATMENT BEING ADOPTED BY THE ASSESSEE MAY ALSO BE REQUIRED TO BE EXAMINED BY THE A.O. IN-AS-MUCH AS THE FIGURE OF TH E PROFIT AND LOSS, AS THE CASE MAY BE, AS REFLECTED IN THE OPERATING STATEMENT, IS ONLY A PROVISIONAL FIGURE, I.E., WITH REFERENCE TO THE MARKET RATE AS AT THE YEAR-END, THE FINAL PROFI T AND LOSS ARISING ON THE MATURITY OF THE CONTRACT/S WOULD HAVE TO BE ADJUSTED THEREFOR, SO T HAT IT IS ONLY THE INCREMENTAL PROFIT/LOSS THAT IS BOOKED FOR AND, THUS, CLAIMED FOR THE YEAR OF THE MATURITY OF THE CONTRACT/S. ONE OF THE METHODS NORMALLY FOLLOWED IS THE REVERSAL OF TH E PROVISIONAL FIGURE, PROFIT OR LOSS, ON THE DAY IMMEDIATELY FOLLOWING THE YEAR-END, THROUGH CORRESPONDING DEBIT OR CREDIT, AS THE CASE MAY BE, TO THE PROFIT AND LOSS ACCOUNT, SO THA T THE BOOKING OF THE ENTIRE INCOME ARISING ON THE MATURITY OF THE CONTRACT WOULD LEAD TO ONLY THE NET AMOUNT BEING BROUGHT TO CHARGE FOR THE RELEVANT YEAR. WE DECIDE ACCORDINGLY . 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. /0,1 )23/, & 4& 567 8 * 9 , & , : ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 18, 2014 AT THE CONCLUSION OF THE HEARING. SD/- SD/- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( ;+ MUMBAI; <) DATED : 23.09.2014 8 ITA NO. 2398/MUM/2012 (A.Y. 2008-09) VINOD K. NEVATIA VS. ASST. CIT *.)../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( =, ( ) / THE CIT(A) 4. ( =, / CIT - CONCERNED 5. @*A $,)B2 , - B20 , ( ;+ / DR, ITAT, MUMBAI 6. C3 D+ / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ( ;+ / ITAT, MUMBAI