The DCIT, Circle-3, Surat V. Shri Mulchandbhai Shankarbhai Amin, Surat

ITA 2623/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89445 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: RASHESH SHAH
• Keywords: Speculation loss

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 2623/AHD/2011 / ASSESSMENT YEAR: 2005-06 DCIT, CIRCLE-3, SURAT VS SHRI MULCHAND SHANKARBHAI AMIN PROP. SHIVA ENGINEERING WORKS, 17, MEERA NAGAR SOCIETY, GHOD ROAD, SURAT PAN : ABWPA 7967 M / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI B.L. YADAV, SR. DR ASSESSEE(S) BY : SHRI RASHESH SHAH, AR !'# $ %& !'# $ %& !'# $ %& !'# $ %& / DATE OF HEARING : 12/05/2015 '( $ %& / // / DATE OF PRONOUNCEMENT: 15/05/2015 )* )* )* )*/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, SURAT DATED 04.08.2011 PERTAINING TO THE ASSESSMENT YEAR 2005-0 6. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE DELETION OF THE PENALTY OF RS.24,62,098/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSING OFFICER LEVIED THE PENALT Y U/S 271(1)(C) IN RESPECT OF FOLLOWING TWO ADDITIONS/DISALLOWANCES:- ITA NO. 2623 AHD 2011 DCIT V. SHRI MULCHAND SHANKARBHAI AMIN AY: 2005-06 2 1 SHORT TERM CAPITAL GAIN TREATED AS LONG TERM CAPITAL GAIN RS.68,87,173 2 DISALLOWANCE OF LOSS ON DERIVATIVES RS.26,14,405 4. WE FIND THAT IN QUANTUM APPEAL, THE ITAT VIDE IT A NO.127/AHD/2009 HAS TREATED THE SUM OF RS.68,87,173 /- AS SHORT TERM CAPITAL GAIN. THUS, THE ASSESSEES CONTENTIONS HAVE BEEN UPHELD BY THE ITAT. THEREFORE, THERE IS NO QUESTION OF LEVY OF P ENALTY IN RESPECT OF SHORT TERM CAPITAL GAIN. 5. SO FAR AS LOSS ON DERIVATIVES AMOUNTING TO RS.26 ,14,405/- IS CONCERNED, THE ITAT ACCEPTED THE REVENUES CONTENTION THAT IT IS A SPECULATION LOSS. HOWEVER, THERE IS NO DISPUTE THAT THE ASSESSEE INCU RRED THE LOSS ON THE TRADING OF DERIVATIVES. THERE IS NO DISPUTE ABOUT T HE GENUINENESS OF LOSS OR THE QUANTUM OF LOSS. THE ONLY DISPUTE IS WHETHER TH E LOSS ON SALE OF DERIVATIVES IS NORMAL BUSINESS LOSS OR SPECULATION LOSS. IN OUR OPINION, IT IS A LEGAL ISSUE AND MERELY BECAUSE THE ASSESSEES CONTE NTION THAT LOSS ON TRADING OF DERIVATIVES IS TO BE TREATED AS BUSINESS LOSS WA S NOT ACCEPTED BUT THE LOSS WAS TREATED AS SPECULATIVE LOSS DOES NOT MEAN THAT THE ASSESSEE EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. THE CASE OF THE ASSESSEE WOULD BE SQUARELY COVERED BY T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT LTD, REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. ITA NO. 2623 AHD 2011 DCIT V. SHRI MULCHAND SHANKARBHAI AMIN AY: 2005-06 3 6. THE RATIO OF ABOVE DECISION WOULD BE SQUARELY AP PLICABLE TO THE CASE OF THE ASSESSEE BECAUSE THE DETAILS FURNISHED BY TH E ASSESSEE HAVE NOT BEEN FOUND TO BE INACCURATE, FALSE OR INCORRECT. MERELY BECAUSE THE ASSESSEES CLAIM THAT THE LOSS ON TRADING OF DERIVATIVES IS TO BE TREATED AS NORMAL BUSINESS LOSS WAS NOT ACCEPTED AND INSTEAD, SUCH LO SS WAS TREATED AS SPECULATIVE LOSS DOES NOT MEAN THAT THE ASSESSEE FU RNISHED INACCURATE PARTICULARS OF INCOME. IN VIEW OF ABOVE, WE, RESPE CTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE SUPREME COURT, ARE OF THE OPINION THAT THE PENALTY U/S 271(1)(C) IS NOT LEVIABLE MERELY BECAUS E THE LOSS OF SALE ON DERIVATIVES WAS TREATED AS SPECULATIVE LOSS. WE, T HEREFORE, UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE R EVENUE. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 15/05/2015 BIJU T., PS )* $ %+ ,)+% )* $ %+ ,)+% )* $ %+ ,)+% )* $ %+ ,)+%/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !-- % '. / CONCERNED CIT 4. '. ( ) / THE CIT(A) 5. +12 % , , / DR, ITAT, AHMEDABAD 6. 2 3# / GUARD FILE . )*'! )*'! )*'! )*'! / BY ORDER, TRUE COPY 4 44 4/ // /! -5 ! -5 ! -5 ! -5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD