KETAN V. THAKKAR, MUMBAI V. ACIT 17(2), MUMBAI

ITA 2625/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49026 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 06-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DEIVEDY
• Keywords: Business income; Speculation loss
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI R,S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NOS. 2624 & 2625/MUM/2010 ASSESSMENT YEARS: 2004-05 & 2005-06 MR. KETAN V. THAKKAR, APPELLANT 14 TH FLOOR, NAPEROL TOWER, RS.A. KIDWAI ROAD, MUMBAI 400 031. (PAN ABWPTO713A) VS. ASST. COMMISSIONER OF INCOME-TAX, RESPONDENT 17(2), MUMBAI APPELLANT BY : MR. JAYANT R. BHATT RESPONDENT BY : MR. RAJARSHI DEIVEDY . ORDER PER V. DURGA RAO, J.M.: BOTH THESE APPEALS PERTAIN TO ONE ASSESSEE ARE DI RECTED AGAINST THE ORDERS OF CIT(A)- 29, MUMBAI FOR THE ASSESSMENT YEARS 2004-05 & 2005-06. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND, THEREFORE, WE FIND CONVENI ENT TO PASS A CONSOLIDATED ORDER. 2. . TO DISPOSE OF THESE APPEALS WE REFER TO THE FA CTS OF THE CASE FOR AY 2004-05 WHEREIN THE GROUNDS RAISED BY THE ASSESS EE, WHICH ARE COMMON IN AY 2005-06 ALSO, REPRODUCED BELOW:- THE CIT(A) HAS ERRED IN CONFIRMING THE ASSESSING OF FICER ACTION IN TREATING LOSS OF RS. 4,26,000/- BEING LOSS ARISI NG FROM DERIVATIVE TRANSACTION AS SPECULATIVE LOSS AS AGAIN ST NORMAL BUSINESS LOSS CLAIMED BY THE APPELLANT. ITA NOS. 2624 & 2625/M/2010 KETAN V. THAKKAR 2 THE CIT(A) HAS ERRED IN NOT ALLOWING THE SET-OFF OF LOSS ARISING FROM DERIVATIVE TRANSACTION AGAINST THE OTHER BUSIN ESS PROFIT AS CLAIMED BY THE APPELLANT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAD DEBITED AN AMOUNT OF RS. 4,26,000/- BY WAY OF DERIVATIVE TRADI NG LOSS, WHICH WAS CLAIMED SET-OFF AGAINST BUSINESS INCOME. THE ASSESS ING OFFICER HAD DISALLOWED THE SET-OFF CLAIM OF THE ASSESSEE ON THE GROUND THAT THE DERIVATIVE LOSS IS IN THE NATURE OF SPECULATIVE LOS S AND THE SAME COULD NOT BE SET-OFF AGAINST BUSINESS INCOME. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 4. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE HAS FAIRLY CONCEDED THAT THE ISSUE UNDER C ONSIDERATION IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BH ARAT R. RUIA (HUF) VIDE INCOME TAX APPEAL NO. 1539 OF 2010, JUDGMENT D ATED 18 TH APRIL, 2011. 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE ISSUE IS COVE RED AGAINST THE ASSESSEE BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BHARAT R. RUIA (SUPRA) WHEREIN THE COURT HELD AS UNDER:- 39)WE HOLD THAT THE EXCHANGE TRADED DERIVATIVE TRANSACTIONS CARRIED ON BY THE ASSESSEE DURING AY 2 003-04 ARE SPECULATIVE TRANSACTIONS COVERED UNDER SECTION 43(5 ) OF THE ACT AND THE LOSS INCURRED IN THOSE TRANSACTIONS ARE LIA BLE TO BE TREATED AS SPECULATIVE LOSS AND NOT BUSINESS LOSS. WE FURTHER HOLD THAT CLAUSE (D) INSERTED TO THE PROVISO TO SEC TION 43(5) WITH EFFECT FROM 01/04/2006 IS PROSPECTIVE IN NATURE AND THE ITAT WAS IN ERROR IN HOLDING THAT CLAUSE (D) TO THE PROV ISO TO SECTION 43(5) APPLIED RETROSPECTIVELY SO AS TO APPLY TO THE TRANSACTIONS CARRIED ON BY THE ASSESSEE DURING AY 2003-04. 6. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF BHARAT R. RUIA (SUPRA), WE UPH OLD THE ACTION OF ITA NOS. 2624 & 2625/M/2010 KETAN V. THAKKAR 3 THE CIT(A) IN CONFIRMING THE ASSESSING OFFICERS AC TION IN TREATING LOSS OF RS. 4,26,000/- IN AY 2004-05 AND RS. 4,64,121/- IN AY 2005-06, BEING LOSS ARISING FROM DERIVATIVE TRANSACTION AS S PECULATIVE LOSS AS AGAINST NORMAL BUSINESS LOSS CLAIMED BY THE ASSESSE E. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 20 TH MAY, 2011. SD/- SD/- (R.S.SYAL) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 20 TH MAY, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV