DEV CHAND JAIN , SINGHBHUM V. ACIT CIRCLE-3 , RANCHI

ITA 263/RAN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0617 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 01-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MOHANTY
• Keywords: Business income; Question of law
• Section: 234B; 43(5)

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO263 / RAN /201 7 ASSESSMENT YEAR : 2013 - 14 DEVEN CHAND JAIN (HUF), M.D.HOUSE, CHAIBASA, SADAR, SINGHBHUM VS. ACIT, CIRCLE - 3, RANCHI PAN/GIR NO. AAAHD 4479 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI DEVESH PODDAR, ADV REVENUE BY : SHRI A.K.MOHANTY, JCIT DATE OF HEARING : 29 / 11 / 2018 DATE OF PRONOUNCEMENT : 30 / 11 / 2018 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), RANCHI, D ATED 8.9.2017 FOR THE ASSESSMENT YEAR 2013 - 14. 2. IN GROUND NO.1 & 2 OF THE APPEAL, T HE GRIEVANCE OF THE ASSESSE IS THAT T HE CIT(A) IN NOT PERMITTING THE SET OFF OF LOSS INCURRED BY THE ASSESSE IN COMMODITY DERIVATIVE OF RS.15,75,087/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER REFERENCE, THE ASSESSE ITA NO.263/RAN/2017 ASSESSMENT YEAR : 2013 - 14 P A G E 2 | 5 ADJUSTED NET LOSS OF RS.55,40,132/ - INCURRED FROM THE SALE OF COMMODITY & CURRENCY FUTURES FROM NORMAL BUSINESS INCOME EARNED U/S.28 OF TH E ACT. HOWEVER, COMMODITY & FUTURES TRADING FALLS UNDER THE DEFINITION OF SPECULATION BUSINESS AS DEFINED IN SECTION 43(5). HENCE, HE DISALLOWED THE SET OFF THE LOSS TO THE ASSESSE. 4. BEING AGGRIEVED BY THIS ORDER, THE ASSESSE CARRIED THE MATTER IN A PPEAL. THE CIT(A) HELD THAT CLAUSE (3) OF PROVISO TO SECTION 43(5) WAS INSERTE D BY THE STATUTE W.E.F. 1.4.2014 AND THE CASE OF THE ASSESSE WAS FOR FINANCIAL YEAR 2012 - 13. HENCE, THERE WAS NO PROVISO IN THE STATUTE TO GIVE THE BENEFIT TO THE ASSESSE IN R ESPECT OF TRANSACTIONS OF COMMODITIES, WHICH ARE ULTIMATELY SETTLED OTHERWISE THEN BY ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY AS PER SECTION 43(5) OF THE ACT. THEREFORE, HE HELD THAT TO THE EXTENT OF RS.15,75,087/ - , THE LOSS INCURRED IN TRADING OF CO MMODITY DERIVATIVES WAS INCORRECTLY CLAIMED BY THE ASSESSE AND CONFIRMED THE DISALLOWANCE. HE DELETED THE OTHER DISALLOWANCE OF SET OFF BEING LOSS ARISING OUT OF CURRENCY FUTURES BEING RS.39,65,044/ - WAS NOT HELD TO BE CORRECTLY SET OFF. 5. BEING STILL AG GRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.263/RAN/2017 ASSESSMENT YEAR : 2013 - 14 P A G E 3 | 5 6. LD AUTHORISED REPRESENTATIVE OF THE ASSESSE RELIED ON THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS M/S. MANDANLAL LIMITED IN ITA NO.1033/KOL/2011 F OR THE ASSESSMENT YEAR 2008 - 09 ORDER DATED 4.5.2012 AND SUBMITTED THAT THE LOSS ON COMMODITY DERIVATIVE WAS ALLOWED BY THE TRIBUNAL AND RESPECTFULLY FOLLOWING THE SAME, THE DISALLOWANCE OF SET OFF OF LOSS OF RS. 15,75,087/ - SHOULD BE DELETED. 7. I HAVE CONS IDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS ON RECORD. I FIND THAT THE KOLKATA TRIBUNAL IN THE CASE OF M/S. MANDANL AL LIMITED(SUPRA) WAS DEALING WITH SECTION 73 OF THE ACT AND IN CASE OF DERIVATIVE TRANSACTION CARRI ED OUT ON ACCOUNT OF FUTURE OPTION THROUGH RECOGNISED STOCK IN THE PRESENT CASE, THE ASSESSE IS DEALING IN TRANSACTION IN RESPECT OF TRADING IN COMMODITY DERIVATIVES. THE CIT(A ) HAS RIGHTLY HELD THAT CLAUSE (E) TO THE PROVISO TO SECTION 43(5) WAS INSERTE D W.E.F 1.4.2014 I.E. ASSESSMENT YEAR 2014 - 15. THE PRESENT ASSESSMENT YEAR INVOLVED IS 2013 - 14 AND, THEREFORE, IN THE YEAR UNDER APPEAL, THE DERIVATIVE TRANSACTION IN COMMODITY WERE NOT TREATED AS NON - SPECULATIVE, IF THEY WERE SETTLED OTHERWISE THAN BY D ELIVERY. THEREFORE, IN VIEW OF THE SPECIFIC PROVISO TO SECTION 43(5) OF THE ACT, WHERE CLAUSE (E) WAS INSERTED W.E.F. 1.4.2014, I DO NOT FIND ITA NO.263/RAN/2017 ASSESSMENT YEAR : 2013 - 14 P A G E 4 | 5 ANY INFIRMITY IN THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSE IS DISMI SSED. 8. IN GROUND NO.3 OF APPEAL, THE GRIEVANCE OF THE ASSESSE IS THAT THE CIT(A) IS NOT JUSTIFIED IN NOT GIVING DIRECTION FOR CHARGING OF INTEREST U/S.234B ON TAX PAYABLE ON RETURNED INCOME INSTEAD OF TAX PAYABLE ON ASSESSED INCOME. 9 . AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES BELOW, WE FIND THAT THE HON'BLE JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VERMA (SUPRA) HELD AS UNDER: - 23. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT IT HAS BE EN ORDERED BY THE A.O. THAT INTEREST BE CHARGED AS PER RULE. INTEREST CAN BE LEVIED UNDER SECTIONS 234A & 234B OF THE ACT. IT IS SUBMITTED THAT IN VIEW OF THE JUDGMENT OF FULL BENCH OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUM ARI VS. CIT REPORTED IN (2001) 114 TAXMAN 404 (PAT) (FB), THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONLY ON THE INCOME DECLARED IN THE RETURN. THE REVENUE PREFERRED S.L.P. BEFORE THE HON'BLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH OF PATNA HIGH COURT WHICH WAS DISMISSED BY THE HON'BLE SUPREME COURT ON MERITS VIDE ORDER DATED 01/08/2000 BY SAYING THAT THERE IS NO MERIT IN THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPUTE THIS LEGAL POSITI ON. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN THIS APPEAL THAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSESSEE UNDER SECTION 234A & 234B IS CONCERNED, IN VIEW OF THE FULL BENCH JUDGMENT OF RANCHI BENCH OF PAT NA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI, THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INCOME DECLARED IN THE RETURNS AND NOT ON THE INCOME ASSESSED AND DETERMINED BY THE A.O. TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND INTEREST SHALL BE CHARGEABLE IN THE LIGHT OF THE FULL BENCH JUDGMENT REFERRED ABOVE. ITA NO.263/RAN/2017 ASSESSMENT YEAR : 2013 - 14 P A G E 5 | 5 10 . THEREFOR E, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AJAY PRAKASH VERMA (SUPRA), WE DIRECT THE ASSESSING OFFICER TO CHARGE THE INTEREST ON THE INCOME DECLARED IN THE RETURN AND NOT ON ASSESSED INCOME AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSE FOR ALL THE ASSESSME NT YEARS UNDER APPEAL. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ORDER PRONOUNCED ON 30 / 11 /2018. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER RANCHI ; DATED 30 / 11 /2018 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, RANCHI ON TOUR 1. THE APPELLANT : DEVEN CHAND JAIN (HUF), M.D.HOUSE, CHAIBASA, SADAR, SINGHBHUM 2. THE RESPONDENT. ACIT, CIRCLE - 3, RANCHI 3. THE CIT(A) - RANCHI 4. PR.CIT - RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//