ITO, New Delhi V. M/s. D.R. Exports International, Delhi

ITA 2876/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4461 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Speculation loss
• Section: 43(5); 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH.K.N.CHARY,JUDICIAL MEMBER ITA NO.2876/DEL/2016 ASSESSMENT YEAR: 2010-11 ITO WARD 40 (5) NEW DELHI VS D. R. EXPORTS INTERNATIONAL 603, GOPAL HEIGHTS NETAJI SUBHASH PALACE, PITAMPURA DELHI 110034 PAN NO. AAAFD3992N (APPELLANT) (RESPONDENT) APPELLANT BY SH. AMIT KATOCH, SR. DR RESPONDENT BY DR. RAKESH GUPTA, ADVOCATE SH. SOMIL AGARWAL, ADVOCATE DATE OF HEARING: 18/03/2019 DATE OF PRONOUNCEMENT: 20/03/2019 ORDER PER N. K. BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE COR RECTNESS OF THE ORDER OF THE CIT(A)-16, NEW DELHI DATED 02.0 2.2016 PERTAINING TO A. Y. 2010-11. 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READ AS UNDER :- 1. DELETING THE ADDITION OF RS.1,05,48,477/- WHILE ONL Y SUSTAINING THE ADDITION OF RS.21,80,882/- OUT OF T HE TOTAL ADDITION OF RS.1,27,29,359/-, MADE BY THE AO ON ACC OUNT OF DISALLOWANCE OF LOSS ON RATE SETTLEMENT (CONTRACTS) , IN CONTRAVENTION OF PROVISIONS OF RULE 46A OF I T RULE, 1962. 2. DELETING THE ADDITION OF RS. 12,93,875/- MADE BY TH E AO ON ACCOUNT OF DISALLOWANCE OF SPECULATIVE LOSS ON DERI VATIVE TRADING ON MCX BY NOT APPRECIATING THAT IT WAS NOT AN APPROVED STOCK EXCHANGE WITHIN THE MEANING OF PROVISO (D) OF SECTION 43(5) OF I T ACT. GROUND NO.1 3. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. CASE RECORDS CAREFULLY PERUSED. 4. THE PERUSAL OF THE ORDER OF THE CIT(A) SHOWS THA T WHILE DECIDING THE APPEAL THE FAA HAS CONSIDERED CERTAIN DOCUMENTS MARKED AS PAGE NUMBERS 208 TO 430. AFTER CONSIDERI NG THESE DOCUMENTS THE CIT(A) DECIDED IN FAVOUR OF THE ASSES SEE. 5. IN OUR CONSIDERED VIEW WHEN THESE DOCUMENTS WERE FILED FOR THE FIRST TIME BEFORE THE CIT(A) THE LEAST HE COULD HAVE DONE WAS TO CALL FOR A REMAND REPORT FROM THE ASSESSING OFFI CER. IN OUR UNDERSTANDING OF THE FACTS THE CIT(A) HAS VIOLATED THE BASIC PRINCIPLES OF NATURAL JUSTICE. THEREFORE, THIS ISS UE IS RESTORED TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSEE I S DIRECTED TO FURNISH ALL THE NECESSARY EVIDENCES BEFORE THE ASSE SSING OFFICER AND THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SAME AND DECIDE THIS ISSUE AFRESH AFTER GIVING A REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.1 IS ALLOWED FOR S TATISTICAL PURPOSE. 3 GROUND NO.2 6. FACTS ON RECORD SHOWS THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED COPY OF CONTRACT NOTE OF M/S. KARVY COMTRADE LTD. AND M/S. LAKAHN LA I KANTILAL BROCKERS (P) LTD. IN RESPECT OF NCDEX/MCX EXCHANGE EXPENSE OF RS.1,29,873/-. AFTER PERUSING THE CONTRACT NOTES T HE ASSESSING OFFICER WAS OF THE FIRM BELIEF THAT THE CASE OF THE ASSESSEE FALLS INTO CLAUSE (A) OR CLAUSE (D) OF PROVISO TO SECTION 43 (5). AFTER ANALYZING THE PROVISIONS OF SECTION 43 (5) OF THE A CT THE ASSESSING OFFICER WAS OF THE OPINION THAT SUCH LOSS IS A SPEC ULATIVE LOSS AND ACCORDINGLY DISALLOWED THE SAME. 7. BEFORE THE CIT(A) THE ASSESSEE AGITATED THAT THE LOSS OF RS.1,29,875/- ON THE TRANSACTIONS CARRIED OUT BY TH E ASSESSEE ON MCX. IT WAS CLAIMED THAT SUCH LOSS WAS ALLOWABLE A S A BUSINESS LOSS. STRONG RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF NASA FINLEASE PR IVATE LIMITED REPORTED 358 ITR 305. 8. AFTER CONSIDERING THE FACTS AND THE JUDGMENT RE LIED UPON BY THE ASSESSEE THE CIT(A) HELD AS UNDER :- THE HBLE DELHI HIGH COURT IN THE CASE OF NASA FIN LEASE HAS HELD THAT THE PROVISION FOR CONSIDERING THE TRADING IN A RECOGNISED STOCK EXCHANGE WAS BROUGHT IN WITH EFFEC T FROM 1 APRIL 2006. THE MCX EXCHANGE WAS RECOGNISED BY THE CBDT BY THE NOTIFICATION DATED 22.05.2009. THIS NOTIFICA TION DOES NOT GIVE THE DATE FROM WHICH THE EXCHANGE IS RECOGN ISED BUT ONLY GIVES THE RECOGNITION TO THE EXCHANGE. THIS DE LAY IN GRANTING THE RECOGNITION TO THE EXCHANGE IS AN ADMI NISTRATIVE DELAY AND IS NOT DUE TO THE ASSESSEE. HENCE ALL TRA NSACTIONS CARRIED OUT AFTER 1.4.2006 ARE TO BE CONSIDERED AS BUSINESS 4 TRANSACTIONS AND ASSESSED ACCORDINGLY. RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE HIGH COURT OF DELHI, THE A DDITION OF RS. 12,93,875/- IS DELETED. 9. SINCE THE FAA HAS FOLLOWED THE JUDGMENT OF THE H ONBLE JURISDICTIONAL HIGH COURT OF DELHI, THE COUNSEL REL IED UPON THE FINDINGS OF THE FAA. 10. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT TH ERE IS SOME CONFUSION OVER THE EXCHANGE WHERE THE LOSS HAS ARIS EN. THE ASSESSING OFFICER HAS PROCEEDED BY CONSIDERING THAT THE TRANSACTION WAS DONE, THROUGH MULTI COMMODITY STOCK EXCHANGE OF INDIA LIMITED WHEREAS THE FAA HAS PROCEEDED ON T HE PREMISE THAT THE TRANSACTION HAS BEEN DONE THROUGH MULTI CO MMODITY STOCK EXCHANGE. SINCE THE RECOGNITION HAS BEEN GIVE N TO MCX AND NOT MULTI COMMODITY STOCK EXCHANGE OF INDIA LIMITED , THEREFORE, IN OUR OPINION THIS HAS TO BE VERIFIED AGAIN. WE, THE REFORE, RESTORE THIS ISSUE TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO DEMONSTRATE THAT HIS TRANSACTIONS WERE DONE, THROUGH THE EXCHANGE WHICH WAS SUBSEQUENTLY NOTIFIED AS A R ECOGNIZED EXCHANGE. THE ASSESSING OFFICER IS DIRECTED TO EXAM INE THE EVIDENCES AND DECIDE THE ISSUE AFRESH. THE GROUND NO.2 IS ALSO ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.03.2019 SD/- SD/- (K. NARSIMHA CHARY) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNT ANT MEMBER *NEHA* 5 DATE:- 20.03.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI DATE OF DICTATION 19.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 20.03.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER