The ITO Ward-3(1) Visakhapatnam, Visakhapatnam V. M/s Golden Threshold Securities P Ltd, Visakhapatnam

ITA 314/VIZ/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72748 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BABU RAO
• Assessee Lawyers: C R HEMANT KUMAR
• Keywords: Speculation loss

Judgement Text

ITA NO.314/VIZAG/2011 M/S. GOLDEN THRESHOLD SECURITIES PVT. LTD., VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 314 /VIZAG/ 20 1 1 ASSESSMENT YEAR : 2007 - 08 ITO WARD - 3(1) VISAKHAPATNAM VS. M/S. GOLDEN THRESHOLD SECURITIES PVT. LTD. VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAACF 8238J ASSESSEE BY : SHRI C.R. HEMANT KUMAR REVENUE BY : SHRI B. BABU RAO, JCIT DATE OF HEARING : 10.12.2013 DATE OF PRONOUNCEMENT : 13 .12.2013 ORDER PER B. RAMAKOTAIAH:- THIS IS A REVENUE APPEAL AGAINST THE ORDER OF THE CIT(A), VISAKHAPATNAM DATED 26.8.2011. THE REVENUE HAS RAI SED THE FOLLOWING THREE EFFECTIVE GROUNDS AS UNDER: (2) THE CIT(APPEALS)-!, VISAKHAPATNAM HAS IGNORED THE P ROVISIONS OF SEC. 73, WHICH CLEARLY STATES THAT ANY COMPANY INDULGES IN PURCHASE AND SALE OF SHARES, IF ANY LOSS ARISING OU T OF SUCH TRADING, SHOULD BE TREATED AS SPECULATION LOSS; (3) THE CIT(A) WITHOUT APPRECIATING FACT THAT THE AO H AS ANALYZED THE SHARE TRANSACTIONS OF THE ASSESSEE BASING ON THE PERIOD OF HOLDING OF SHARES AND DETERMINED THE TAXABLE INCOME FROM SHARE TRADING; (4) THE CIT(APPEALS) MIGHT HAVE CONFIRMED THE DISA LLOWANCE OF EXPENSES MADE BY THE AO, SINCE, THE ASSESSEE HAS FA ILED TO FURNISH ANY EXPENDITURE CLAIMS RELEVANT TO SPECULATION (INTRADAY TRADING) BUSINESS. ITA NO.314/VIZAG/2011 M/S. GOLDEN THRESHOLD SECURITIES PVT. LTD., VSKP 2 2. BRIEFLY STATED, ASSESSEE COMPANY IS IN THE SHARE TRADING ACTIVITY AND DECLARED LOSS OF RS.22,36,536/-. THE AO ANALYSED T HE SHARE TRANSACTIONS BASED ON THE PERIOD OF HOLDING OF SHARES. HE BIFUR CATED THEM AS INTRADAY TRADING AND DELIVERY BASED TRADING. ON EXAMINATION OF THE DETAILS FILED, HE ARRIVED AT THE PROFIT OF INTRADAY TRADING AT RS.5,8 1,789/- AND ARRIVED AT THE DELIVERY BASED TRADING LOSS AT RS.14,97,418/- AS A SSESSEE ADMITTED, NET LOSS OF RS.9,15,629/-. THE ASSESSING OFFICER BROUGHT TO TAX THE PROFIT OF RS.5,81,789/- AND DID NOT ALLOW SET OFF OF THE LOSS ON THE REASON THAT IT WAS SHORT TERM CAPITAL LOSS WHICH CANNOT BE SET OFF AGA INST SPECULATIVE INCOME. 3. BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT ASS ESSEE HAS DONE A TURNOVER OF RS.41.35 CRORES AND ASSESSING OFFICER EXERCISE IN SEGREGATING INTRA DAY TRANSACTIONS AND INVESTMENT TRANSACTIONS IS NOT CORRECT AS ASSESSEE IS ONLY IN THE TRADING OF SHARES. IT WAS SUBMITTED THAT ENTIRE BUSINESS TRANSACTIONS ARE TRADING IN NATURE. THE LD. CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSIONS HELD AS UNDER: 5. I HAVE GONE THROUGH THE SUBMISSION OF THE APPEL LANT AND THE PROFIT AND LOSS ACCOUNT, IN THE BALANCE-SHEET, THE ASSESSEE HA S SHOWN STOCK OF SHARES AS STOCK-IN- TRADE UNDER CURRENT ASSETS. FURTHER, IT REFLECTED T HE INVESTMENTS SEPARATELY WHICH RELATED TO THE UNQUOTED SHARES OF PRIVATE LIMITED COMPANIES. IT CAN BE SEEN THAT FROM THE P&L ACCOUNT THAT THE O NLY ACTIVITY OF THE APPELLANT IS SHARE TRADING. IT IS ALSO CLEAR THAT T HE APPELLANT IS FOLLOWING THIS METHOD CONTINUOUSLY AND THE DEPARTMENT ACCEPTED THE STAND OF THE APPELLANT. FROM THE DETAILS OF THE SHARE PURCHASES AND SALE IT IS SEEN THAT THE APPELLANT IS IN EARLIER YEARS DEALING IN SHARES AND EVERY DAY TH ERE ARE MULTIPLE TRANSACTIONS IN VARIOUS SHARES. FROM THIS, IT IS CLEAR THAT THE APPELLANT IS IN THE BUSINESS OF DEALING IN THE SHARES AND HENCE THE ARTIFICIAL SEGR EGATION MADE BY THE AO OF DIVIDING THE SHARE TRADING INTO SPECULATION AND SHO RT TERM CAPITAL GAINS/LOSS IS NOT CORRECT. THE AO IS HENCE DIRECTED TO TREAT THE APPELLANT'S SHARE TRANSACTIONS AS ITS BUSINESS ACTIVITY AND ARRIVE AT THE PROFIT AND LOSS ACCORDINGLY. ITA NO.314/VIZAG/2011 M/S. GOLDEN THRESHOLD SECURITIES PVT. LTD., VSKP 3 6. THE NEXT ISSUE IS REGARDING DISALLOWANCE OF EXPE NDITURE. FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THE AO DID NOT GI VE ANY REASON FOR DISALLOWANCE OF THE EXPENDITURE WHICH IS LEGITIMATE LY CLAIMED BY THE APPELLANT. THE EXPENDITURE INCLUDES BROKERAGE, FINA NCIAL CHARGES, STATIONERY TURN-OVER TAX ETC. PRIMA-FACIE, ALL THE EXPENSES AR E ALLOWABLE IN THE BUSINESS OF SHARE TRADING. HOWEVER, AS THE AO DID NOT SPECIF ICALLY GIVE ANY REASON FOR NOT ALLOWING THE EXPENDITURE, THE MATTER IS REMITTE D BACK TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW ALL REASONABLE EXPENDI TURE CLAIMED BY THE APPELLANT. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAM INING THE FACTS ON RECORD INCLUDING THE PAPER BOOK FILED BY ASSESSEE F ROM PAGE NO.1 TO 657, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER O F THE CIT(A). IN FACT THE EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER IN SEG REGATING THE TRANSACTIONS AS SPECULATIVE AND INVESTMENT ITSELF IS NOT CORRECT AS ASSESSEE IS IN THE BUSINESS OF SHARE TRADING ONLY. MOREOVER, WHETHER IT IS INTRADAY OR DELIVERY BASED, THERE WAS A NET LOSS IN THE TRANSACTIONS. S INCE THE ASSESSING OFFICER TREATED THE LOSS AS SHORT TERM CAPITAL LOSS, THE GR OUND RAISED BY THE REVENUE THAT IT SHOULD BE TREATED AS SPECULATIVE LOSS HAS N O MERIT AT ALL. IN CASE IT IS TO BE TREATED AS SPECULATIVE LOSS, ASSESSING OFFICE R SHOULD HAVE SET OFF TO THE SPECULATIVE PROFIT, WHICH HE HIMSELF HAS ARRIVED AT . LOOKING IT IN EITHER WAY, THE GROUNDS RAISED BY THE REVENUE HAS NO MERIT AND ACCORDINGLY, THE SAME ARE DISMISSED. 5. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13 TH DEC13. SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 13 TH DECEMBER, 2013 ITA NO.314/VIZAG/2011 M/S. GOLDEN THRESHOLD SECURITIES PVT. LTD., VSKP 4 COPY TO 1 ITO WARD - 3(1), VISAKHAPATNAM 2 M/S. GOLDEN THRESHOLD SECURITIES LTD., 46 - 3 - 47, KUMMARI ST., DONDAPARTHY, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM