ITO 3(2)(2), MUMBAI V. MANALI TRADING & HOLDINGS P.LTD, MUMBAI

ITA 3397/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83460 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Business income; Assessment record
• Section: 143(3); 28

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.3397/MUM/2013, A.Y. 2004-05 THE INCOME TAX OFFICER 3(2)(2), ROOM NO.673, 6 TH FLOOR, AAYKAR BHAVAN, MUMBAI 400020 PAN: AAACM 7396J (APPELLANT ) VS. M/S.MANALI TRADING & HOLDINGS PVT. LTD. 508, DALAMAL HOUSE, JB.ROAD, NARIMAN POINT, MUMBAI 400021 (RESPONDENT) APPELLANT BY : SHRI VIVEK BATRA RESPONDENT BY : SHRI G YANESHWAR KATARAM DATE OF HEARING : 07/08/2014 DATE OF PRONOUNCEMENT : 07 /08/2014 ORDER PER I.P.BANSAL, J.M, THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-4, MUMBAI DATED 06/02/2013 FOR THE AS SESSMENT YEAR 2004-05. GROUNDS OF APPEAL READ AS UNDER: 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF SET OFF OF B ROUGHT FORWARD BUSINESS LOSSES AMOUNTING TO RS.11,54,540/- WITHOUT APPRECIATING TH E FACT THE SAME HAD BEEN ADJUSTED AGAINST INCOME UNDER THE HEAD OTHER THAN INCOME FR OM BUSINESS AND PROFESSION 2.THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON T HE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE IMPUGNED ASSESSMENT ORDER IS PASSED UNDER SE CTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT) AND IS DATED 22/ 12/2011. EARLIER THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 26 /12/2006 AT AN INCOME OF ITA NO.3397/MUM/2013, A.Y. 2004-05 2 RS.1,34,99,739/- AS AGAINST RETURNED INCOME OF RS.1 ,31,52,650/-. THE ASSESSEE IS A MEMBER OF NATIONAL STOCK EXCHANGE OF INDIA AND IT EARNED INCOME INTER-ALIA FROM SALE AND PURCHASE OF SHARES AND SECURITIES WHICH HA S BEEN OFFERED AS BUSINESS INCOME IN THE COMPUTATION OF INCOME FILED BY THE AS SESSEE. THE SAID COMPUTATION OF INCOME HAS BEEN REPRODUCED IN PARA-5 OF THE ORDER O F LD. CIT(A) AND FOR THE SAKE OF BREVITY THE SAME IS NOT REPRODUCED HERE. REASSESSM ENT PROCEEDINGS WERE STARTED FOR THE REASON THAT BUSINESS LOSS OF RS.11,54,540/- BRO UGHT FORWARD FROM A.Y 2003-04 WAS WRONGLY SET OFF BY THE ASSESSEE AGAINST THE ASS ESSED INCOME WHICH ACCORDING TO GROUNDS OF APPEAL AND ACCORDING TO THE CASE OF THE DEPARTMENT DOES NOT CONTAIN INCOME FROM BUSINESS AND PROFESSION. IT IS THE C ASE OF THE REVENUE THAT THE SAID SET OFF HAS BEEN GRANTED TO THE ASSESSEE AGAINST IN COME UNDER THE HEAD OTHER THAN INCOME UNDER BUSINESS AND PROFESSION. LD. CI T(A) IN PARA -5 HAS RECORDED A FINDING THAT HE HAS GONE THROUGH THE ASSESSMENT REC ORDS AND FROM THE ASSESSMENT ORDER IT WAS FOUND THAT THE ASSESSEE WAS HAVING SUF FICIENT BUSINESS INCOME FROM WHICH IT COULD CLAIM SET OFF OF LOSS OF RS.11,54,54 0/- BROUGHT FORWARD FROM A.Y 2003- 04. REGARDING ASSESSMENT ORDER PASSED UNDER SECTIO N 143(3) DATED 26/12/2006, LD. CIT(A) HAS NOTED THAT THE COMPUTATION OF INCOME ST ARTED BY THE A.O WAS TAKEN FROM COMPUTATION OF INCOME FILED BY THE ASSESSEE, WHEREB Y GROSS TOTAL INCOME WAS SHOWN AT RS.1,33,95,484/-, WHEREAS AS PER REVISED STATEM ENT OF INCOME FILED BY THE ASSESSEE AND AVAILABLE IN THE ASSESSMENT RECORD WAS DESCRIBED AS BUSINESS INCOME OF RS.1,22,21,752/- BEFORE REDUCING BROUGHT FORWARD LOSS OF A.Y. 2003-04 AMOUNTING TO RS.11,54,540/- AND EVEN AFTER SET OFF OF THE BRO UGHT FORWARD LOSS, THE NET BUSINESS INCOME HAS BEEN ASSESSED AT RS.1,10,67,212/- AND IN VIEW OF THIS FACT LD. CIT(A) HAS COME TO A CONCLUSION THAT AO HAS COMPLETELY MISUNDE RSTOOD THE FACT THAT ANY BROUGHT FORWARD BUSINESS LOSS HAS BEEN SET OFF AG AINST THE INCOME UNDER THE HEAD OTHER THAN BUSINESS INCOME. THEREFORE, LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. 3. WE HAVE HEARD BOTH THE PARTIES AT LENGTH. PROB ABLY THE DEPARTMENT IS OF THE VIEW THAT SINCE THE INCOME HAS BEEN EARNED BY THE A SSESSEE FROM SALE AND PURCHASE OF SHARES AND SECURITIES THE SAME IS IN THE NATURE OF SPECULATIVE INCOME AND WILL FALL ITA NO.3397/MUM/2013, A.Y. 2004-05 3 UNDER THE HEAD OTHER THAN INCOME FROM BUSINESS AND PROFESSION. THEREFORE, THE DEPARTMENT IS DESCRIBING SUCH INCOME TO BE FALL UNDER THE HEAD OTHER THAN INCOME FROM BUSINESS OR PROFESSION. SUCH OPINIO N OF THE DEPARTMENT IS CONTRARY TO THE PROVISIONS OF SECTION 28 ITSELF AS EXPLANA TION -2 UNDER SECTION 28(VII) EXPLAINS THAT IN A CASE WHERE SPECULATIVE TRANSACTION CARRI ED ON BY AN ASSESSEE ARE OF IN THE NATURE SO AS TO CONSTITUTE A BUSINESS, THE BUSINE SS (HEREAFTER REFERRED TO AS SPECULATIVE BUSINESS) SHALL BE DEEMED TO BE DISTI NCT AND SEPARATE FROM ANY OTHER BUSINESS. THEREFORE, EXPLANATION-2 CLEARLY DESCRIB ES THAT WHERE SPECULATIVE TRANSACTIONS ARE CARRIED ON BY AN ASSESSEE ARE IN T HE NATURE OF CONSTITUTING A BUSINESS THEN ALSO IT WILL BE A BUSINESS THOUGH IT MAY BE DISTINCT AND SEPARATE FROM ANY OTHER BUSINESS. IF IT IS INCOME ASSESSABLE UN DER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION THEN BROUGHT FORWARD LOSS F ROM BUSINESS FROM EARLIER YEAR WILL BE ELIGIBLE FOR SET OFF AGAINST BUSINESS INCOM E AS PER PROVISIONS OF SECTION -72 OF THE ACT, WHICH DOES NOT DIFFERENTIATE BETWEEN AN OR DINARY BUSINESS OR BUSINESS DISTINCT AND SEPARATE FROM ANY OTHER BUSINESS. A CCORDING TO THE FACTS OF THE CASE THE IMPUGNED BUSINESS LOSS WHICH HAS BEEN SET OFF B Y THE ASSESSEE AGAINST BUSINESS OF DERIVATIVE TRANSACTION THOUGH MAY BE SPECULATION BUSINESS BUT HAS TO BE TREATED AS INCOME FROM BUSINESS OR PROFESSION, THEREFORE, IS ELIGIBLE FOR SET OFF AGAINST SPECULATION INCOME OF THE YEAR UNDER CONSIDERATION. IT IS UNDISPUTED THAT SUCH SPECULATION INCOME IN THE YEAR UNDER CONSIDERATION HAS BEEN ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION . THUS, WE FIND NO INFIRMITY IN THE RELIEF GRANTED BY LD. CIT(A) AND WE DECLINE TO INTE RFERE. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/08/2 014 ! ' #$ % &'( 07/08/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 07/08/2014 ITA NO.3397/MUM/2013, A.Y. 2004-05 4 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS