ACIT, Circle -15(1),Kolkata, Kolkata V. Baljit Securities Pvt. Ltd., Kolkata

ITA 346/KOL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0481 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARVIND AGARWAL; RAJAT A
• Assessee Lawyers: DHRUBAJYOTI ROY
• Keywords: Business income; Transactions in derivatives; Earning of tax free income; Proportionate interest; Speculation loss; Speculative transactions; Rule 8D; Capital Gains; CHAPTER IV
• Section: 43B; 14A; 115JB; 43(5); 201; 192; 43; 48; 73; 72; 13; 28

Judgement Text

ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 1 | P A GE , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI A. T. VARKEY, JM] I.T.A. NO. 346/KOL/2017 ASSESSMENT YEAR: 2012-13 ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-15(1), KOLKATA. VS. BALJIT SECURITIES (PAN:AABCB0779P) APPELLANT RESPONDENT DATE OF HEARING 11.02.2021 DATE OF PRONOUNCEMENT 24 .02.2021 FOR THE APPELLANT SHRI DHRUBAJYOTI ROY, JCIT FOR THE RESPONDENT S/SHRI ARVIND AGARWAL, ADVOCATE & RAJAT AGARWAL, CA ORDER PER SHRI A. T. VARKEY, JM: THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. CIT(A)-16, KOLKATA DATED 15.12.2016 FOR AY 2012-13. 2. THE FIRST GROUND OF APPEAL OF THE REVENUE IS AG AINST THE ACTION OF THE LD. CIT(A) IN ALLOWING RELIEF OF RS.9,37,263/- TO THE ASSESSEE U/ S. 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE THAT THE VALUE OF INVESTMENTS AS ON 01.04.20101 AND 31.03.2011STOOD AT RS. 5,19,63,994 /- AND RS.4,40,42,041/- RESPECTIVELY. THE AO NOTED THAT DURING THE YEAR THE ASSESSEE EARN ED TAX EXEMPT DIVIDEND INCOME OF RS. 1,79,466/- OUT OF ITS INVESTMENT IN SHARES AND UNIT S OF MUTUAL FUND. ACCORDING TO THE AO, HE REQUESTED THE ASSESSEE TO FURNISH DETAILS OF EXP ENSES INCURRED ON SUCH INVESTMENTS, INCOME FORM WHICH IS NOT INCLUDIBLE IN THE TOTAL IN COME OF THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE WAS UNABLE TO FURNISH A SATISFACTORY R EPLY. SO, HE TOOK NOTE OF THE CIRCULAR NO. 05/2014 DATED 11.02.2014 ISSUED BY THE CBDT AND OBS ERVED THAT THE LEGISLATIVE INTENT IS TO ALLOW ONLY THAT EXPENDITURE WHICH IS RELATABLE TO E ARNING OF INCOME AND THEREFORE EXPENSES WHICH ARE RELATABLE TO EARNING OF EXEMPT INCOME HAV E TO BE CONSIDERED FOR DISALLOWANCE, ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 2 | P A GE IRRESPECTIVE OF THE FACT WHETHER ANY SUCH INCOME HA S BEEN EARNED DURING THE FINANCIAL-YEAR OR NOT. THE AO FURTHER NOTED THAT SINCE THE ASSESSE E DID NOT MAINTAIN ANY SEPARATE BOOKS OF ACCOUNTS FOR ACCOUNTING FOR EXPENSES INCURRED IN RE LATION TO INCOME NOT INCLUDIBLE IN ITS TOTAL INCOME, HE WAS OF THE OPINION THAT AMOUNT OF EXPENSES ACTUALLY INCURRED COULD NOT BE ASCERTAINED FROM THE ASSESSEE'S BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO APPLIED THE PROVISIONS OF SECTION 14A OF THE ACT R.W. RULE 8D I N ORDER TO COMPUTE THE DISALLOWANCE AS UNDER: AS PER RULE 8D(2)(I)-DIRECT EXPENSES: NIL, AS THERE IS NO DIRECT EXPENSES IN CONNECTION TO INCURRED EXEMPT INCOME. AS PER RULE 8D(2)(II) - PROPORTIONATE INTEREST EXP ENDITURE: TOTAL AMOUNT OF INTEREST PAID RS.29,80,759/-WHICH W OULD STAND FOR 'A' AS REFERRED TO IN RULE 8D(2)(II). THE AVERAGE VALUE OF INVESTMENT IS RS.4,80,03,018/- WHICH WOULD STAND FOR 'B' AS REFERRED TO IN RULE 8D(2)(II). IT IS OBSERV ED FROM THE BALANCE SHEET THAT THE AVERAGE VALUE OF ASSETS AS PER RULE 8D(2)(II) IS RS.20,52,1 4,580/- CALLED AS (C). THEREFORE, DISALLOWANCE UNDER RULE 8D(2)(II) = INTE REST (A)X(B)/(C) = RS.29.80.759/- RS.4.80,03,018 /- RS.20,52,14,580/- = RS.697248/- AS PER RULE 8D(2)(III) THE AVERAGE OF VALUE OF INVESTMENT IS RS.4,80,03,01 8/- AS WORKED OUT EARLIER. IN THIS VIEW OF THE MATTER, THE DISALLOWANCE UNDER RULE 8D(2)(II I) IS MADE AS UNDER :- DISALLOWANCE U/R 8D(2)(III) = 0.5% OF THE AVERAGE O F VALUE OF INVESTMENT = 0.5% OF RS.4,80,03,0I8/- = RS.2,40,015/- ACCORDINGLY, THE TOTAL DISALLOWANCE WAS MADE AT RS. 937263/- U/S 14A READ WITH RULE 8D(2) OF THE ACT. THUS RS.9,37,263/- WAS ADDED BACK IN CO MPUTING THE INCOME UNDER NORMAL PROVISIONS AS WELL AS IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION A S UNDER: ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 3 | P A GE THE A.R HAS STATED THAT 'WRITTEN SUBMISSION BEFORE THE A.O. ARE APPEARING AT PAGES 1,13- 14 OF ATTACHMENTS TO STATEMENT OF FACTS! CASE RELIE D ON BY THE APPELLANT ASSESSEE BEFORE THE A.O. - ACIT VS. CHAMPION COMMERCIAL LTD. -. PLEASE REFER BALANCE SHEET APPEARING AT PAGE 41 AND NOTES ON ACCOUNTS 10 AT PAGE 46 OF STATEMENT OF FACTS ATTACHMENTS, YOU WILL NOTICE1 TH AT THE ASSESSEE -HELD SHARES & SECURITIES AS STOCK IN TRADE IN THE COURSE OF SHARES & SECURITIES TRADING. THE RESULT OF THIS ACTIVITY IS TAXABLE & NOT EXEMPT INCOME. THEREFORE, SECTION 14A CANNOT BE APPLIED IN RESPECT OF ACTIVITIES WHICH RESULTS TAXABLE INCOME. BUT THE A.O. HAD OBSERVED I N THE ASSESSMENT ORDER AT PARAGRAPH 2 THAT THE ASSESSEE EARNED TAX EXEMPT DIVIDEND INCOME OUT OF IFS INVESTMENTS IN SHARES & UNITS OF MUTUAL FUNDS. THIS IS NOT A FACT, RATHER SUCH SHARE S & UNITS OF MUTUAL FUNDS WERE HELD BE AS STOCK IN TRADE. THE ABOVE ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE IN THE A.Y.2013-14 VIDE APPEAL ORDER DATED 21/10/2016 PASSED BY LEARNED CIT(A)- 5, KOLKATA, CO PY OF THE APPEAL ORDER APPEARS AT PAGE. 15A TO 15C OF PAPER BOOK. MOREOVER HONBLE ITAT, KOLKATA HAD HELD IN ASSESSEE S OWN CASE IN THE A.Y.2009-10 THAT EARNING OF DIVIDEND WAS MERELY INCIDENTAL! TO THE H OLDING OF SHARES (AS STOCK IN TRADE) FOR THE PARTICULAR PERIOD WITHIN WHICH DIVIDEND WAS DECLARE D - THE BALANCE SHEET OF THE ASSESSEE DOES NOT SHOW ANY INVESTMENT & ALL THE SHARES ARE BEING HELD AS STOCK IN TRADE ONLY - THE A.O. HAS CALCULATED THE DISALLOWANCE FROM THE STOCK IN TRADE /INVENTORIES HELD BY THE ASSESSEE - RULE 8D (2) (II) (III) CAN ONLY BE APPLIED WHERE SHARES ARE HELD AS AN INVESTMENT & THIS RULE WILL NOT HAVE ANY APPLICATION WHEN THESE SHARES ARE HELD AS STOCK IN TRADE. THIS VIEW FINDS SUPPORTS FROM KOLKATA TRIBUNAL'S DECISION IN THE CASE OF 'DY . CIT VS. GULSHAN INVESTMENT CO LTD' & HON'BLE KARNATAKA HIGH COURT JUDGEMENT IN THE CASE OF 'CCI LTD VS J.T. C.I.T (2012) 206 TAXMANN 563.'. THE AO HAD REFERRED THE BOARD CIRCULAR NO. 05/2014 DATED 11 TH FEBRUARY, 2014 IN THE IMPUGNED ASSESSMENT ORDER TO DISALLOW U/S.14A READ WITH RULE 8D OF THE ACT AT PAGE - 2 OF THE ASSESSMENT ORDER. A COPY OF THE SAID CIRCULAR IS AT TACHED AT PAGE - 15D OF PAPER BOOK. AT PARAGRAPH - 6 OF THE SAID CIRCULAR THE HOARD HAD CL ARIFIED THAT 'RULE 8D READ WITH SECTION 14A OF THE ACT PROVIDES FOR DISALLOWANCE OF THE EXP ENDITURE EVEN WHERE TAX PAYER IN A PARTICULAR YEAR HAS LOOT EARNED ANY EXEMPT INCOME.' THUS THIS CIRCULAR HAS BEEN ISSUED TO CLARIFY FOR DISALLOWANCE OF EXPENDITURE U/S.'14A IN CASES WHERE EXEMPT INCOME HAS NOT BEEN EARNED BY THE ASSESSEE. IN THE INSTANT CASE, THE AS SESSEE HAD EARNED EXEMPT INCOME IN THE SHAPE OF DIVIDEND FOR RS. 1,79,465.70. REFER PAGE - 48 OF ATTACHMENT TO STATEMENT OF FACTS - NOTE- - 14 - OTHER INCOME FORMING PART OF STATEMENT OF PROFIT & LOSS ACCOUNT AT PAGE - 42. AND IN THE COMPUTATION OF TAXABLE INCOME, APPEARING AT PAGE - 31 OF ATTACHMENT TO STATEMENT OF FACTS] TAX FREE INCOME U/S.10(33) - DIVIDEND - R S. 1,79,466/- HAS BEEN DEDUCTED IN COMPUTING TOTAL TAXABLE INCOME. THUS THE INSTANT CIRCULAR IS NOT AT ALL APPLICABLE {TO THE FACTS OF THIS CASE. IN VIEW OF THE ABOVE THE ADDITION MADE BY THE A.O. FOR RS.9,37,263 U/S 14A OF THE ACT READ WITH RULE 8D(2)(II) & (III) SHOULD BE DELETED'. I AGREE WITH THE SUBMISSION OF THE A.R. OF THE ASSE SSED. LD. CIT(A) -.5, KOLKATA HAS DECIDED THIS ISSUE IN THE FAVOUR OF THE ASSESSEE FOR AY 201 3-14. BEING BOUND BY COORDINATE LD. CIT(A), I DECIDE THIS ISSUE IN THE FAVOUR OF THE ASSESSEE. THE ADDITION IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 4 | P A GE 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED ONL Y RS.1,79,466/- AS THE DIVIDEND INCOME AND CONTENDED THAT THE DISALLOWANCE U/S. 14A OF THE ACT EVEN IF MADE CANNOT EXCEED RS.1,79,466/-. IN THE LIGHT OF THE AFORESAID DISCU SSION AND THE FACTS TAKEN NOTE BY THE AO, WE NOTE THAT EVEN IF THE COMPUTATION IS MADE BY APP LYING RULE 8D, THE DISALLOWANCE CANNOT EXCEED THE DIVIDEND INCOME AS HELD BY THE HONBLE H IGH COURTS. IN SUCH A SCENARIO, WE ARE RESTRICTING THE DISALLOWANCE AT RS.1,79,466/- IN PL ACE OF RS.9,37,263/- AS MADE BY THE AO. THIS GROUND OF REVENUE APPEAL IS PARTLY ALLOWED. 6. GROUND NO. 2 OF THE REVENUE APPEAL IS AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS OF RS. 3,72,08,053/- BY INTERPRETING LAW ON ACCOUNT OF DERIVATIVE LOSS, WHEREAS AO WAS RIGHT IN TREATING IT AS SPECULATION LOSS AND BY INVOKING SEC. 73 OF THE I. T. ACT DENYING THE ASSESSEES CLAIM OF SET OFF OF THE SAID LOSS FROM INCOME OF BUSINESS OF DEALING IN SHARES. THEREBY LD. CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE BY SETTING OFF OF SHARE TRADING LOSS WHICH IS DEEMED SPECULATIVE LOSS WITH DERIVATIVE INCOME AND OTHER BUSINESS INCOME. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IN THE E-FILED RETURN OF INCOME IN THIS RELEVANT AY 2012-13 REFLECTED TOTAL LOSS OF RS.2,57,18,558/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BROKERAGE OF SECURITIES AND FUNCTIONS AS REGISTERED STOCK BROKER IN RECOGNIZED STOCK EXCHANGE (NSE, BSE & FORWARD EX CHANGE ETC.). IT ALSO TRANSACTS IN THE PURCHASE AND SALE OF SHARES AND SECURITIES OF OTHER COMPANIES ON SELF ACCOUNT WHERE THE ACTUAL DELIVERY IS TAKEN AND GIVEN. ACCORDING TO TH E ASSESSEE, THE ASSESSEE GETS INCOME FROM BROKERAGE AND SHARE TRADING BUSINESS BY DELIVE RY AND OF DERIVATIVE TRANSACTIONS WHERE THE ACTUAL DELIVERY IS NOT INTENDED TO BE TAKEN OR GIVEN. GROSS INCOME FROM SHARE TRADING WAS SHOWN AT RS.3,15,992/-. AND IT INCURRED GROSS LOSS FROM DERIVATIVE TRANSACTION OF RS.37,48,335/-. THE ASSESSEE HAS EARNED GROSS IN COME OF BROKERAGE OF RS.1,52,68,296/-. AS PER THE ASSESSEE SINCE IT IS A REGISTERED SHARE BROKER OF STOCK EXCHANGES, THE ASSESSEE HAD TO RECORD PURCHASE AND SALE OF SHARES AND SECURITIE S ON LINE BY GIVING CLIENTS CODE AND WHERE TRANSACTION IS MADE ON THE BROKERAGE ACCOUNT, DETAILS OF THE CODE ARE MENTIONED WHILE BOOKING PURCHASE AND SALE TRANSACTION. IT WA S POINTED OUT THAT WHERE PURCHASE AND SALE OF SHARES AND SECURITIES ARE MADE ON SELF ACCO UNT UNDER THE CLIENTS CODE COLUMN, SELF CODE IS MENTIONED. IN OTHER WORDS, ACCORDING TO TH E ASSESSEE, THE BUSINESS OF BUYING AND ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 5 | P A GE SELLING OF SHARES ON BEHALF OF CLIENTS AND ON BEHAL F OF SELF ARE THE SAME. THUS, IT WAS CONTENDED BY THE ASSESSEE THAT IT IS INTO BUSINESS OF SHARE TRADING ON SELF ACCOUNT AND SHARES AND SECURITIES BROKERAGE ARE COMPOSITE BUSINESS AND RETURNED TOTAL LOSS OF RS.2,57,18,558/-. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES CONTE NTION AND HELD THAT THE BUSINESS OF THE ASSESSEE CONSISTING OF AND RELATING TO PURCHASE AND SALE OF SHARES IS DEEMED TO BE A SPECULATION BUSINESS AND LOSS THEREON IS DEEMED TO BE A SPECULATION LOSS. SO, ACCORDING TO AO, SINCE THE ASSESSEE HAS NOT ACCOUNTED FOR THE EX PENSES INCURRED ON ACCOUNT OF SPECULATION BUSINESS AS COMPARED TO THE NON-SPECULA TION BUSINESS SEPARATELY TO ARRIVE AT THE CORRECT QUANTUM OF PROFIT OR LOSS ON ACCOUNT OF DEE MED SPECULATION BUSINESS, HE APPORTIONED THE EXPENDITURE CONNECTED WITH AND RELA TED TO THE TWO DISTINCT AND SEPARATE BUSINESS AND THEN HELD AS UNDER: ACCORDINGLY, ON APPORTIONING THE EXPENSES INCURRED ON ACCOUNT OF ESTABLISHMENT AND OTHER EXPENDITURE AND INTEREST (ARRIVED AT ON THE BASIS O F APPORTIONMENT OF EXPENDITURE IN RELATION TO THE TURN OVER FROM EACH BUSINESS AS COMPARED TO THE CUM ULATIVE TURNOVER OF THE BUSINESS) THE INCOME/LOSS FROM SPECULATIVE AS WELL AS THE NON-SPE CULATIVE BUSINESS IS RECOMPUTED AS UNDER: TOTAL TURNOVER AS PER P&L A/C. (RS.) INCOME AS PER P&L A/C (RS.) APPORTIONED EXPENDITURE (RS.) INCOME (LOSS) SALE OF SHARES 12,60,52,263 3,15,992 3,28,19,770 (3 ,25,03,778) DERIVATIVE LOSS 37,48,335 (37,48,335) 9,75,940 (47 ,24,275) EXPENDITURE RELATABLE TO EARNING NON- SPECULATIVE INCOME - - 40,26,232 LOSS FROM SPECULATION BUSINESS: RS.3,72,28,053/- ACCORDINGLY, AO HELD THAT AN AMOUNT OF RS.3,72,28,0 53/- IS DEEMED TO BE LOSS ON ACCOUNT OF SPECULATION BUSINESS AND IS, THEREFORE, NOT ALLOWED TO BE SET OFF AGAINST NON-SPECULATION BUSINESS INCOME AS PER PROVISIONS OF SEC. 73 OF THE ACT. 8. AGGRIEVED BY THE AFORESAID ACTION OF AO, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO GAVE RELIEF TO THE ASSESSEE BY HOLD ING AS UNDER: GROUNDS NO. 2 AND 3 ARE THE ADDITION OF RS. 3,72,28 ,053/- ON ACCOUNT OF DERIVATIVES LOSS TREATED AS SPECULATION BUSINESS INVOKING EXPLANATIO N TO SECTION 73 OF THE ACT:- THE A.R HAS STATED THAT 'FACTS ARE MENTIONED IN BRI EF IN THE STATEMENT OF FACTS AT PARAGRAPHS 4.1 TO 4.3. WRITTEN SUBMISSION ON THIS ISSUE BEFORE THE A.O. APPEARS AT PAGES 25-28 OF ATTACHMENTS TO STATEMENT OF FACTS. TURNOVER IN CLIE NT ACCOUNT WHEREFROM BROKERAGE INCOME WAS EARNED APPEARS AT PAGE 30 & STATEMENT OF APPORT IONMENT OF EXPENDITURE WITH REFERENCE TO TURNOVER OF SHARES & SECURITIES APPEARS AT PAGE 29 OF ATTACHMENTS TO STATEMENT OF FACTS. ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 6 | P A GE THE PRINCIPLE HELD BY HON'BLE ITAT KOLKATA (FOLLOWI NG THE JUDGEMENT OF CALCUTTA HIGH COURT IN ASSESSEE'S OWN CASE) HELD IN ASST, YEAR 20 09-10 THAT AGGREGATION OF THE BUSINESS PROFIT/LOSS IS TO BE WORKED OUT IRRESPECTIVE OF THE FACT, WHETHER IT IS FROM SHARE DELIVERY TRANSACTION OR DERIVATIVE TRANSACTION, BEFORE APPLI CATION OF THE EXPLANATION TO SECTION 73. (COPY OF APPEAL] ORDER APPEARS AT PAGE 2-12 OF STAT EMENT OF FACTS ATTACHMENTS). IN THE YEAR UNDER APPEAL - GROSS PROFIT FROM SHARE DELIVERY TRANSACTION IS RS.82,37,944/- [SALE PRICE OF SHARES AND SECURITIES RS.12,60,52,26 3/- LESS COST OF SHARES AND SECURITIES RS.11,78,14,319/- (PAGE - 48 OF INDEX OF STATEMENT OF FACT -NOTES ANNEXED TO AND FORMING PART OF BALANCE SHEET) AND DERIVATIVE LOSS RS. 37,48,335 /-] HON'BLE KOLKATA HIGH COURT HAD HELD IN ASSESSEE'S O WN CASE THAT THE SHARE BROKER WAS ENTITLED TO SET OFF LOSS INCURRED IN TRANSACTIONS O F DERIVATIVES AND DAY TRADING OF SHARES AGAINST ITS PROFITS AND GAINS FROM PURCHASE AND SAL E OF SHARES ON DELIVERY BASIS. ABSTRACT OF THIS JUDGEMENT APPEARS IN ITAT, KOLKATAS ORDER IN ASSESSEE'S CASE FOR A.Y. 2009-10 IN PARAGRAPH 6 OF THE ORDER. THIS VERY PRINCIPLE HAVE FURTHER BEEN HELD, IN FAVOUR OF THE ASSESSEE BY HON'BLE KOLKATA HIGH COURT IN 'ASIAN FI NANCIAL SERVICES LTD, V. CIT [2016] 70 TAXMANN. CORN 9 (CALCUTTA) (HC)'. FURTHER THE ABOVE PRINCIPLE HAS BEEN REITERATED BY HON'BLE KOLKATA TRIBUNAL IN FOLLOWING CASES:- A) DC IT, KOL V. MPC SECURITIES LTD. -[2016] 72 TAXMANN.COM 209/[2016] 160 ITD 199 (KOLKATA - TR IB.)J B) DCIT KOL V. GUINESS SECURITIES LTD. [2016] 68 TAXMANN .COM 375 (KOLKATA F- TRIB.) C) LOHIA SECURITIES LTD. V. DCIT, KOL [2016] 66 TAXMANN.COM 86 / [20JL6] 157 IT D 265 (KOLKATA - TRIB.). EXPLANATION TO SECTION 73 WAS AMENDED BY THE FINANC E (2) ACT, 2014 WHEREBY IN THE EXCEPTION CLAUSE WAS MODIFIED TO INCLUDE THE COMPAN IES WHOSE PRINCIPLE BUSINESS CONSISTS OF TRADING IN SHARES - W.E.F. 01.P4.2015. HON'BLE MUMB AI FEAT HAD HELD IN THE CASE OF 'FIDUCIARY SHARES & STOCK P. LTD VS. ACIT- ITA NO. 321/MUM/2013 - A.Y.2009-10 - DATE OF PRONOUNCEMENT: 13.05.2016' THAT THE AFORESAID AMEND MENT IS CLARIFICATORY IN MATURE & WOULD OPERATE RETROSPECTIVELY FROM 01/04/1977. - FR OM WHICH DATE EXPLANATION TO SECTION 73 WAS PLACED ON THE STATUTE, COPY OF THE ORDER APPEAR S AT PAGE 53 TO 72 OF THE PAPER BOOK. HON'BLE TRIBUNAL HAD CITED A NUMBER OF HONBLE SUPRE ME COURT DECISIONS AT PARAS 5.6.3 TO 5.6.9 OF THE ORDER & FOLLOWING; THE SAME HELD AS ST ALED HEREIN BEFORE. SINCE THE PRINCIPLE BUSINESS OF THE ASSESSEE IS DEALING IN SHARES & STO CK BROKER, IT QUALIFIES FOR EXEMPTION FROM APPLICABILITY OF EXPLANATION 2 SECTION 73 OF THE AC T DURING THE YEAR UNDER APPEAL AS WELL BECAUSE OF THE AFORESAID MUMBAI TRIBUNAL ORDER. IN ANY CASE HON'BLE TRIBUNAL & HIGH COURT HAD HELD; IN FAVOUR OF THE ASSESSEE'S IN ITS OWN CASES (IN EARLIER YEAR) WITHOUT CONSIDERING THE AFO RESAID AMENDMENT. THEREFORE, EXPLANATION TO SECTION 73 SHOULD NOT BE INVOKED & THE ADDITION MADE ON THIS ACCOUNT SHOULD BE DELETED'. IN VIEW OF THE JUDGMENT OF HON'BLE KOLKATA I FAT IN THE CASE OF THE ASSESSEE AND HON'BLE KOLKATA HIGH COURT IN ASSESSEE'S OWN CASE, THE ADDI TION ON ACCOUNT OF DERIVATIVE LOSS IS DELETED, AND THE APPEAL OF THE ASSESSEE IS ALLOWED. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, IT HAS BEEN BROUGHT TO OUR NOTICE THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR AY 2009-10 CAME UP BEFORE T HE TRIBUNAL WHEREIN THE TRIBUNAL WAS PLEASED TO ALLOW THE CLAIM OF THE ASSESSEE; AND IN ASSESSEES OWN CASE FOR AY 2005-06, ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 7 | P A GE SUCH A CLAIM OF THE ASSESSEE WAS ALLOWED BY THE TRI BUNAL WHICH WAS LATER CONFIRMED BY THE HONBLE CALCUTTA HIGH COURT VIDE ORDER DATED 12.03. 2014. IT IS NOTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND ASSESS EE IS ALSO FUNCTIONS AS A BROKER OF SECURITIES AND IS A REGISTERED STOCK BROKER (STOCK EXCHANGES I.E. NSE, BSE & FORWARD EXCHANGE ETC.). THE ASSESSEE ADMITS THAT IT IS INV OLVED IN THE PURCHASE AND SALE OF SHARES & SECURITIES OF OTHER COMPANIES ON SELF ACCOUNT WHERE THE ACTUAL DELIVERY IS TAKEN AND GIVEN FROM WHICH GROSS INCOME HAS BEEN SHOWN AT RS.3,15,9 92/-. IT IS NOTED THAT THE ASSESSEE IS ALSO ENGAGED IN DERIVATIVE TRANSACTION [ WHEREIN THE ACTUAL DELIVERY IS NOT TAKEN OR GIVEN ] AND, IT INCURRED GROSS LOSS FROM DERIVATIVE TRANSAC TION AT RS.37,48,335/-THE ASSESSEE HAS ADMITTED TO HAVE EARNED GROSS INCOME ON BROKERAGE A T RS.1,52,68,296/-. . THE ASSESSEE COMPUTED THE GROSS INCOME FROM THE THREE BUSINESSES BEING COMPOSITE IN NATURE AND HAS RETURNED LOSS OF RS.2,57,18,558/-. THE AO HAS NOT ACCEPTED THIS ACTION OF ASSESSEE AND AFTER SCRUTINY HAS ACCEPTED THE ASSESSEES INCOME F ROM BROKERAGE AS BUSINESS INCOME I.E. RS.1,52,68,296/-. HOWEVER, THE AO APPORTIONED SOME EXPENSES AND DETERMINED THE BUSINESS INCOME FROM BROKERAGE AS RS.1,25,59,636/- AND NOT RS.1,52,68,296/-; AND THEREAFTER TREATED THE INCOME FROM SHARE ( DELIVERY BASED ) AND DERIVATIVE AS SPECULATION IN NATURE U/S. 73 OF THE ACT AND HAS DISALLOWED RS.3,7 2,28,053/- (SUPRA). NOW THE QUESTION IS WHETHER THE ACTION OF AO IS LEGALLY CORRECT/SUSTAIN ABLE I.E. WHETHER THE INCOME FROM SHARE TRADING (DELIVERY BASED) AND DERIVATIVES CAN BE TRE ATED SEPARATELY AND THE LOSS FROM IT IS HIT BY SECTION 73 (EXPLANATION) OF THE ACT. FOR ANSWERI NG THIS QUESTION LET US LOOK AT THE SCHEME OF THE ACT. UNDER CHAPTER IV WHICH IS TITLE D COMPUTATION OF TOTAL INCOME AND THE BUSINESS RECEIPTS/INCOME IS DEALT UNDER GROUP D I.E. UNDER THE HEADS OF INCOME D - PROFIT AND GAIN OF BUSINESS WHICH CONSISTS OF SECTI ON 28 TO 44 DB OF THE ACT. IT IS TRITE LAW THAT PROFIT INCLUDES LOSSES BECAUSE LOSS HAS BEEN C ONSTRUED AS NEGATIVE PROFIT AND WE NOTE THAT EXPLANATION (2) TO SECTION 28 PROVIDES IN RESP ECT OF SPECULATIVE TRANSACTIONS AS FOLLOWS: EXPLANATION 2 WHERE SPECULATIVE TRANSACTIONS CARRIED ON BY AN ASSESSEE ARE OF SUCH A NATURE AS TO CONSTITUTE A BUSINESS, THE BUSINESS (H EREINAFTER REFERRED TO AS SPECULATION BUSINESS) SHALL BE DEEMED TO BE DISTINCT AND SEPAR ATE FROM ANY OTHER BUSINESS. 10. FROM A PLAIN READING OF THE ABOVE EXPLANATION ( 2) IT CAN BE DISCERNED THAT SPECULATIVE TRANSACTIONS CARRIED ON BY AN ASSESSEE MAY BE OF SUCH A NATURE AS TO CONSTITUTE A ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 8 | P A GE BUSINESS, THEN SUCH BUSINESS SHALL BE DEEMED TO BE DISTINCT AND SEPARATE FROM ANY OTHER BUSINESS. SUBSECTION (5) OF SECTION 43 OF THE ACT GIVES THE DEFINITION OF SPECULATIVE TRANSACTION AS UNDER: SEC. 43 IN SECTION 28 TO 41 AND IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES : - 1 2.. 3.. 4. (5) ' SPECULATIVE TRANSACTION ' MEANS A TRANSACTION IN WHICH A CONTRACT FOR THE P URCHASE OR SALE OF ANY COMMODITY, INCLUDING STOCKS AND SHARES, IS P ERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMM ODITY OR SCRIPS: PROVIDED THAT FOR THE PURPOSES OF THIS CLAUSE- (A) A CONTRACT IN RESPECT OF RAW MATERIALS OR MERC HANDISE ENTERED INTO BY A PERSON IN THE COURSE OF HIS MANUFACTURING OR MERCHANTING BUSINESS TO GUARD AGAINST LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN RESPECT OF HIS CONTRACTS FOR ACTUAL DELIVERY OF GOODS MANUFACTURED BY HIM OR MERCHANDISE SOLD BY HIM; OR (B) A CONTRACT IN RESPECT OF STOCKS AND SHARES ENT ERED INTO BY A DEALER OR INVESTOR THEREIN TO GUARD AGAINST LOSS IN HIS HOLDINGS OF STOCKS AND SH ARES THROUGH PRICE FLUCTUATIONS; OR (C) A CONTRACT ENTERED INTO BY A MEMBER OF A FORWAR D MARKET OR A STOCK EXCHANGE IN THE COURSE OF ANY TRANSACTION IN THE NATURE OF JOBBING OR ARBI TRAGE TO GUARD AGAINST LOSS WHICH MAY ARISE IN THE ORDINARY COURSE OF HIS BUSINESS AS SUCH MEMB ER; [OR] (D) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING I N DERIVATIVES REFERRED TO IN CLAUSE [(AC)] OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF J 956) CARRIED OUT IN A RECOGNISED STOCK EXCHANGE; [OR] (E) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING I N COMMODITY DERIVATIVES CARRIED OUT IN A [RECOGNISED ASSOCIATION, WHICH IS CHARGEABLE TO COM MODITIES TRANSACTION TAX UNDER CHAPTER VII OF THE FINANCE ACT, 2013 (17 OF2013)] SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION; 11. FROM A PERUSAL OF THE ABOVE, IT CAN BE SEEN THA T THIS DEFINITION OF SPECULATIVE TRANSACTION IS ONLY FOR THE PURPOSE OF SECTION 28 T O 41 OF THE ACT. FROM A CONJOINT READING OF EXPLANATION 2 TO SECTION 28 OF THE ACT AND DEFIN ITION IN SECTION 43(5) OF THE ACT IT IS UNDERSTOOD THAT WHEN AN ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE OR SALE OF ANY COMMODITY INCLUDING STOCKS AND SHARES WHICH ARE PER IODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY ACTUAL DELIVERY OR TRANSFER OF TH E COMMODITY OR SCRIPS WILL BE TERMED AS SPECULATIVE TRANSACTION. SO, NON-DELIVERY OR TRANS FER OF THE COMMODITY OR SCRIPS WOULD BE TREATED AS SPECULATIVE TRANSACTION. HOWEVER, THE P ROVISO EXEMPTS THE TRANSACTIONS OR ACTIVITIES APPEARING IN CLAUSES (A) TO (E) WHICH AR E NOT TO BE DEEMED TO BE SPECULATIVE ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 9 | P A GE TRANSACTIONS. SINCE IN THIS CASE, THE DERIVATIVE TR ANSACTION FALLS IN THE EXEMPTION, THEREFORE THE PROFIT OR LOSS FROM DERIVATIVES CANNOT BE DEEME D TO BE A SPECULATIVE TRANSACTION. SINCE THE LOSS FROM DERIVATIVE TRANSACTION IS NOT A SPECU LATIVE LOSS, IT CAN BE SET OFF WITH THE PROFIT AND GAIN OF BUSINESS. SO, IN THIS CASE, THE DERIVA TIVE LOSS SUFFERED BY THE ASSESSEE CAN BE SET OFF WITH THE ASSESSEES INCOME FROM BROKERAGE AND T RADING OF SHARES (I.E. INTRA-HEAD ADJUSTMENT). THIS VIEW OF OURS GETS SUPPORT FROM T HE DECISIONS THE HONBLE JURISDICTIONAL HIGH COURT IN ASIAN FINANCIAL SERVICES LTD. VS. CI T-3, KOLKATA REPORTED IN 240 TAXMAN 192 (KOL) WHEREIN IT EAS HELD THAT THE ACTIVITIES C OVERED IN CLAUSE (A) TO (E) OF SECTION 73 OF THE ACT EVEN THOUGH ARE NOT DEEMED AS SPECULATIVE B USINESS, HOWEVER, THESE DEEMED BUSINESSES ARE DISTINCT AND SEPARATE FROM ANY OTHER BUSINESS. THEREAFTER, THE HONBLE HIGH COURT (SUPRA) IN SIMILAR CIRCUMSTANCES OBSERVED THA T NOW THE QUESTION IS WHETHER THE LOSS ARISING OUT OF SUCH BEING THE BUSINESS CAN BE SET O FF AGAINST THE PROFIT ARISING OUT OF OTHER BUSINESS OR BUSINESSES WHICH MAY FOR CLARITY BE CAL LED PROPER BUSINESS. UNDER SECTION 70 OF THE ACT, THE ASSESSEE IS ENTITLED TO HAVE THE LO SS SET OFF AGAINST HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD UNLESS OTHERWISE PROVIDE D. THE QUESTION, HOWEVER REMAINS WHETHER THE EXPLANATION TO SUB-SECTION (4) OF SECTI ON 73 RELIED UPON BY MR. LODH PROVIDES OTHERWISE. A PLAIN READING OF THE EXPLANATION QUOT ED ABOVE CANNOT BE SAID TO HAVE PROVIDED OTHERWISE. IN THAT CASE THE IRRESISTIBLE CONCLUSION IS THAT THE ASSESSEE IS ENTITLED TO SET OFF SUCH LOSS ARISING OUT OF DEEMED BUSINESS AGAINST THE INCOME ARISING OUT OF BUSINESS PROPER. IN THIS CASE THE TOTAL TURNOVER ON ACCOUNT OF SHAR ES AND SECURITIES TRADING, DERIVATIVE TRANSACTIONS AND BROKER TRANSACTIONS ARE GIVEN AS U NDER: SL. NO. PARTICULARS TOTAL TURNOVER (RS.)(COL.A) APPORTIONED EXPENDITURE (RS.) ESTABLISHMENT AND OTHER EXPENDITURE / INTEREST) (COL. B) GROSS INCOME AS PER P/L ACCOUNT(RS.) (COL. C) NET INCOME/LOSS (RS.) (COL.D) [C-B] 1. SALE AND PURCHASE OF SHARES (TRADING) 126,052,263 193701 315992 122291 2 DERIVATIVE SALE AND PURCHASE OF SHARES 3,748,335 5760 -3748335 -3754095 3. INCOME OF BROKERAGE (PURCHASE & SALES TURNOVER) 24,483,100,897 37622482 15268296 -22354186 TOTAL 24,612,901,495 37821943 11835953 -25985990 ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 10 | P A GE 12. FROM THE TABLE ABOVE IT CAN BE NOTED THAT THE A SSESSEE HAS SHOWN SALE AND PURCHASE OF SHARES BY DELIVERY, THE GROSS INCOME AT RS.3,15, 992/- AND THE LOSS FROM DERIVATIVE IS (MINUS) RS.37,48,335/-. SINCE DERIVATIVE LOSS CANN OT BE TERMED AS FROM SPECULATIVE TRANSACTION AFTER THE AMENDMENT W.E.F. AY 2006-07 W HERE-AFTER DERIVATIVE TRANSACTIONS NEEDS TO BE TREATED AS NON-SPECULATIVE TRANSACTIONS . THUS, IN VIEW OF THE TRIBUNALS VIEW IN ASSESSEES OWN CASE FOR AY 2009-10, THE DERIVATIVE LOSS CANNOT BE HELD TO BE AS A RESULT OF SPECULATIVE TRANSACTION. THUS, FOR COMPUTATION OF TOTAL INCOME WHICH COMES UNDER GROUP D (SECTION 28 TO 44 DB) ALL THE THREE SOURCES OF INCO ME/LOSS SHOULD BE AGGREGATED FIRST BEFORE APPLICATION OF THE DEEMING FICTION AS PER EXPLANATI ON TO SECTION 73 OF THE ACT IS CONCERNED. SUB-SECTION (4) OF SECTION 73 AND EXPLANATION TO IT ARE AS FOLLOWS (FOR AY 2012-13): LOSSES IN SPECULATION BUSINESS- 1. 2 3 4. NO LOSS SHALL BE CARRIED FORWARD UNDER THIS SECT ION FOR MORE THAN [FOUR ASSESSMENT YEARS] IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHIC H THE LOSS WAS FIRST COMPUTED. EXPLANATION .- WHERE ANY PART OF THE BUSINESS OF A COMPANY (OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHA RGEABLE UNDER THE HEADS INTEREST ON SECURITIES', INCOME FROM HOUSE PROPERTY', 'CAPITAL GAINS, AND INCOME FROM OTHER SOURCES) OR A COMPANY (THE PRINCIPAL BUSINESS OF WHICH IS TH E BUSINESS OF BANKING) OR THE GRANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SA LE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSIS TS OF THE PURCHASE AND SALE OF SUCH SHARES.' 13. WE FIND FROM A READING OF THE ABOVE EXPLANATION THAT IN THE CASE OF A COMPANY WHOSE BUSINESS CONSISTS MAINLY OR PARTLY OF PURCHAS E AND SALE OF SHARES OF OTHER COMPANIES, IT WILL AMOUNT TO SPECULATION BUSINESS, UNLESS SUCH COMPANYS GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME UNDER THE HEADS OF INTEREST ON SE CURITIES AND INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER S OURCES, OR WHERE THE PRINCIPAL BUSINESS OF THE COMPANY IS THE BUSINESS OF BANKING OR OF GRANTING LOANS AND ADVANCES. HENCE FROM THIS, THE FOLLOWING POINTS EMERGE:- IT APPLIES TO COMPANIES WHOSE BUSINESS CONSISTS O F PURCHASE AND SALE OF SHARES OF OTHER COMPANIES. ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 11 | P A GE IT APPLIES TO ALL PURCHASE AND SALE OF SHARES. IT DOES NOT DIFFERENTIATE BETWEEN DELIVERY BASE D TRANSACTIONS AND F&O OPERATIONS. IT APPLIES TO THE ENTIRE BUSINESS OF PURCHASE AND SALE OF SHARES, WHETHER SUCH TRADING IS DELIVERY BASED OR NON-DELIVERY BASED AND SUCH BUSIN ESS IS DEEMED AS SPECULATION TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHA SE AND SALE OF SUCH SHARES. 14. FROM A READING OF THE ABOVE PROVISION IT UNDERS TOOD THAT IF AN ASSESSEE IS A COMPANY WHICH DEALS IN PURCHASE AND SALE OF SHARES OF OTHER COMPANIES [ AND WHICH DOES NOT COME WITHIN THE EXCEPTION STATED IN THE PROVISION ITSELF ] SO, THEN SUCH A COMPANY SHALL FOR THE PURPOSE OF THIS SECTION BE DEEMED TO BE CARRYING ON SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SAL E OF SUCH SHARES. HERE IN THIS CASE ON HAND, THERE IS NO DOUBT THAT THE ASSESSEE IS A COMP ANY AND IS IN THE BUSINESS OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES. AND THE DEE MING PROVISION U/S. 73 OF THE ACT IS ATTRACTED SINCE IN THIS CASE THERE IS NET LOSS OF A SSESSEES BUSINESS OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES. HOWEVER AS HELD (SUPRA) , SINCE THE ASSESSEE TRANSACTED IN SALE & PURCHASE OF SHARES OF OTHER COMPANIES, BY DELIVERY AS WELL AS NON-DELIVERY ( TRANSACTIONS OF DERIVATIVES ) ARE NOT HIT BY SEC.43(5) OF THE ACT AND HENCE THE AGGREGATION OF THE BROKERAGE, SHARE TRADING PROFIT AND LOSS FROM DERIVATIVE TRANS ACTIONS SHOULD BE DONE BEFORE APPLICATION OF THE EXPLANATION TO SEC.73 OF THE ACT. 15. WE FIND THAT THE ASSESSEE HAD TREATED THE ENTIR E ACTIVITY OF BROKERAGE, PURCHASE AND SALE OF SHARES WHICH COMPRISED OF BOTH DELIVERY BAS ED AND NON-DELIVERY BASED TRADING AS ONE COMPOSITE BUSINESS BEFORE THE APPLICATION OF DE EMING PROVISION CONTAINED IN EXPLANATION TO SEC.73 OF THE ACT AND ACCORDINGLY, C LAIMED SET OFF OF THE LOSS INCURRED IN NON-DELIVERY BASED TRADING (DERIVATIVE) WITH PROFIT DERIVED FROM DELIVERY BASED SHARE TRADING AND BROKERAGE WHICH IS LEGALLY VALID. THERE FORE, WE CONFIRM THE ACTION OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REV ENUE. 16. GROUND NO. 3 OF THE REVENUE IS AGAINST THE ACTI ON OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.4,74,350/- U/S. 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT IN RESPECT OF ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 12 | P A GE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND DEPOSIT BE YOND THE DUE DATE PRESCRIBED UNDER THE PF ACT. 17. THE AO DISALLOWED RS.4,74,350/- SINCE THE DEPOS IT OF EMPLOYEES CONTRIBUTION TO PF WAS BEYOND THE DUE DATE PRESCRIBED UNDER THE PF ACT . ON APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: THE A.R HAS STATED THAT 'PLEASE REFER ANNEXURE - C OF THE TAX AUDIT REPORT APPEARING AT PAGE 63 OF ATTACHMENTS TO STATEMENT OF FACTS, WHICH WAS AVAILABLE BEFORE THE A.O. IN ASSESSMENT PROCEEDING, GIVING DETAILS OF EMPLOYEE'S CONTRIBUTION TO PF, DATE OF DEDUCTION, DUE DATE OF PAYMENT & DATE OF ACTUAL PAYMENT. DETAI LS OF ADDITION MADE BY THE A.O. IN RESPECT OF DEPOSIT' OF CONTRIBUTION AMOUNT BEYOND T HE DUE DATE PRESCRIBED IN THE ACT BUT BEFORE FILING OF RETURN OF INCOME ARE APPEARING IN THE MODIFIED STATEMENT ATTACHED HEREWITH. HONBLE HIGH COURT HAD HELD IN THE CASE OF 'CIT CIR CLE-1, KOL VS. M/S VIJAY SHREE LTD ' COPY OF ORDER APPEARING AT PAGE 73 TO 74 OF THIS P APER BOOK HAD HELD THAT THE DEPOSIT OF EMPLOYEES' CONTRIBUTION TO PF BEFORE THE DUE DATE OF FILING OF RETURN CANNOT BE DISALLOWED U/S 36(1 )(VA) & 2(24)(X) IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT. THIS JUDGMENT IS FINDING SUPPORT FROM ORDERS OF OTHER COURTS AS WELL , COPIES ATTACHED WITH PAPER BOOK. RELYING UPON THE JUDGMENT OF JURISDICTIONAL HIGH CO URT THE APPEAL ON THIS GROUND NO 4 IS ALLOWED. 18. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAS DEPOSITED THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND BEFORE FILING OF RETURN OF INCOME WHICH FACT H AS NOT BEEN ASSAILED BY THE REVENUE BEFORE US. SINCE THE ASSESSEE HAS DEPOSITED THE CO NTRIBUTION AMOUNT TO THE PROVIDENT FUND BEFORE FILING OF RETURN OF INCOME, THE LD. CIT(A) R ELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VI JAYSHREE LTD. (2014) 43 TAXMANN.COM 396 (CAL) HAS ALLOWED THE APPEAL OF THE ASSESSEE, W HICH DECISION IS BINDING ON THIS TRIBUNAL AND AT THE TIME OF HEARING BEFORE US, NO OTHER ORDE R OF THE HONBLE SUPREME COURT HAS BEEN CITED REVERSING THIS VIEW OF THE HONBLE HIGH COURT . THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 19. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2021. SD/- SD/- (J.S. REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.02.2021 JD, SR. PS ITA NO. 346/KOL/2017 BALJIT SECURITIES, A.Y. 2012-13 13 | P A GE COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- ACIT, CIRCLE-15(1), KOLKATA 2. M/S. BALJIT SECURITIES, GROUND FLOOR, BALJIT KUNJ, 7A, PRETORIA STREET, KOLKATA-700 071. 3. THE CIT(A)- 16, KOLKATA (SENT THROUGH E-MAIL) 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES, KOLKATA