THE Ad CIT, Range-4, Visakhapatnam., Visakhapatnam V. M/S Sandhya Marines Ltd., Visakhapatnam

ITA 349/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7027 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Keywords: Speculation loss; Speculative transactions

Judgement Text

PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NOS.380/VIZAG/2008 & ITA NO.349/VIZAG/2009 ASSESSMENT YEAR: 2005-06 & 2006-07 ACIT, RANGE-4, VISAKHAPATNAM VS. SANDHYA MARINES LTD., VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO: AADCS 1423 K APPELLANT BY: SHRI SUBRATA SARKAR, CIT (DR) RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER: THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) ON COMMON GROUNDS THAT CIT (A) HAS ERRED IN DEL ETING THE ADDITION MADE ON ACCOUNT OF SPECULATION LOSS AFTER CONCLUDING THAT F ORWARD BOOKING TRANSACTIONS/CONTRACTS ARE INTEGRAL PART OF MAIN BU SINESS AND ARE REVENUE NEUTRAL. 2. DURING THE COURSE OF HEARING THE LD COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE C ASE OF M/S COASTAL CORPORATION LTD., IN ITA NO.149/VIZAG/2002 AND M/S LAVANYA ENTE RPRISES IN ITA NO.505/VIZAG/2004 WITH THE SUBMISSION THAT THE IMPU GNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THESE ABOVE CASES, IN WHICH IT HAS BEEN HELD THAT A TRANSACTION CAN BE TERMED AS SPECULATIV E TRANSACTIONS, IF THERE IS SETTLEMENT ON CONTRACT BETWEEN TWO PARTIES OTHERWIS E THAN BY DELIVERY. THERE IS PAGE 2 OF 3 NO SUCH SETTLEMENT IN THESE CASES. THE SETTLEMENT I S WITH INTERMEDIARY I.E. BANK. WHAT IS ACTUALLY PAID BY THE BANK TO THE ASSESSEE I S THE CANCELLATION CHARGES FOR CANCELLING THE FORWARD CONTRACT AND HENCE IT CAN ON LY BE HELD AS A BUSINESS LOSS. 3. THE LD DR DID NOT DISPUTE THESE FACTS. WE HAVE H EARD THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ORDERS OF THE TRIBUNAL REFERRED TO AND FROM ITS PERUSAL WE FIND F ORCE IN THE CONTENTIONS OF THE ASSESSEE. THIS BENCH OF THE TRIBUNAL HAS TAKEN A CO NSISTENT VIEW IN THE CASE OF COASTAL CORPORATION LTD., AND LAVANYA ENTERPRISES T HAT IF THERE IS SETTLEMENT ON CONTRACT BETWEEN TWO PARTIES OTHERWISE THAN BY DELI VERY, IT CAN BE TERMED AS SPECULATIVE TRANSACTIONS. BUT THERE IS NO SETTLEMEN T AND THE SETTLEMENT IS INTERMEDIARY I.E. WITH BANK AND WHAT IS ACTUALLY PA ID TO THE BANK BY THE ASSESSEE IS CANCELLATION CHARGES FOR CANCELLING THE FORMAL C ONTRACT AND HENCE IT CAN ONLY BE HELD TO THE BUSINESS LOSS. SINCE THE FACTS OF THE I MPUGNED CASE ARE SIMILAR TO THE AFORESAID CASES, WE FIND NO REASON TO TAKE A CONTRA RY VIEW. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF COASTAL CORPORATION LTD., AND LAVANYA ENTERPRISES (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSE SSEE. SINCE NO INFIRMITIES IS POINTED OUT IN THE ORDER OF THE CIT (A), WE CONFIRM HIS ORDER. 4. IN THE RESULT THE APPEALS FILED BY THE REVENUE AR E DISMISSED. PRONOUNCED IN THE OPEN COURT ON 24-03-2010. SD/- SD/- (B R BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM, DATE:24 TH MARCH,,2010. PAGE 3 OF 3 COPY TO 1 THE ACIT, RANGE-4, VISAKHAPATNAM 2 M/S SANDHYA MARINES LTD., PLOT NO;32, PANDURANGAPURAM, VISAKHAPATNAM 3 THE CIT VISAKHAPATNAM 4 THE CIT(A)-I, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM