ACIT 1(2)(1), MUMBAI V. ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

ITA 3600/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7383 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: KRUPA R GANDHI; VIDHI DOSHI
• Keywords: Speculation loss; Speculative transactions
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER & SHRI G MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3600/MUM/2016 ASSESSMENT YEAR : 2004-2005 ACIT 1(2)(1) MUMBAI VS. ICICI SECURITIES PRIMARY DEALERSHIP LTD. ICICI CENTRE, H T PAREKH MARG, CHURCHGATE, MUMBAI 400 020 PAN AAACI0995H (APPELLANT) (RESPONDENT) APPELLANT BY : MS N HEMALATHA RESPONDENT BY : MS KRUPA R GANDHI & MS. VIDHI DOSHI DATE OF HEARING : 03.05.2018 DATE OF PRONOUNCEMENT : 18.05.2018 O R D E R PER G MANJUNATHA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A)-8, MUMBAI, DATED 18.02.2016, AND IT PERTAINS TO ASSESS MENT YEAR 2004-05. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED DIRECTING THE ASSESSING OFFICER TO DEL ETE THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL LOSS OF RS 6,36,65,058/- AND LONG TERM CAPITAL LOSS OF RS 32,83,484/- SUFFERED BY THE ASSESSEE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY, A PRIMARY DEALER AND MERCHANT BANKER IN THE SECURITIES MARKET AND ALSO R EGISTERED WITH SEBI FOR MERCHANT BANKING AND PORTFOLIO MANAGEMENT, FILED IT S RETURN OF INCOME FOR A.Y 2004-05 ON 29.10.2004 DECLARING TOTAL INCOME AT ` 1,27,02,00,588/- UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 AND BOOK PRO FIT AT ` 1,90,22,34,514/-. THE ASSESSMENT WAS COMPLETED U/S, 143(3) ON 03.03.2005 DETERMINING THE TOTAL INCOME ITA NO.3600/MUM/2016 ICICI SECURITIES PRIMARY DEALERSHIP LTD. 2 AT ` 162,13,12,640/- UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961. THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT. THE LEARNED CIT(A), VIDE ORDER DATED 15..02.2007, PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE, WHEREIN THE LEARNED CIT(A) HAS DELETED THE ADDITIONS MADE B Y THE ASSESSING OFFICER TOWARDS LONG TERM AS WELL AS SHORT TERM CAPITAL LOSSS DERIV ED FROM THE PURCHASE AND SALE OF SHARES BY HOLDING THAT EXPLANATION TO SECTION 73 IS NOT APPLICABLE AND, THEREFORE, THE ASSESSING OFFICER ERRED IN MAKING ADDITIONS TOWARDS SHORT TERM AND LONG TERM CAPITAL LOSS DERIVED FROM SALE OF SHARES AS SPECULA TIVE LOSS. THEREAFTER, THE ASSESSING OFFICER PASSED ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A) ON 20.03.2007, DETERMINING THE TOTAL INCOME AT ` 140,44,83,270/-, WHEREIN THE ASSESSING OFFICER HAS NOT GIVEN EFFECT TO THE SHORT TERM CAPITAL LOSS OF ` 6,37,65,058/- AND LONG TERM CAPITAL LOSS OF ` 32,83,484/- BY HOLDING THAT THE LEARNED CIT(A) IN PARA 7.3 OF THE ORDER DATED 15.02 .2007, ALLOWED THE CLAIM OF THE ASSESSEE FOR ` 12,32,95,026/- ONLY. THEREAFTER, THE ASSESSEE FIL ED APPLICATION U/S. 154 ON 09.03.2009 BEFORE THE ASSESSING OFFICER TO R ECTIFY THE MISTAKES IN ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A). HOWEVER, SUCH APPLICATION HAS BEEN REJECTED BY THE ASSESSING OFFICER BY STATING THAT T HERE IS NO MISTAKE APPARENT FROM RECORD REQUIRING RECTIFICATION U/S. 154 OF THE ACT. THE ASSESSEE HAS FILED FURTHER APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 154. THE CIT(A), VIDE ITS ORDER DATED 18.02.2016, DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS SHORT TERM C APITAL LOSS ` 6,37,65,058/- AND LONG TERM CAPITAL LOSS OF ` 32,83,484/- BY HOLDING THAT EXPLANATION TO SECTION 73 HAS NO APPLICATION AND, HENCE, THE ASSESSING OFFICER WA S INCORRECT IN MAKING ADDITIONS TOWARDS LOSS AS SPECULATIVE LOSSES. AGGRIEVED BY T HE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED AR FOR THE ASSESSEE, AT THE TIME OF HEARING SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL HAS ALREADY BEEN DECI DED BY THE ITAT, IN ITA NO. 3108/MUM/2007, VIDE ORDER DATED 02.06.2017, WHEREIN IN PARA 8.1 OF ITS ORDER HAS HELD THAT EXPLANATION TO SECTION 73 IS NOT APPLICAB LE AND, HENCE, THE FIRST APPELLATE ITA NO.3600/MUM/2016 ICICI SECURITIES PRIMARY DEALERSHIP LTD. 3 AUTHORITY HAS RIGHTLY DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS SPECULATIVE LOSSES DERIVED FROM PURCHASE AND SALE O F SHARES. 4. ON THE OTHER HAND, THE LEARNED DR FAIRLY ACCEPTE D THAT ITAT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE OF DISALLOWANCE OF SHORT TER M CAPITAL LOSS AND LONG TERM CAPITAL LOSS BY THE ASSESSING OFFICER HAS BEEN DECI DED BY THE ITAT IN ITA NO.3108/MUM/2007 FOR A.Y. 2004-05, WHEREIN THE ITAT HAS CATEGORICALLY HELD THAT THE TRANSACTIONS IN DISPUTE WERE SETTLED BY ACTUAL DELIVERY OF SHARES AND, THEREFORE, SAME CANNOT BE TREATED AS SPECULATIVE TRANSACTIONS. SINCE THE ISSUES INVOLVED IN PRESENT APPEAL RELATES TO SIMILAR ADDITIONS MADE BY THE ASSESSING OFFICER IN PROCEEDINGS U/S. 143(3) AND SUCH ADDITIONS HAVE ALR EADY BEEN DELETED BY THE ITAT, WE ARE OF THE CONSIDERED VIEW THAT THE PRESENT APPE AL BY THE REVENUE BECOMES INFRUCTUOUS AND, HENCE, WE DISMISS THE APPEAL OF TH E REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 18 TH MAY 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 18 TH MAY, 2018. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI