ITO 2(3)(2), MUMBAI V. SHREE FISCAL SERVICES P. LTD, MUMBAI

ITA 3663/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2277 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L K AGRAWAL
• Keywords: Speculation loss; Futures and options; Set aside
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR ,(AM) ITA NO.3663/MUM/2009 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER WARD 2(3)(2) ROOM NO.581A, AAYAKAR BHAVAN MUMBAI. ..( APPELLANT ) VS. M/S. SHREE FISCAL SERVICES P. LTD. GREAT WESTERN BLDG. CABIN NO.34 N.M. ROAD, FORT MUMBAI-400 001. ..( RESPONDENT ) P.A. NO. (AAFCS 2531 N) APPELLANT BY : SHRI L.K. AGRAWAL RESPONDENT BY : NONE O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 6.3.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06 TAKING THE FOLLOWING GROUNDS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. THE CIT(A) HAS ERRED IN HOLDING THAT THE LOSS FROM FUTURE OPTIONS OF RS.53,78,483/- IS NOT SPECULATIVE LOSS IGNORING THE PROVISIONS OF SECTION 43(5) OF TH E INCOME TAX ACT. ITA NO.3663/MUM/09 A.Y:05-06 2 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. AT THE TIME OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR ADJOURNMENT OF TH E CASE DESPITE THE FACT THAT THE NOTICE OF DATE OF HEARING WAS SENT BY RPAD. IT WAS, THEREFORE, DECIDED TO DISPOSE OF THE APPEAL EXPARTE, Q UA THE ASSESSEE, ON MERITS, AFTER HEARING THE LD. DR. 3. THE LD. DR SUBMITS THAT THIS ISSUE IS FULLY COVERE D IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN SHREE CAPITAL SERVICES LTD., THEREFORE, THE ISSUE MAY BE DECIDED ACCORDINGLY. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. 4. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE LD. D.R. AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND ME RIT IN THE PLEA OF THE LD. DR. IN SHREE CAPITAL SERVICES LTD. VS. ACIT ( 2009) 121 ITD 498(KOL.)(SB); (2009) 318 ITR (AT) 1(KOL.)(SB), IT HAS BEEN HELD (AT PAGE-2 OF 318 ITR HEADNOTE): HELD ACCORDINGLY, DISMISSING THE APPEAL, THAT THE TRANSACTION IN DERIVATIVES WAS A SPECULATIVE TRANSA CTION AS PROVIDED UNDER SECTION 43(5) AND THE TRANSACTION IN DERIVATIVES WAS NOT EXEMPTED FROM THE PURVIEW OF SPECULATIVE TRANSACTION UNDER SECTION 43(5) AND THE ASSESSING OFFICER WAS RIGHT IN TREATING THE LOSS AS SPECULATION LOSS IN TERMS OF SECTION 43(5) OF THE I NCOME TAX ACT, 1961 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA , WE HOLD THAT THE LOSS ON FUTURES AND OPTIONS TRANSACTIONS IS A SPECULATI VE TRANSACTION, NOT EXEMPTED FROM THE PURVIEW OF SPECULATIVE TRANSACTIO N U/S.43(5) OF ITA NO.3663/MUM/09 A.Y:05-06 3 THE INCOME TAX ACT, 1961 (THE ACT) AND THE AO WAS RIGH T IN TREATING THE LOSS AS SPECULATION LOSS IN TERMS OF SEC.43(5) OF THE A CT. ACCORDINGLY THE ORDER PASSED BY THE LD. CIT(A) IS REVE RSED AND THAT OF AO IS RESTORED. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE ALLOWED. 5. IN THE RESULT, REVENUE APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8.4.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 8.4.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 1.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 8.4.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 12.4.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER