MUKESH SHROFF, MUMBAI V. THE ASST. C.I.T. 4(2), MUMBAI

ITA 3754/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55091 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-08-2011
• Assessment Year: 1993-1994
• Appeal Filed On: 10-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Speculation loss
• Section: 143(3); 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI T.R. SOOD, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 3754/MUM/2009 ASSESSMENT YEAR : 1993-94 MUKESH SHROFF, APPELLANT 24/26, CAMA BUILDING, 1 ST FLOOR, DALAL STREET, FORT, MUMBAI 400 023. (PAN AAGPS5422A) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDEN T CIRCLE (4)(2), MUMBAI. APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. SHANTAM BOSE DATE OF HEARING : 11/08/2011 DATE OF PRONOUNCEMENT : 30/08 /2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)-IV, MUMBAI, PASSED ON 09/04/2009 FOR THE ASSESSMENT YEAR 1993-94. 2. A SOLITARY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN TREATING THE LO SS OF RS. 4,52,500/- AS SPECULATION LOSS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO IN HIS ORDER U/S 143(3) DATED 29/02/96 HELD THAT THE LOSS CLAIME D BY THE ASESSSEE TO BE A SPECULATION LOSS. THE CIT(A) VIDE HIS ORDER DATED 25./06/98 ALLOWED THE APPEAL OF THE ASSESSEE, HOWEVER, DID NO T ANY FINDING ON THE ACTUAL DELIVERY OF UNITS HAD TAKEN PLACE OR NOT . ON DEPARTMENTAL ITA NO. 3754/MUM/2009 MUKESH SHROFF. 2 APPEAL TO ITAT, THE ITAT VIDE ORDER DATED 3/12/2003 REMITTED THE ISSUE TO CIT(A). THE CIT(A) VIDE ORDER DATED 17/01/ 2005 CONFIRMED THE FINDINGS OF THE AO STATING THAT THE ASSESSEE WA S NOT HOLDING ANY PHYSICAL SHARES OF MASTER SHARES PRIOR TO 31/02/92, I.E. PRIOR TO RELEVANT PERIOD, SO TRANSACTIONS CARRIED OUT BY THE ASSESSEE FROM 31/03/92 ONWARDS CANNOT BE TREATED AS HEDGING IN NA TURE OR TO PROTECT LOSSES ON ACCOUNT FLUCTUATIONS. THUS, PROVI SO (B) TO SECTION 43(5) IS NOT APPLICABLE AND AS ASSESSEE IS NOT A JO BBER OR DOING ARBITRAGE, PROVISO (C) TO SECTION 43(5) IS NOT APPL ICABLE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE APPEALED TO TRIB UNAL. THE TRIBUNAL VIDE ORDER DATED 13/03/08(ITA NO. 2951/MUM/05) REST ORED THE MATTER TO THE FILE OF THE CIT(A) WITH A DIRECTION T O EXAMINE AND RECORD HIS FINDING WITH REGARD TO THE ISSUE OF DELIVERY OF MASTER SHARES AND DISPOSE OF THE MATTER AFRESH IN ACCORDANCE WITH LAW . THE CIT(A) HELD THAT THE ORDER OF AO, CIT(A), REMAND REPORT OF THE AO AN D DETAILS ASKED FROM APPELLANT BY THIS OFFICE FROM 01/07/08 T O 09/02/09 AND THE DETAILS FURNISHED BY THE APPELLANT HAS BEEN CAR EFULLY AND PAINSTAKINGLY EXAMINED. ALL THE APPELLANT COULD DEM ONSTRATE THE POSSIBILITY OF DELIVERY OF THE EVIDENCE OF ACTUAL DELIVERY WERE JUST NOT THERE. THE MERE POSSIBILITY OF DELIVERY OF MASTER S HARE OF UNIT DOES NOT MEAN THAT THE UNITS WERE ACTUALLY DELIVERED. FINALLY THE CIT(A) HELD THAT THE ASSESSEE DEMONSTRATED THAT IT WAS POSSIBLE TO SELL A CERTAIN LOT AFTER PHYSICALLY HANDLING OVER THE UNITS TO ASS ESSEE AND TAKING THE SAME BACK, BUT NO EVIDENCE OF ACTUAL HANDING OVER O F UNITS WERE PRODUCED AND THE PREPONDERANCE OF POSSIBILITY SUGGE STS THAT UNDER THE CIRCUMSTANCES, THE DELIVERY OF MASTER SHARE HAS NOT TAKEN PLACE AND THE LOSS IS, THEREFORE, SPECULATIVE. AGGRIEVED, AGAIN, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WRONG IN TREATING THE ACTUAL DELIVERY OF MASTER SHARES AS MERE POSSIBILITY OF DELIVERY OF THE EVIDENCE OF ACT UAL DELIVERY OF MASTER SHARES WITHOUT APPRECIATING THE WRITTEN SUBMISSION, THE CHART AND THE ITA NO. 3754/MUM/2009 MUKESH SHROFF. 3 STATEMENTS SUBMITTED SHOWING THE DISTINCTIVE NUMBER OF MASTER SHARES OF WHICH ACTUAL DELIVERY HAD TAKEN PLACE IN ITS CORRECT PERSPECTIVE. IT IS SUBMITTED THAT THE CIT(A) FAILED TO ACCEPT THE FACT THAT BEFORE EACH DATE OF SALE OF MASTER SHARES EFFE CTED BY THE ASSESSEE THROUGH M/S V.B. DESAI THE ASSESSEE WAS HOLDING SUF FICIENT NUMBER OF MASTER SHARES WITHOUT APPRECIATING THE WRITTEN SUBM ISSIONS AND THE TABULAR INFORMATION PROVIDED. IT IS FURTHER SUBMITT ED THAT THE CIT(A) ERRED IN TREATING THAT THE ASSESSEE DID NOT MAKE AC TUAL DELIVERY OF MASTER SHARES UNDER THE EXPLANATION TO SECTION 43(5 ) OF THE ACT, WITHOUT CONSIDERING THE CHART FILED BY THE ASSESSEE SHOWING THE DATE OF TRANSACTION, PARTICULARS OF PURCHASE AND SALE, Q UANTITY, AMOUNT, RATE IN RUPEES AND PROFIT AND LOSS, IN ITS CORRECT PERSPECTIVE. THE LEARNED COUNSEL INVITED OUR ATTENTION TO PAGES 14 T O 16 & 19 PERTAINING TO PURCHASE AND SALE OF SHARES AND PAGES 23 TO 40 PERTAINING TO LEDGER ACCOUNT OF ASSESSEE MAINTAINED BY M/S V.B. DESAI, SHARE BROKER, IN SUPPORT OF ASSESSEES CASE. THE LEARNED COUNSEL, THEREFORE, PRAYED THAT THE ORDER OF THE CI T(A) MAY BE SET ASIDE AND TREAT THE LOSS AS BUSINESS LOSS. 5. ON THE OTHER HAND, THE LEARNED DR STRONGLY RELIE D ON THE ORDER OF THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE MAIN CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US IS THAT THE CIT(A) HAS NOT PROPERLY CONSIDERED AND EXAMINED THE COMPLETE DETAILS SUBMITTED BY THE ASSESSEE IN THE CORRECT PE RSPECTIVE WHILE ADJUDICATING THE ISSUE. AFTER CONSIDERING THE TOTAL ITY OF THE FACTS OF THE CASE, IN THE INTEREST OF JUSTICE AND TO MEET THE EN DS OF JUSTICE, WE REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WIT H A DIRECTION TO DECIDE THE ISSUE AFTER THOROUGHLY EXAMINING THE DET AILS SUBMITTED BY THE ASSESSEE AND IN ACCORDANCE WITH LAW AFTER PROVI DING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTE R. ITA NO. 3754/MUM/2009 MUKESH SHROFF. 4 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS T REATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (T.R. SOOD) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH AUGUST, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, F BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.