NAKUL SUDHIR MULLICK, MUMBAI V. ITO WD 10(3)(3), MUMBAI

ITA 4177/MUM/2010

• Counselvise Citation: 417719914 RSA 2010
• Duration Of Justice: 2 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.4177/MUM/2010 (ASSESSMENT YEAR: 2002-03) MR. NAKUL SUDHIR MULLICK, A/302, RAJKAMAL CO-OP. HSG. SOC. LTD., JUHU, VERSOVA, LINK ROAD, ANDHERI (W), MUMBAI -400 061 ..... APPELLANT VS INCOME-TAX OFFICER WD.10(3)(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 .... RESPONDENT PAN : AABPM 6515 F APPELLANT BY: SHRI SANJAY PARIKH RESPONDENT BY: SHRI ATIQ AHMAD DATE OF HEARING: 12.04.2012 DATE OF PRONOUNCEMENT: 25.05.2012 O R D E R R.S. PADVEKAR, JM: IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-22, MUMBAI DATED 15.03.2010 FOR THE A.Y. 2002-03. THE ASSESSEE HAS TAKEN THE FOLLOWING CONCISE BUT EF FECTIVE GROUNDS: A) TREATING BUSINESS LOSS AS SPECULATIVE IN NATURE 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) 22, MUMBAI [CIT(A)] ERRED ON FACTS AND IN LAW IN UPHOLD ING THE ORDER OF THE AO IN TREATING THE LOSS FROM SHARE TRA DING AMOUNTING TO ` 7,34,834/- AS SPECULATIVE IN NATURE. 2. THE APPELLANT PRAYS TO YOUR HONOUR TO DIRECT TH E AO TO TREAT THE LOSS OF ` 7,34,834/- AS NORMAL BUSINESS LOSS AND NOT AS SPECULATIVE IN NATURE. ITA NO.4177/MUM/2010 MR. NAKUL SUDHIR MULLICK 2 B) NOT ALLOWING SET OFF OF BUSINESS LOSS AGAINST INCOM E FROM SALARY AND INCOME FROM OTHER SOURCES 3 THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ORDER OF THE AO IN NOT ALLOWING THE SET OFF OF BUSINESS LOSS FROM SHARE TRADING AGAINST INCOME FROM SALARY AND I NCOME FROM OTHER SOURCES. 4. THE APPELLANT PRAYS TO YOUR HONOUR TO DIRECT TH E AO TO ALLOW THE SET OFF OF BUSINESS LOSS FROM SHARE TRADING ACT IVITY AGAINST INCOME FROM SALARY AND INCOME FROM OTHER SO URCES. 2. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL WHO IS JT. DIRECTOR, M/S. LANYARD FOODS LIMITED. THE ASSESSEE DECLARED THE SALARY FROM THE SAID COMPANY AND LOSS FROM THE TRADING IN THE SHARES OF ` 7,34,834/- AND ALSO SHOWN LOSS ON THE SALE OF THE SHARES AND LOSS ON SALE OF MUTUA L FUNDS. THE ASSESSEE SET OFF THE LOSS ON THE TRADING OF THE SHA RES AGAINST HIS SALARY INCOME FROM M/S. LANYARD FOODS LIMITED (M/S. LFL). THE A.O. HAS OBSERVED THAT IN THE A.Y. 2002-03 THE ASSESSEE HAS PURCHASED SHARE OF ` 14,99,09,430/- AND SOLD THE SHARES OF ` 14,40,12,609/- AND HAS SHOWN GROSS LOSS OF ` 9,96,916/-. THE A.O. HAS OBSERVED THAT AS STATED BY THE ASSESSEE HE HAS NOT TAKEN THE DELIVERY OF TH E SHARES AND HENCE, NET TRANSACTIONS IN THE SHARE TRADING ARE LESS THAN ` 40 LAKHS. THE A.O. FURTHER OBSERVED THAT SINCE THE ASSESSEE HAS NOT TA KEN DELIVERY OF SHARES, WHICH MEANS THE LOSS IS FROM THE SPECULATIV E BUSINESS. THE ASSESSEE TRIED TO JUSTIFY HIS STAND THAT THERE WAS NO ACTUAL DELIVERY BUT THE BROKERS OF THE ASSESSEE WERE MEMBER OF BOTH STO CK-EXCHANGES. THE ASSESSEE WAS FIRMED ON HIS STAND THAT THE LOSS FROM THE SHARE TRADING WAS A BUSINESS LOSS ONLY. THE A.O. WAS NOT IMPRESS ED WITH THE SUBMISSION OF THE ASSESSEE AND HE REJECTED THE SAME . THE A.O. TREATED THE LOSS ON THE TRADING OF THE SHARES AS SPECULATI ON LOSS AND DECLINED TO GIVE THE BENEFIT OF THE SET OFF AGAINST THE SALA RY INCOME. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD. CIT (A). THE LD. CIT (A) DECIDED THE ITA NO.4177/MUM/2010 MR. NAKUL SUDHIR MULLICK 3 APPEAL EX-PARTE AND DISMISSED THE SAME. NOW, THE ASSESSEE IS IN A PPEAL BEFORE ME. 3. I HAVE HEARD THE PARTIES AND PERUSED THE RECORDS . THE LD. COUNSEL SUBMITS THAT THERE WAS LAPSE ON THE PART OF THE CHARTERED ACCOUNTANT OF THE ASSESSEE AND ASSESSEE SHOULD NOT BE SUFFERED FOR THE SAME. HE SUBMITS THAT THE MATTER MAY BE RESTORED T O THE A.O. AND SUITABLE DIRECTIONS MAY BE GIVEN THAT THE DELIVERY BASED TRANSACTIONS SHOULD BE SEPARATED AND ACCORDINGLY LOSS MAY BE COM PUTED. THE LD. D.R. HAS NO OBJECTION FOR RESTORING THE MATTER TO T HE FILE OF THE A.O. I, THEREFORE, RESTORE THE MATTER TO THE FILE OF THE A. O. TO DECIDE THE ISSUE OF NATURE OF THE LOSS IN THE SHARE TRADING AFRESH. TH E ASSESSEE SHOULD FILE THE DETAILS OF THE DELIVERY AND NON-DELIVERY BASED TRANSACTIONS AND AO SHOULD CONSIDER THE SAME AND THE LOSS PERTAINING TO THE DELIVERY BASED TRANSACTIONS SHOULD NOT BE TREATED AS A SPECULATION LOSS. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) IS SET ASIDE. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5TH MAY 2012. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 25TH MAY 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 22, MUMBAI. 4) THE CIT -10, MUMBAI. 5) THE D.R. SMC BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI