MANGAL KESHAV SECURITIES LTD, MUMBAI V. ITO WD 4(3)(4), MUMBAI

ITA 4282/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71104 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 26-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: NISHANT THAKUR; PRASHANT THAKUR
• Keywords: Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SRI H.L. KARWA, PRESIDENT, AND SHRI N.K.BILL AIYA, AM ./ I.T.A. NO. 4282/MUM/2011 ( / ASSESSMENT YEAR : 2001-02) MANGAL KESHAV SECURITIES LTD. 501, HERITAGE PLAZA, J.P. ROAD, OPP.COLONY, ANDHERI(W), MUMBAI-400053 / VS. INCOME - TAX OFFICER, WARD-4(3)(4) MUMBAI !' $ ./ PAN : AAACM8957F ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( ) / APPELLANT BY : SHRI PRASHANT THAKUR & SHRI NISHANT THAKUR &''% ( ) / RESPONDENT BY : SRI SURENDRA KUMAR ( *$ / DATE OF HEARING : 10-09-2013 +, ( *$ / DATE OF PRONOUNCEMENT : 10-09-2013 -. / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)11, MUMBAI, DATED 11.03.2011 PERTAINING TO A.Y.2001-02. 2. THE SOLE GRIEVANCES OF THE ASSESSEE RELATES TO L EVY OF PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF RS.66,80,4 30/- AS SPECULATION LOSS AND ON ACCOUNT OF DISALLOWANCE OF ADHOC EXPENSES OF RS.2,50,000/- BEING DEEMED TO HAVE BEEN INCURRED FOR SPECULATION TRANS ACTIONS. 2 ITA NO.4282/MUM/2011 MS MANGAL KESHAV SECURITIES LTD. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS CARRIED OUT SHARE TR ADING ACTIVITY IN ITS OWN ACCOUNT WHICH HAS RESULTED IN SHARE TRADING LOSS OF RS.6,68,043/-. ACCORDING TO THE AO, THIS IS DEEMED TO BE SPECULATION LOSS AS PER EXPLANATION TO SECTION 73 OF THE ACT. THE AO FURTHER OBSERVED THAT THE AS SESSEE HAS NOT CONSIDERED ANY EXPENSES ATTRIBUTABLE TO ITS SHARE TRADING ACTI VITY. ACCORDING TO THE AO, THE DETERMINATION OF SHARE TRADING LOSS CANNOT BE P OSSIBLE WITHOUT ALLOCATING EXPENSES WHICH ARE INVARIABLY INCURRED FOR SHARE TR ADING ON PROPRIETARY ACCOUNT. THE AO WENT ON TO ALLOCATE TO RS.2,50,000 /- AS EXPENSES TO SHARE TRADING BUSINESS ON OWN ACCOUNT. THE PENALTY ITS L EVIED ON ACCOUNT OF THESE TWO DISALLOWANCES IN ADDITION TO OTHER DISALLOWANC ES MADE BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE CIT(A) CANCELED TH E PENALTY ON ACCOUNT OF OTHER DISALLOWANCES BUT CONFIRMED THE PENALTY IN RE SPECT OF DISALLOWANCE ON ACCOUNT OF SPECULATION LOSS AT RS.6,68,043/- AND ON ADHOC EXPENSES OF RS.2,50,000/-. THE ASSESSEE IS AGGRIEVED BY THIS F INDING OF THE CIT(A). 4. BEFORE US, THE COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL, AHMADABAD BENCH IN THE CASE OF MAH IPAT RAICHAND SHARE BROKING PVT. LTD. IN ITA NO.2794/AHD/2006 FOR A.Y.1 998-99 AND ITA NO.216/AHD/2007. IT IS THE SAY OF THE COUNSEL THAT FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF THE SAI D DECISION OF THE TRIBUNAL, ON IDENTICAL FACTS THE LEVY OF PENALTY HAS BEEN CANCEL ED BY THE TRIBUNAL. THEREFORE, THE PENALTY LEVIED FOR THE YEAR UNDER CO NSIDERATION SHOULD ALSO BE DELETED. THE LD. DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE ACCORDINGLY CONSIDERED THE SUBMISSIONS M ADE BY THE LD. COUNSEL AND PERUSED THE ORDERS OF THE LOWER AUTHORI TIES. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL O F THE AHMEDABAD BENCH (SUPRA), WE FIND FORCE IN THE SUBMISSIONS OF THE LD . COUNSEL, FACTS AS MENTIONED IN THE ORDER OF THE TRIBUNAL AT PARA 2 PAGE 2 OF I TS ORDER ARE IDENTICAL TO THE FACTS OF THE ASSESSEE UNDER CONSIDERATION. THE TRI BUNAL HAS GIVEN ITS FINDING AT PAGE 11 AT PARA 8 OF ITS ORDER WHICH IS AS UNDER:- 3 ITA NO.4282/MUM/2011 MS MANGAL KESHAV SECURITIES LTD. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED SUB-BROKERAGE OF RS. 4,63, 532/- A ND SHARE TRADING LOSS OF RS.11,84,848/- WHICH WAS DISALLOWED BY THE LEARN ED ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER DELETED THE DISALLOWANCE OF SUB- BROKERAGE PAYMENT IN THE ORDER PASSED PURSUANCE TO THE DIRECTION OF THE TRIBUNAL ON 4.05.2009. THUS, AS THE VERY BASIS FOR LEVY OF PENALTY DOES NOT SURVIVE THEREFORE, THE PENALTY ALSO DOES NOT SURVIV E. HENCE, WE DELETE THE LEVY OF PENALTY ON THE SUBBROKERAGE PAYMENT OF RS.4 ,63,532/-. AS REGARDS THE DISALLOWANCE OF SHARE TRADING LOSS OF RS.11,84, 848/- WE FIND THAT THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS SUFFERED LOSS ON DEALING IN SHARES OF RS.11,48,848/-. THE ASSESSEE CLAIMED DEDU CTION FOR THE AFORESAID LOSS IN THE RETURN OF INCOME WHICH WAS DI SALLOWED DUE TO THE DEEMING PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT AND THE ASSESSEE WAS EVEN ALLOWED TO CARRY FORWARD THIS LOS S IN THE SUBSEQUENT YEAR TO SET OFF AGAINST THE SPECULATIVE PROFIT OF T HE SUBSEQUENT YEAR. THUS IT IS OBSERVED THAT THE LOSS CLAIMED BY THE ASSESSEE W AS NOT FOUND TO BE BOGUS OR FICTITIOUS. THE DIFFERENCE WAS ONLY WITH R ESPECT TO THE HEAD OF COMPUTATION, AS PER THE ASSESSEE IT WAS NORMAL BUSI NESS LOSS WHEREAS AS PER THE DEPARTMENT IT WAS A SPECULATIVE LOSS. NO MA TERIAL WAS BROUGHT ON RECORD THAT THE ASSESSEE HAS AT ANY TIME CONCEALED ANY MAT ERIAL PARTICULARS IN RESPECT OF TRANSACTIONS IN SHARES OR FURNISHED ANY INACCURATE PARTICULARS. IN THE ABOVE CIRCUMSTANCES IN OUR CONS IDERED VIEW THERE WAS NO ERROR IN THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) IN DELETING THE PENALTY ON RS. 11,84,848/- ON ACCOU NT OF SHARE TRADING LOSS TREATED AS SPECULATIVE LOSS BY THE DEPARTMENT. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE BENCH LEVY OF PENALTY ON THIS ACCOUNT IS ACCORDINGLY DELETED. FU RTHER, WE DO NOT FIND ANY REASON TO LEVY PENALTY ON ADHOC ALLOCATION OF EXPEN SES TOWARDS SHARE TRADING BUSINESS. THEREFORE, THE PENALTY LEVIED ON THIS AC COUNT IS ALSO DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/09/2013 -. ( +, $ /- 10/09/2013 , , ( 0 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDENT ACCOUNTANT MEMBER MUMBAI; 4 ITA NO.4282/MUM/2011 MS MANGAL KESHAV SECURITIES LTD. /- /DATED : SEPTEMBER, 2013. SHEKHAR. P.S. -. -. -. -. ( (( ( &*12 &*12 &*12 &*12 32 * 32 * 32 * 32 * / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 4 ( ) / THE CIT- , MUMBAI. 4. 4 / CIT(A)- , MUMBAI 5. 250 &* , , / DR, ITAT, MUMBAI 6. 06 7 / GUARD FILE. -. -. -. -. / BY ORDER, '2* &* //TRUE COPY// 8 88 8 / 9 9 9 9 : : : : (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI