The ITO, Ward-1(3)(4), Ahmedabad V. M/s. Ranchhodlal Kishordas Chokshi, Ahmedabad

ITA 434/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5827 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH SR
• Keywords: Business income; Transactions in derivatives; Speculation loss

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.434/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) INCOME TAX OFFICER WARD-1(3)(4) AHMEDABAD-380 015 / VS. M/S.RANCHHODLAL KISHORDAS CHOKSHI 2219, OPP. POLICE CHOWKY MANEKCHOWK AHMEDABAD # ./ ./ PAN/GIR NO. : AACFC 1913 A ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI JAMES KURIAN, SR.DR &#%(' / RESPONDENT BY : SHRI J.P. SHAH,SR.ADVOCATE )*(+ / DATE OF HEARING 28/02/2018 ,-./(+ / DATE OF PRONOUNCEMENT 20/03/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTA NCE OF THE REVENUE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-10, AHMEDABAD [CIT(A) IN SHORT] DATED 01/12/2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF T HE INCOME TAX ITA NO.434/AHD/ 2016 ITO VS. M/S.RANCHHODLAL KISHORDAS CHOKSHI ASST.YEAR 2012-13 - 2 - ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') D ATED 24/02/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE SET OFF OF CARRIED FORWARD SPECULATION LOSSES OF AYS 2008-0 9 AND 2009-10 AGAINST SPECULATION INCOME OF AY 2012-13 WITHOUT APPRECIATING THE FACT THAT THE AO HAS RIGHTLY DISALLOWED THE SET OFF OF SPECULATION LOSS AGAINST THE BUSINESS INCOME FOR AY 2012-13 WHICH WA S DISCLOSED BY THE ASSESSEE IN THE COMPUTATION AND RETURN OF INCOME FO R THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF WHOLESALE DEALER IN COMMODITY ITEMS (GO LD AND SILVER) AND STOCKS INCLUDING SHARES RELEVANT TO AY 2012-13. TH E RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT. IN THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER (AO) OBSERVED THA T THE ASSESSEE HAS CLAIMED SET OFF OF RS.53,89,233/- ALLEGED TO BE SP ECULATION LOSS AGAINST NORMAL BUSINESS INCOME. THE AO DENIED THE SET OFF OF ALLEGED SPECULATIVE LOSS AGAINST THE NORAMAL INCOME IN V IEW OF THE RESTRICTIONS PLACED UNDER S.73(1) OF THE ACT. THE CHARGEABLE I NCOME WAS ACCORDINGLY INCREASED TO THE AFORESAID EXTENT. ITA NO.434/AHD/ 2016 ITO VS. M/S.RANCHHODLAL KISHORDAS CHOKSHI ASST.YEAR 2012-13 - 3 - 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER TAKING NOTE OF THE FACTS AND CIRCUMSTA NCES OF THE CASE AS NARRATED BY THE ASSESSEE FOUND CONSIDERABLE MERIT I N THE CLAIM OF SET OFF. THE CIT(A) NOTED THAT THE LOSS AROSE IN THE EARLIER ASSESSMENT YEARS (AY 2008-09 AND 2009-10) FROM SIMILAR SET OF TRANSACTIO NS IN COMMODITY ITEMS. THE CIT(A) ACCORDINGLY HELD THAT THE AO SHO ULD HAVE EXAMINED THE COMPLETE RECORDS OF THE ASSESSEE PERTAINING TO EARLIER YEARS WHILE DENYING THE SET OFF CLAIMED. THE CIT(A) IN CONCLUS ION HELD THAT BOTH THE LOSS IN EARLIER ASSESSMENT YEARS AS WELL AS PROFIT IN THE CURRENT YEAR WHEN ARISING FROM COMMODITY TRANSACTIONS ARE SPECULATIVE IN NATURE AND CONSEQUENTLY ASSESSEE IS ENTITLED TO SET OFF UNDER S.73(1) OF THE ACT. THE CIT(A) ACCORDINGLY RESTORED THE CLAIM OF SET OFF TH E ASSESSEE AND DELETED THE ADDITIONS. 5. AGGRIEVED, THE REVENUE HAS PREFERRED APPEAL BEFO RE THE TRIBUNAL. 6. THE LD.DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO. 7. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE NATURE O F TRANSACTIONS IN THE EARLIER YEARS OF LOSS AS WELL AS IN THE YEAR OF P ROFIT ARE THE SAME AND THEREFORE THE LOSS ARISING IN ONE YEAR FROM COMMODI TY TRANSACTIONS IS NECESSARILY REQUIRED TO BE SET OFF AGAINST THE PRO FITS OF THE CURRENT YEAR. ITA NO.434/AHD/ 2016 ITO VS. M/S.RANCHHODLAL KISHORDAS CHOKSHI ASST.YEAR 2012-13 - 4 - 8. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE AGREE WITH THE CONTENTIONS PLACED ON BEHALF OF THE ASSESSEE ON FIRST PRINCIPLES THAT WHE RE THE LOSS/PROFIT ARISING FROM TRANSACTIONS OF SIMILAR NATURE, THE LOSS AND P ROFITS CANNOT BE TREATED DIFFERENTLY FOR THE PURPOSES OF CLAIM OF SET OFF OF LOSSES AGAINST PROFITS. THEREFORE, THE CONCLUSION OF THE CIT(A) CANNOT BE F AULTED ON THIS SCORE. HOWEVER, IN THE SAME VAIN, WE OBSERVE THAT THE CIT( A) HAS FOUND FAULT WITH THE AO FOR NOT VERIFYING THE NATURE OF TRANSAC TIONS GIVING RISE TO THE LOSSES QUA THE NATURE OF TRANSACTIONS GIVING RISE TO PROFITS. HOWEVER, THE CIT(A) HIMSELF APPARENTLY HAS NOT MADE ANY ENQUIRY AND HAS NOT COME TO ANY INDEPENDENT FINDING ON SIMILAR NATURE OF TRANSA CTIONS CLAIMED IN THIS REGARD. NEEDLESS TO SAY, IT IS THE DUTY OF THE AO TO VERIFY THE RELEVANT FACTS AND INDEED THE DUTY OF THE CIT(A) TO DO SO WH ERE THE AO HAS FAILED TO DISCHARGE ITS FUNCTION. THE CIT(A) CANNOT SHUT ITS EYES TO THE SACROSANCT OBLIGATIONS WHILE ADJUDICATING THE ISSUE WITHOUT BRINGING FACTS ON RECORD. THE CIT(A), IN OUR CONSIDERED VIEW, COU LD NOT HAVE STOPPED SHORT SHIFTING THE ONUS ON THE AO FOR FAILING TO MA KE ENQUIRY ABOUT THE SIMILARITY OF NATURE OF TRANSACTIONS AS CLAIMED. THE CIT(A) MERELY FOUND FAULT WITH THE ORDER OF THE AO WITHOUT LOOKIN G INTO THE FACTS CONCERNING THE VERY BASIS TO ALLOW SET OFF. THEREF ORE, WE FIND APPARENT FALLACY IN THE ACTION OF THE CIT(A). THEREFORE, WHI LE WE ACCEPT THE PLEA OF THE ASSESSEE FOR ELIGIBILITY OF SET OFF OF LOSS ARISING FROM COMMODITY TRANSACTIONS AGAINST PROFITS FROM TRANSACTIONS OF S IMILAR NATURE, THE ITA NO.434/AHD/ 2016 ITO VS. M/S.RANCHHODLAL KISHORDAS CHOKSHI ASST.YEAR 2012-13 - 5 - FACTUAL MATRIX NEED TO BE VERIFIED, PARTICULARLY WH EN THE ASSESSEE CLAIMS TO BE ENGAGED IN BOTH SHARE TRADING AS WELL AS COMM ODITY TRADING. THE RELEVANT FACTS ON SIMILARITY OF TRANSACTIONS ARE TH US REQUIRED TO BE ASCERTAINED. HENCE, THE AO WOULD BE AT LIBERTY TO VERIFY THIS LIMITED ASPECT OF NATURE OF TRANSACTIONS WHILE GIVING EFFEC T TO THIS ORDER. THUS, ISSUE IS RESTORED BACK TO THE FILE OF AO FOR APPREC IATION OF FACTS IN PERSPECTIVE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 20 / 0 3 /201 8 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/03 /2018 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-10, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. : * / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD