Dr.S.S.K.Ayyar, CHENNAI V. ACIT, CHENNAI

ITA 443/CHNY/2015

• Counselvise Citation: 44321714 RSA 2015
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 21-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: T BANUSEKAR
• Keywords: Business income; Condonation of delay; Revised return
• Section: 142(1)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 443/MDS/2015 / ASSESSMENT YEAR :200 9 - 1 0 DR. S.S.K. AYYAR, 16, BESANT AVENUE, KARPAGAM GARDEN, ADYAR, CHENNAI 600 020 [PAN: A A B P A9998A ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , BUSINESS CIRCLE III, CHENNAI 600 034. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR, C.A. / RESPONDENT BY : SHRI A. B. K O LI, J CIT / DATE OF HEARING : 21 . 0 9 .201 5 / DATE OF P RONOUNCEMENT : 30 . 0 9 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) V , CHENNAI , DATED 22 . 0 9 .20 1 4 RELEVANT TO THE ASSESSMENT YEAR 200 9 - 1 0 . 2. THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY 103 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED A PETITION IN SUPPORT OF AN AFFIDAVIT TO CONDONE THE DELAY IN FILLING THE APPEAL AND SUBMITTED THAT THE DELAY IN FILING THE APPEAL WAS NEITHER WILFUL NOR DELIBERATE BUT DUE TO I.T.A. NO . 443 /M/ 15 2 COMPELLING BONAFIDE CIRCUMSTANCES. THE ASSESSEE IS DOCTOR BY PROFESSION AND AGED 80 YEARS. IN THE AFFIDAVIT, THE ASSESSEE HAS SUBMITTED THAT HE HAS SUFFERED A SECON D HEART ATTACK DURING THE YEAR 2014 AND HAD TO UNDERGO MAJOR CARDIAC SURGERY AND WAS ADVISED BY HIS DOCTORS TO TAKE COMPLETE REST AND AVOID UNDERTAKING ANY STRESSFUL ACTIVITY. IT TOOK OVER A YEAR FOR THE ASSESSEE TO RETURN TO NORMALCY TO START ORGANIZING H IS AFFAIRS THAT HAD BEEN LEFT UNATTENDED . THE IMPUGNED ORDER GOT MIXED UP WITH OTHER PAPERS AND THE ASSESSEE COULD NOT ABLE TO LOCATE THE ORDER TILL FEBRUARY . THEREAFTER, AFTER TAKING THE ADVICE OF THE CHARTERED ACCOUNTANT, THE APPEAL PAPERS WERE PREPARED AND FILED. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THERE WAS NO WILFUL ATTEMPT ON THE PART OF THE ASSESSEE AND PRAYED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL S FOR HEARING. THE LD. DR HAS NOT SERIOUSLY OBJECT TO THE SUBMISSION S OF THE LD. COUNSEL FOR THE ASSESSEE . 3. WE HAVE CAREFULLY CONSIDERED THE PETITION FOR CONDONATION OF DELAY AND THE AFFIDAVIT FILED BY THE ASSESSEE. WE HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND FIND THAT THERE IS SUFFIC IENT CAUSE FOR CONDONING THE DELAY. ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE ABOVE APPEAL AND ADMIT THE APPEAL S FOR HEARING. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DOCTOR BY PROFESSION. THE ASSESSEE HAS FILED HIS RET URN OF INCOME ON I.T.A. NO . 443 /M/ 15 3 30.09.2009 ON A TOTAL INCOME OF .21,25,939/ - AND SUBSEQUENTLY FILED A REVISED RETURN ON 25.03.2010 ADMITTING INCOME OF .13,26,759/ - . NOTICE UNDER SECTION 143(2) WAS SERVED ON THE ASSESSEE ON 04.09.2010. FURTHER, NOTICE UNDER SECTION 143(2) R.W.S. 129 AND NOTICE UNDER SECTION 142(1) WER E ISSUED TO THE ASSESSEE ON 05.07.2011 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS EARNED INCOME FROM CONSULTANCY FROM THE MALAR HOSPITAL AND VIJAYA HOSPITAL, APART FROM PROFESSIONAL RECEIPTS FROM ADYAR NEURODIANOCTIC SERVICE LAB/CLINIC OWNED BY HIM AND ALSO HAD INTEREST INCOME. IN THE RETURN, THE ASSESSEE HAS CLAIMED SET OFF OF LOSS FROM SHARE TRANSACTION TO THE TUNE OF .7,93,024/ - WITH THE BUSINESS AND PROFESSIONAL INCOME. IN RESPONSE TO THE NOTICE ISSUED TO THE ASSESSEE , THE AR OF THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFORE THE ASSESSING OFFICER AND SUBMITTED THAT IT IS NOT AN ISOLATED TRANSACTION BUT ON REGULAR DAY TO DAY SHARE TRADING DONE BY THE ASSESSEE AND INCLUSION OF SPOUSE S SHARE TRADING BUSINESS LOSS IN ASSESSEE S ACCOUNT. THE ASSESSEE HAS FURTHER EXPLAINED THAT THE ASSESSEE S SPOUSE IS ONLY A HOUSE WIFE AND ALL THE INVESTMENTS IN THE SHARE TRADING WERE MADE BY THE ASSESSEE OUT OF HIS OWN EARNED INCOME. THE ASSESSEE WAS AVARICIOUS IN MAKING INCOME, THOUGHT I T FIT AND APPROPRIATE TO DO THE BUSINESS IN THE NAME OF LAKSHMI (SPOUSE NAME) AND HAD RESULTED IN BUSINESS LOSS AND CLAIMED IT AS HIS OWN LOSS, BEING HIS BUSINESS INCOME IN SHARE TRADING. FURTHER, THE ASSESSEE WAS ASKED TO FILE THE PAN NO. OF ASSESSEE S SPOUSE, DMAT ACCOUNT DETAILS, ETC., I.T.A. NO . 443 /M/ 15 4 BUT THE ASSESSEE COULD NOT FILE THE DETAILS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE MAT ERIALS, THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE SINCE THERE IS NO MERIT IN THE CONTENTIONS OF THE ASSESSEE SPECIALLY LOSS INCURRED IN THE NAME OF SPOUSE AND SET OFF WITH THE HUSBAND S REGULAR BUSINESS INCOME. ACCORDINGLY, THE SHARE TRADING IN THE NAME OF SPOUSE AND INCURRED LOSS TO THE TUNE OF .7,93,024/ - WAS DISALLOWED FOR WRONG SET OFF WITH THE HUSBAND S INCOME AND ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE L D. CIT(A) AND SUBMITTED THAT SHARE TRADING WAS DONE BY THE ASSESSEE IN THE NAME OF THE SPOUSE AND PRAYED TO ALLOW THE LOSS INCURRED IN SHARE TRADING. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AS UNDER: 5. AFTER HAVING CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT AND ASSESSMENT ORDER, THE AO HAS DISALLOWED THE LOSS INCURRED IN SHARE TRADING AMOUNTING TO .7,93,024/ - . THE AR OF THE APPELLANT OBJECTED TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE SHARE TRADING THOUGH CARRIED OUT IN THE NAME OF THE ASSESSEE'S SPOUSE THE INVESTMENT WAS MET OUT OF THE APPELLANT'S OWN EARNED INCOME AN D THE AO IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE TO OFFSET THE SHARE TRADING LOSS TOWARDS HIS PROFESSIONAL INCOME. THE ASSESSING OFFICER AFTER HAVING CONSIDER THE ARGUMENTS OF THE APPELLANT AND AS WELL AS DISTINGUISHING THE CASE LAWS RE LIED UPON BY THE AR OF THE APPELLANT AND FOUND THEY ARE NOT PARTICULARLY RELEVANT TO THE FACTS OF THE CASE. THE LOSS INCURRED FROM THE SHARE TRADING IN THE NAME OF THE ASSESSEE'S SPOUSE SMT. LAKSHMI N.R IS NOT ALLOWED FOR SET OFF TO THE ASSESSEE'S BUSINESS INCOME AND THE SAME IS ADDED BACK TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS.7,93,024/ - IS HEREBY CONFIRMED. SINCE THE ASSESSEE FOR THE FIRST TIME DID THE SHARE TRADING IN THE NAME OF THE WIFE AND THEREBY INCURRING SOME SHARE I.T.A. NO . 443 /M/ 15 5 TRADING LOSS, THE APPELL ANT APPEARS TO REDUCE HIS TAXABLE INCOME BY THE ADJUSTING THE SHARE TRADING LOSS OF HIS WIFE TO THE TUNE OF RS.7,93,024/ - IS NOT ALLOWABLE CLAIM OF THE APPELLANT AND ACCORDINGLY, THE APPELLANT GROUNDS OF APPEALS ARE REJECTED, CONFIRMING THE ADDITION MADE B Y THE ASSESSING OFFICER. 6. ON BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A PETITION UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 TO CONSIDER THE AD DITIONAL EVIDENCE AND PRAYED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) MAY KINDLY BE DELETED. 7. ON THE OTHER HAND, THE LD. DR STRONGLY RELIED ON THE ORDERS OF AUTHO RITIES BELOW. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CLAIMED DEDUCTION TO SET OFF OF LOSS INCURRED IN SHARE TRADING DONE IN THE NAME OF HIS SPOUSE SMT. N.R. LAKSHMI AGAINST HIS BUSINESS INCOME. WHEN CALLED FOR, THE ASSESSEE HAS NOT FILED PAN NO. AND OTHER PARTICULARS IN RESPECT OF SMT. LAKSHMI. FURTHER THE ASSESSING OFFICER HAS HELD THAT THERE ARE NO MERIT S IN THE CONTENTION OF THE ASSESSEE THAT THE LOSS INCURRED IN THE NAME OF SPOUSE AND SET OFF WITH THE HUSBAN D S REGULAR BUSINESS INCOME AND DISALLOWANCE WAS MADE. BEFORE THE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CARRIED OUT SHARE TRADING BUSINESS IN THE NAME OF ASSESSEE S SPOUSE AND THE INVESTMENT WAS MADE OUT OF ASSESSEE S OWN EARNED I.T.A. NO . 443 /M/ 15 6 INCO ME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SINCE THE ASSESSEE S SPOUSE HAS NO OTHER SOURCE OF INCOME, THE LO SS INCURRED BY THE ASSESSEE BY WAY OF SHARE TRADING IN ASSESSEE S SPOUSE HAS TO BE CLUBBED AS LOSS INCURRED BY THE ASSESSEE SINCE THE INCOME OF THE ASSESSEE S SPOUSE IS INCLUDIBLE IN THE HANDS OF THE ASSESSEE. WE FIND FORCE IN THE CONTENTION OF THE ASSESSE E IN VIEW OF SECTION 64(IV) OF THE ACT, WHEREIN IT IS STATED THAT SUBJECT TO THE PROVISIONS OF CLAUSE (I) OF SECTION 27, TO THE SPOUSE OF SUCH INDIVIDUAL FROM ASSETS TRANSFERRED DIRECTLY OR INDIRECTLY TO THE SPOUSE BY SUCH INDIVIDUAL OTHERWISE THAN FOR AD EQUATE CONSIDERATION OR IN CONNECTION WITH AN AGREEMENT TO LIVE APART: FURTHER, EXPLANATION 2 TO SECTION 64 STATES THAT EXPLANATION 2 FOR THE PURPOSES OF THIS SECTION, INCOME INCLUDES LOSS. 9. THE HON BLE SUPREME COURT IN THE CASE OF CIT V. P. DOR AISWAMY CHETTY 183 ITR 559 HAS HELD AS UNDER: THE ASSESSEE AND HIS WIFE WERE THE TWO PARTNERS OF A FIRM EACH HAVING A HALF SHARE IN THE PROFITS OR LOSSES. THE QUESTION WAS WHETHER THE ASSESSEE COULD CLAIM TO ADD HIS WIFE S SHARE OF THE LOSS OF THE FIRM TO HIS SHARE FOR CARRY FORWARD AND SET OFF AGAINST HIS FUTURE BUSINESS INCOME. THE INCOME TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER HELD THAT HE COULD NOT, BUT THE APPELLATE TRIBUNAL HELD THAT HE COULD. ON A DIRECT REFERENCE TO THE SUPREME COURT U NDER SECTION 257 OF THE INCOME TAX ACT, 1961, IN VIEW OF A DIVERGENCE OF JUDICIAL OPINION BETWEEN THE KARNATAKA AND GUJARAT HIGH COURTS: HELD, AFFIRMING THE DECISION OF THE TRIBUNAL, THAT THE ASSESSEE WAS ENTITLED TO CARRY FORWARD TO SUBSEQUENT YEARS NOT ONLY HIS SHARE BUT ALSO THE SHARE OF HIS WIFE IN THE LOSS OF THE FIRM. I.T.A. NO . 443 /M/ 15 7 10. IN VIEW OF THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE ABOVE CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE PRESENT CASE, THE LOSS INCURRED BY THE ASSESSEE BY WAY OF SHARE TRADING IN ASSESSEE S SPOUSE HAS TO BE TREATED AS LOSS INCURRED BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ALLOW THE LOSS INCURRED BY THE ASSESSEE S SPOUSE AS LOS S INCURRED BY THE ASSESSEE AGAINST THE BUSINESS INCOME OF THE ASSESSEE SUBJECT TO VERIFICATION OF ANY INCOME EARNED BY THE ASSESSEE S SPOUSE BY WAY OF INTEREST WHICH SHOULD BE ADDED AS INCOME OF THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE THE EVIDE NCE BEFORE THE ASSESSING OFFICER AS FILED BEFORE THE TRIBUNAL UNDER RULE 29 OF THE ITAT RULES FOR VERIFICATION. 11 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 30 TH SEPTEMBER , 2015 AT CHENN AI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 9 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.