M/s. Nalini Jewellers, New Delhi V. ACIT, New Delhi

ITA 4463/DEL/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3211 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 28-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NISHANT DATTA
• Keywords: Business income; Opportunity of being heard; Speculation loss; Speculative transactions; Set aside
• Section: 260A; 43(5); 201; 28

Judgement Text

ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO: 4463/DEL/2014 (ASSESSMENT YEAR: 2010-11) M/S NALINI JEWELLERS, 16/2646-49, BANK STREET, KAROL BAGH, NEW DELHI. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-33(1), NEW DELHI. PAN NO: AAEFN2292D APPELLANT RESPONDENT ASSESSEE BY : SHRI NISHANT DATTA, ADV. REVENUE BY : MS. RAKHI VIMAL, SR. DR ORDER PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXVI, NEW DELHI, [LD. CIT(A) FOR SHORT], DATED 23.05.2014, FOR ASSESSMENT YEAR (A.Y., FOR SHORT) 2010-11, ON TH E FOLLOWING GROUNDS: 1. THAT LEARNED ACIT AND CIT(A) HAS ERRED IN LAW A ND ON FACTS WHILE TREATING RS. 1,03,93,854/- BEING THE LOSS OF GOLD DESK ACCOUNT AS SPECULATIVE LOSS. 2. THAT THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACTS OF THE CASE, EXPLANATION OFFERED & PROCEEDED TO HOLD THE LOSS OF RS. 1,03,93,854/- AS SPECULATIVE LOSS. ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 2 OF 11 3. THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS WHILE HOLDING THAT PROVISO (A) TO SECTION 43(5) IS NOT AP PLICABLE TO THE FACTS OF THE APPELLANTS CASE. 4. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. ACCORDINGLY, IT IS SUBMITTED THAT RELIEF AS PRAYED ABOVE MAY KINDLY BE GRANTED. (B) AT THE OUTSET, LD. COUNSEL FOR ASSESSEE BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUES WERE DECIDED BY CO-ORDINATE BENCH OF INCOME TAX APP ELLATE TRIBUNAL (ITAT, FOR SHORT) IN ASSESSEES OWN CASE BY CO-ORDINATE BENCH OF ITAT, D ELHI, VIDE ORDER DATED 27.04.2018 IN ITA NO.- 4463/DEL/2014 FOR ASSESSMENT YEAR 2010-11 WHEREIN THE ASSESSEES APPEAL WAS DISMISSED AND REVENUES APPEAL WAS PARTLY ALLOWED F OR STATISTICAL PURPOSES; AND IT WAS HELD AS UNDER: '4.9 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACTS IN RESPECT OF THE TRANSACTION BRO UGHT ON RECORD BY THE LD. CIT(A) HAVE NOT BEEN DISPUTED BY THE LD. COUNSEL OF THE AS SESSEE. THE ASSESSEE IS CONTESTING THAT FORWARD CONTRACT TRANSACTION OF GOL D ARE HEDGING TRANSACTIONS, WHEREAS ACCORDING TO THE ASSESSING OFFICER, NO SUPP ORTING DOCUMENTS HAVE BEEN FILED. THE HEDGING TRANSACTIONS CAN BE ILLUSTRATED AS UNDER: 'FOR EXAMPLE, IMAGINE AN EXPORTER HAS GOT AN EXPORT ORDER OF JEWELLERY, SAY 1000 GRAMS ON 01/04/2008, WHICH HAS TO BE SUPPLIED WITHIN 3 MONTHS, SAY BY 30/6/2008. THE PRICE OF PURE GOLD PER 10 GMS AS ON 01/04/2008 IS SAY RS. 30,000/-. THE EXPORTER PURCHASES THE GOLD AND START MANUFACTURING OF THE JEWELLERY. THE EXPORTER APPREHENDS THAT THE PRICES OF GOLD MAY GO UP OR MAY GO DOWN AS ON THE DATE OF JEWELLERY FINALLY EXPORTE D TO THE BUYER I.E. 30/06/2008. IN CASE, THE PRICE OF GOLD GOES UP, THE EXPORTER GET MORE VALUE OF THE JEWELLERY DUE TO RISE IN THE PRICE OF THE GOLD, HOWEVER, IF THE PRICE, GOES DOWN THE EXPORTER WILL GET LESS VALUE F THE JEWELLE RY AS COMPARED TO THE VALUE OF THE DATE OF PURCHASE. IN ORDER TO ELIMINATE THE RISK OF LOSS ON SALE OF JEWELLERY, IF ANY DUE TO FALL IN PRICE OF GOLD ON T HE DATE OF BOOKING OF SALES AS COMPARED TO PRICES ON THE DATE OF PURCHASE, THE EXP ORTER ENTERS INTO A FORWARD CONTRACT WITH BANK OR ANY AUTHORIZED PERSON ON 01.04.2008 FOR SALE OF GOLD ON THE FUTURE DATE (WHICH MAY BE AROUND THE DA TE OF SUPPLY OF JEWELLERY TO THE BUYER, SAY 30.06.2008), ON THE SAME PRICE ON WHICH, THE EXPORTER HAS ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 3 OF 11 PURCHASED THE GOLD I.E. RS. 30,000/- PER 10 GMS. NO W, IN CASE THE PRICE OF THE GOLD ON THE DATE OF SUPPLY OF JEWELLERY GOES UP, SA Y RS. 40,000/- PER 10 GMS, THEN THERE WILL BE A LOSS OF RS. 10,000 PER GRAM TO THE EXPORTER, AT THE TIME OF SETTLEMENT OF THIS FORWARD CONTRACT TRANSACTION, HO WEVER THERE WILL BE A GAIN OF RS. 10,000 PER GRAM IN EXPORT ORDER SUPPLIED. TH US, WHEN BOTH THE FORWARD CONTRACT TRANSACTION AND ACTUAL SUPPLY OF THE JEWEL LERY, ARE SEEN IN COMBINED MANNER, THERE IS NO LOSS TO THE EXPORTER, BUT WHEN FORWARD CONTRACT TRANSACTION IS SEEN ISOLATED & ACCOUNTED SEPARATELY , THERE WILL BE A LOSS OF RS: 10,000 PER 10 GMS. SIMILARLY, IN CASE THE PRICE OF THE GOLD GOES DOWN SAY TO RS.20,000/- PER 10 GMS, IN THAT CASE AT THE TIME OF SETTLEMENT OF THE FORWARD CONTRACT ON 30/06/2008, THE EXPORTER WILL GAIN RS. 10,000 PER 10 GMS, WHEREAS IN THE EXPORT ORDER SUPPLIED, VALUE OF THE JEWELLERY WILL BE REDUCED BY RS. 10,000 PER 10 GMS AND WHICH WILL BE A LOSS ON T HE EXPORT ORDER. BUT, WHEN WE SEE, BOTH THE FORWARD CONTRACT TRANSACTION AND EXPORT ORDER IN COMBINED MANNER, THERE WILL BE NO LOSS TO THE EXPOR TER. IN THIS MANNER, THE EXPORTER HAS HEDGED ITS LOSSES FROM FLUCTUATION OF THE GOLD PRICES IN THE MARKET'. 4.9.1 IN THE ABOVE EXAMPLE, THE FORWARD CONTRACT TRANSAC TIONS HAVE BEEN SETTLED OTHERWISE THAN BY ACTUAL DELIVERY OF GOLD A ND THEREFORE THESE TRANSACTIONS WILL FALL IN THE NATURE OF SPECULATIVE TRANSACTIONS SUBJECT TO THE EXCEPTIONS PROVIDED IN PROVISO (A) TO (E) TO TH E SECTION 43(5) OF THE ACT. 4.9.2 IN THE FACTS OF THE INSTANT CASE, THE ISSUE IN DIS PUTE IS WHETHER THE TRANSACTIONS OF FORWARD (FUTURE) CONTRACT OF SALE O F GOLD TO THE BANK OR THE MMTC ARE SPECULATIVE TRANSACTION OR NOT. FOR RE ADY REFERENCE, THE RELEVANT SECTION 43(5) OF THE ACT, DEFINING THE SPE CULATIVE TRANSACTION IS REPRODUCED AS UNDER: 'DEFINITIONS OF CERTAIN TERMS RELEVANT TO INCOME F ROM PROFITS AND GAINS OF BUSINESS OR PROFESSION. 43. IN SECTIONS 28 TO 41 AND IN THIS SECTION, UNLES S THE CONTEXT OTHERWISE REQUIRES (1) . (2) .. (3) (4) (5) SPECULATIVE TRANSACTION' MEANS A TRANSACTION IN WHI CH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY, INCLUDIN G STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHER WISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS: PROVIDED THAT FOR THE PURPOSES OF THIS CLAUSE (A) A CONTRACT IN RESPECT OF RAW MATERIALS OR MERCHANDI SE ENTERED INTO ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 4 OF 11 BY A PERSON IN THE COURSE OF HIS MANUFACTURING OR M ERCHANTING BUSINESS TO GUARD AGAINST LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN RESPECT OF HIS CONTRACTS FOR ACTUAL DELIVERY OF GOO DS MANUFACTURED BY HIM OR MERCHANDISE SOLD BY HIM; OR (B) A CONTRACT IN RESPECT OF STOCKS AND SHARES ENTERED INTO BY A DEALER OR INVESTOR THEREIN TO GUARD AGAINST LOSS IN HIS HO LDINGS OF STOCKS AND SHARES THROUGH PRICE FLUCTUATION; OR (C) A CONTRACT ENTERED INTO BY A MEMBER OF A FORWARD MA RKET OR A STOCK EXCHANGE IN THE COURSE OF ANY TRANSACTION IN THE NATURE OF JOBBING OR ARBITRAGE TO GUARD AGAINST LOSS WHICH MA Y ARISE IN THE ORDINARY COURSE OF HIS BUSINESS AS SUCH MEMBER; [OR ] (D) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING IN DE RIVATIVES REFERRED TO IN CLAUSE (AC) OF SECTION 2 OF THE SECURITIES CO NTRACTS (REGULATION) ACT, 1956 (42 OF 1956) CARRIED OUT IN A RECOGNISED STOCK EXCHANGE; [OR] (E) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING IN. C OMMODITY DERIVATIVES CARRIED OUT IN A RECOGNISED ASSOCIATION , WHICH IS CHARGEABLE TO COMMODITIES TRANSACTION TAX UNDER CHA PTER VII OF THE FINANCE ACT, 2013 (17 OF 2013), SHALL NOT BE DE EMED TO BE A SPECULATIVE TRANSACTION.' 4.9.3 THUS, ACCORDING TO THE SECTION ANY TRANSACTIONS OF CONTRACT FOR PURCHASE AND SALE OF COMMODITIES (HERE IN THIS CASE GOLD), WHICH IS SETTLED PERIODICALLY, OTHERWISE THAN BY WAY OF ACTU AL DELIVERY OR TRANSFER OF THAT COMMODITY, THE TRANSACTION WOULD F ALL UNDER SPECULATIVE TRANSACTION. HOWEVER, THERE ARE EXCEPTI ONAL SITUATIONS FROM SUB-CLAUSE (A) TO (E), WHERE THESE TRANSACTIONS WOU LD NOT BE SPECULATIVE TRANSACTION. 4.9.4 IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE CONTRACTS OF SALE OF GOLD TO MMTC ARE SETTLED PERIODICALLY WITHOUT ACTUA L DELIVERY AND ON THE DATE OF SETTLEMENT OF THE CONTRACT, ONLY DIFFER ENCE IN MARKET PRICE AND THE CONTRACT PRICE IS PAID OR RECEIVED BY THE A SSESSEE. THUS UNDER THE MAIN DEFINITION OF THE SUBSECTION, THE TRANSACT IONS ARE SPECULATIVE TRANSACTION, BUT THE ASSESSEE HAS CLAIMED THAT ITS CASE IS COVERED BY PROVISO (A) AND OF THE SAID SUBSECTION. 4.9.5 THE PROVISO (A) SPEAKS ABOUT CONTRACT IN RESPECT O F RAW MATERIAL TO GUARD AGAINST ANY LOSS IN PRICE FLUCTUATION AGAINST CONTRACT OF SALE OF MANUFACTURED GOODS. 4.9.6 THE LD. CIT(A) HAS NOTED THAT PROVISO (A) TO SECTI ON 43(5) IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE AS THERE IS N O ELEMENT OF LOSS EMBEDDED IN RESPECT OF THE CONTRACT FOR ACTUAL DELI VERY OF JEWELLERY MANUFACTURED AND EXPORTED BY THE ASSESSEE, WHICH RE QUIRED TO BE GUARDED BY ENTERING INTO A CONTRACT IN RESPECT OF T HE RAW MATERIAL. ACCORDING TO THE LD. CIT(A), THE ASSESSEE HAS ENTER ED INTO FORWARD CONTRACT WITH BANK TO GUARD THE LOSS THROUGH FUTURE PRICE FLUCTUATION IN RESPECT OF THE PURCHASE OF PURE GOLD. 4.9.7 IN OUR OPINION, OBJECT OF ENTERING INTO FORWARD CON TRACT TRANSACTION HAS TO BE SEEN FROM THE CONTRACT AGREEMENTS AND UNDERLY ING ASSETS. IN THE CASE OF THE ASSESSEE FOR CLAIMING BENEFIT OF CLAUSE (A) OF SECTION 43(5) OF THE ACT, ITS FORWARD CONTRACT TRANSACTIONS SHOUL D HAVE BEEN CORROBORATED ONE BY ONE, WITH THE PURCHASES OF GOLD AN SUPPLY OF JEWELLERY MANUFACTURED. BEFORE THE ASSESSING OFFIC ER, THE ASSESSEE FAILED TO CORRELATE THESE FORWARD CONTRACTOR TRANSA CTIONS OF GOLD AND ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 5 OF 11 CORRESPONDING PURCHASES AND EXPORT OF JEWELLERY. E VEN SUCH DETAILS HAVE NOT BEEN FILED EITHER BEFORE THE LD. CIT(A) OR BEFORE US. THUS, N THIS GROUND, THE ASSESSEE CANNOT BE ALLOWED THE BEN EFIT OF PROVISO (A) TO SECTION 43(5) OF THE ACT IN ABSENCE OF ANY DOCUM ENTARY EVIDENCES TO SUPPORT ITS CONTENTION OF FULFILLING CONDITIONS OF PROVISO (A) TO SECTION 43(5) OF THE ACT . . 4.9.8 FURTHER, THE LD. CIT(A) HAS DISTINGUISHED THE FACTS OF THE CASE WITH THE FACTS OF THE CASE OF LONDON STAR DIAMOND COMPANY. IN THE SAID CASE FORWARD CONTRACTS WERE ENTERED INTO WITH BANKS FOR HEDGING FOREIGN EXCHANGE LOSS ON OUTSTANDING RECEIVABLES IN FOREIGN CURRENCY . IN THE SAID CASE THERE WAS ONE TO ONE CORRELATION BETWEEN THE FORWARD CONTRACTS AND THE EXPORT INVOICES BUT IN THE INSTAN T CASE THE ASSESSEE HAS FAILED TO CORRELATE UNDERLYING ASSET WITH THE F ORWARD CONTRACTS ENTERED INTO BY THE ASSESSEE. WE AGREE WITH THE FIN DING OF THE LD. CIT(A) THAT THE FACTS OF THE CASE OF LONDON STAR DI AMOND COMPANY ARE DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEE AND ACCORDINGLY RATIO OF THE SAID DECISION IS NOT APPLICABLE OVER THE FACTS OF THE INSTANT CASE. 4.9.9 THE LD. CIT(A) HAS ALSO RELIED ON THE RULE OF CONS ISTENCY AS LAID DOWN BY THE HON'BIE SUPREME COURT IN THE CASE OF RADHASA MI STASANG 193 ITR 321 IN VIEW OF THE LOSS TREATED BY THE ASSESSEE AS SPECULATIVE LOSS IN THE PRECEDING ASSESSMENT YEAR. 4.9.10 IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE DECISION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY DISMISSED. 5. THE GROUND NOS. 1 TO 4 OF THE APPEAL OF THE REVENU E RELATES TO HOLDING THE TRANSACTION OF FOREIGN CURRENCY FORWARD CONTRAC TS AMOUNTING TO RS.99,22,176/-AS SPECULATIVE BY THE LD. CIT(A). 5.1 BEFORE US THE LD. DR SUBMITTED THAT THIS AMOUNT WA S DECLARED BY THE ASSESSEE ITSELF AS BUSINESS PROFIT IN THE RETURN OF INCOME FILED AND THEREFORE THE ASSESSING OFFICER DID NOT LOOK INTO W HETHER THE TRANSACTIONS COULD BE IN THE NATURE OF SPECULATIVE OR NOT. ACCORDING TO HIM, THE LD. CIT(A) ON THE BASIS OF HIS FINDING IN RESPECT OF FORWARD CONTRACT TRANSACTION OF GOLD, TREATED THE GAIN FROM FOREIGN CURRENCY FORWARD CONTRACT TRANSACTION AS SPECULATION GAIN WI THOUT LOOKING INTO THE DOCUMENTARY EVIDENCES OF SUCH TRANSACTIONS, WHI CH WERE ALREADY ADMITTED BY THE ASSESSEE AS BUSINESS TRANSACTION. A CCORDING TO HIM, WHETHER THESE TRANSACTIONS COULD BE CONSIDERED AS S PECULATIVE TRANSACTION, NEED TO BE EXAMINED IN THE LIGHT OF SU PPORTING CONTRACT AGREEMENTS AND DOCUMENTARY EVIDENCES. 5.2 THE LD. AR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A). 5.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE GAIN OF RS. 99,22,176/-FROM FOREIGN CURRENCY FORWARD CONTRACTS WAS OFFERED TO TAX BY TH E ASSESSEE AS BUSINESS GAIN AND, THEREFORE,, THE ASSESSING OFFICE R DID NOT FEEL TO GO INTO EXAMINING, WHETHER IT WAS SPECULATIVE IN NATUR E. WE ALSO FIND THAT THE LD. CIT(A) HAS HELD THE TRANSACTIONS AS SPECULA TIVE IN NATURE WITH FOLLOWING FINDING : 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE RECORD. I AM OF THE CONSIDERED VIEW TH AT THE ASSESSING OFFICER HAS ERRED IN HOLDING THE GAINS ARISEN FROM FORWARD CONTRACTS IN RESPECT OF FOREIGN CURRENCY 1 AS BUSINESS INCO ME THOUGHT HE HAS PLACED RELIANCE ON THE DECISION IN THE CASE F K MOH AN & COMPANY (EXPORT) (P) LTD. (2010) 130 TTJ 719. HOWEVER, THE NATURE OF ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 6 OF 11 FORWARD CONTRACTS IN RESPECT OF FOREIGN CURRENCY AS MENTIONED ABOVE IS SPECULATION. THUS, BOTH TYPES OF TRANSACT ION; FORWARD CONTRACTS IN RESPECT OF PURE GOLD AND FORWARD CON TRACTS IN RESPECT OF FOREIGN CURRENCY BEING SIMILAR HS TO BE TREATED O N THE SAME FOOTINGS. THUS, IT IS HEREBY HELD THAT THE PROFIT OF RS. 99,21,176/- DERIVED ON ACCOUNT OF FORWARD CONTRACTS IN RESPECT OF 'FOREIGN CURRENCY' AS MENTIONED ABOVE IS SPECULATIVE PROFIT/ GAINS AND NOT THE BUSINESS INCOME AS HELD BY THE AO. ACCORDINGLY, IT IS HELD THAT THE PROFIT OF RS. 99,22,176/- DERIVED ON ACCOUNT OF FOR WARD CONTRACTS IN RESPECT OF 'FOREIGN CURRENCY' BEING SPECULATIVE PRO FIT HAS TO BE SET- OFF OF AGAINST THE LOSS OF RS. 1,03,93,854/- DEBITE D IN GOLD DESK ACCOUNT. CONSEQUENTIALLY,' THE ADDITION OF RS. 1,03 ,93,854/- IS RESTRICTED TO RS.4,71,678/-. THE AO SHALL GIVE CONS EQUENTIAL RELIEF.' 5.4 ON PERUSAL OF THE ABOVE FINDING, WE NOTE THAT THE L D. CIT(A) HAS DECIDED THE ISSUE IN VIEW OF THE FACTS NOTED IN THE CASE OF FORWARD CONTRACT TRANSACTIONS OF THE GOLD AND NO DOCUMENTAR Y EVIDENCE IN SUPPORT HAVE BEEN REFERRED IN HIS FINDINGS ON THE I SSUE IN DISPUTE. 5.5 IN VIEW OF THE AFORESAID FACTS, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECI DING AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE, WITH LIBERTY TO THE ASSESSEE TO FILE NECESSARY DOCUMENTA RY EVIDENCE IN SUPPORT ITS CLAIM. THUS, THE GROUND NOS. 1 TO 4 OF THE APPEAL OF THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. (B.1) THE ASSESSEE CARRIED THE MATTER IN HONBLE DELHI H IGH COURT AND FILED APPEAL UNDER SECTION 260A OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) FOR ASSESSMENT YEAR 2010-11. VIDE ORDER DATED 29.04.2019, THE HONBLE DELHI HIGH COURT HELD AS UNDER: 4.WE HAVE HEARD COUNSEL FOR THE PARTIES. THE LIMIT ED RELIEF THAT THE ASSESSEE SEEKS IS THAT EVEN WHILE DIRECTING THE REMAND FOR RECONSI DERATION AT THE BEHEST OF THE REVENUE IN ITS APPEAL, ITAT FAILED TO APPRECIATE TH E ASSESSEES CONTENTION WITH RESPECT TO THE CONTRACTS WHICH IT CLAIMED WERE NOT FORWARD CONTRACTS BY VIRTUE OF PROVISO CLAUSES (A) & (B) TO SECTION 43 (5) OF THE ACT. THE CONTENTION WAS DECLINED ON THE GROUND THAT NO CORRELATION BETWEEN THE FORWA RD CONTRACT TRANSACTIONS OF GOLD AND CORRESPONDING PURCHASES AND EXPORT OF JEWELLERY WAS ESTABLISHED TO SATISFY THE REQUIREMENTS OF LAW. THIS COURT IS OF THE OPINION T HAT THE ASSESSEES CONTENTION HAS SOME MERIT - THE EARLIER PORTION OF THE MAIN IMPUGN ED ORDER SPECIFICALLY NOTICED THE COMPILATION OF DOCUMENTS PRODUCED DURING THE PROCEE DINGS, WHICH CONTAINED SPECIFIC CONTRACTS AND THE TRANSACTIONS WHICH THE REVENUE AL LEGED WERE SPECULATIVE. 5. IN THESE CIRCUMSTANCES, GIVEN THAT THE REVENUES APPEAL HAS BEEN REMITTED, THE ITATS APPROACH IN OUR OPINION WAS NOT CORRECT. ACCORDINGLY, THE ASSESSEES QUESTION WITH RESPECT TO THE VERIFICATION OF THE TR ANSACTIONS AND THE CORRELATION WITH SPECIFIC CONTRACTS SHALL BE EXAMINED HAVING REGARD TO THE ASSESSEES CONTENTIONS AS ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 7 OF 11 WELL. ITA 430/2019 AND W.P. (C) 4468/2019 ARE PARTL Y ALLOWED IN THE ABOVE TERMS. THE ITATS IMPUGNED ORDER IS HEREBY SET ASIDE. (B.2) IDENTICAL ISSUES CAME UP BEFORE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 ALSO. VIDE ORDER DATED 28.05.2019 FOR ASSE SSMENT YEAR 2011-12 IN ITA NO. 4531/DEL/2015 AND 4181/DEL/2015; AND THE ISSUES WER E SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE, IN ACCORDANCE WITH DEC ISION TAKEN IN ASSESSMENT YEAR 2010-11, BY FOLLOWING THE DIRECTIONS OF THE HONBLE HIGH COU RT. THE RELEVANT PORTION OF THE AFORESAID ORDER DATED 28.05.2019 IS REPRODUCED AS UNDER: 7. AT THE VERY OUTSET, IT IS BROUGHT TO OUR NOTICE BY THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEALS THAT IDENTICAL ISSUES WERE DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN IT A NOS,4487/DEL/2014 & 4463/DEL/2014 ORDER-DATED 27.04.2 018 BY DISMISSING THE APPEAL FILED BY THE ASSESSEE AND BY PARTLY ALLO WING THE APPEAL FILED BY THE REVENUE FOR STATISTICAL PURPOSES. THEN, THE ASSESSE E CARRIED THE MATTER BEFORE THE HONBLE DELHI HIGHOURT- WHO HAS PASSED THE ORDER DATED 29.04.2019 IN WP (C) 4468/2019 AND ITA 430/2019 BY SETTING ASIDE THE MATTER TO THE AO TO EXAMINE THE ISSUE WITH RESPECT TO VERIFICATION OF TRANSACTI ONS AND CORRELATION WITH SPECIFIC CONTRACTS BY RETURNING FOLLOWING FINDINGS 4. WE HAVE HEARD COUNSEL FOR THE PARTIES. THE LIMI TED RELIEF THAT THE ASSESSEE SEEKS IS THAT EVEN WHILE DIRECTING THE REM AND FOR RECONSIDERATION AT THE BEHEST OF THE REVENUE IN ITS APPEAL, IT AT FAILED TO APPRECIATE THE ASSESSEE''S CONTENTION WIT H RESPECT TO THE CONTRACTS WHICH IT CLAIMED WERE NOT FORWARD CONTRAC TS BY VIRTUE OF PROVISO CLAUSES (A) & (B) TO SECTION43 (5) OF THE A CT THE CONTENTION WAS DECLINED ON THE GROUND THAT NO CORRELATION BETW EEN THE FORWARD CONTRACT TRANSACTIONS OF GOLD AND CORRESPONDING PUR CHASES AND EXPORT OF JEWELLERY WAS ESTABLISHED TO SATISFY THE REQUIREMENTS OF LAW. THIS COURT IS OF THE OPINION THAT THE ASSESSEE S CONTENTION HAS SOME MERIT - THE EARLIER PORTION OF THE MAIN IMPUGN ED ORDER SPECIFICALLY NOTICED THE COMPILATION OF DOCUMENTS P RODUCED DURING THE PROCEEDINGS, WHICH CONTAINED SPECIFIC CONTRACTS AND THE TRANSACTIONS WHICH THE REVENUE ALLEGED WERE SPECULA TIVE. 5. IN THESE CIRCUMSTANCES, GIVEN THAT THE REVENUES APPEAL HAS BEEN REMITTED, THE ITATS APPROACH IN OUR OPINION WAS NOT CORRECT. ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 8 OF 11 ACCORDINGLY, THE ASSESSEES QUESTION WITH RESPECT T O THE VERIFICATION OF THE TRANSACTIONS AND THE CORRELATION WITH SPECIF IC CONTRACTS SHALL BE EXAMINED HAVING REGARD TO THE ASSESSEES CONTENT IONS AS WELL, ITA 430/2019 AND W.P.(C) 4468/2019 ARE PARTLY ALLOW ED IN THE ABOVE TERMS. THE ITATS IMPUGNED ORDER IS HEREBY SE T ASIDE. 8. WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ID ENTICAL ISSUES FOR AY 2010-11 ARE ALREADY PENDING ADJUDICATION BY THE AO HAVING B EEN REMANDED BY THE HONBLE DELHI HIGH COURT, THE SAME ISSUES QUA FOR THE YEAR UNDER ASSESSMENT ARE ALSO REQUIRED TO BE REMANDED BACK TO THE AO TO DECIDE IN ACCORDANCE WITH THE ORDER PASSED BY THE HONBLE HIGH COURT. CONSEQUENTLY, BOT H THE APPEALS ARE SET ASIDE TO THE AO TO DECIDE IN ACCORDANCE WITH THE DECISION TA KEN IN AY 2010-11 BY FOLLOWING THE DIRECTIONS BY THE HONBLE HIGH COURT. CONSEQUEN TLY, BOTH THE APPEALS FILED BY THE ASSESSEE AS WELL AS REVENUE ARE ALLOWED FOR STATIST ICAL PURPOSES. (B.3) SIMILARLY, IDENTICAL ISSUES ONCE AGAIN CAME UP BEF ORE ITAT FOR ASSESSMENT YEAR 2012-13 IN ASSESSEES APPEAL. VIDE ORDER DATED 11. 07.2019 IN ITA NO.- 2178/DEL/2016; CO-ORDINATE BENCH OF ITAT, DELHI, REMANDED THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER; HOLDING AS UNDER: 6. DURING THE HEARING FOR THE ASSESSMENT YEAR 201 2-13 ,BOTH THE REPRESENTATIVES HAVE ARGUED THAT THE MATTER BE REMANDED BACK TO THE FILE OF THE AO TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF JUDGMENT OF THE HON'BL E HIGH COURT FOR THE ASSESSMENT YEAR 2010-11. HENCE, WE HEREBY DIRECT THE AO TO VER IFY THE TRANSACTIONS AND CORRELATE THE SAME WITH THE SPECIFIC CONTRACTS. THE AO IS ALSO DIRECTED TO CONSIDER THE ORDER OFF THE HON'BLE HIGH COURT OF DELHI AT NE W DELHI VIDE W.P.(C) 4469/2019 CM APPL. 19848/19 AND TO CONSIDER THE FORWARD CONTR ACTS WITH RELATION TO THE PROVISION TO CLAUSE (A) AND (B) TO SECTION 43(5) OF THE INCOME TAX ACT, 1961 IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX AC T. ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 9 OF 11 (C) AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL F OR ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE BEING IDENTICAL IN THE PRESENT APP EAL; BE ALSO REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ORDER IN ACCORDANCE WITH AFORESAID ORDER DATED 28.05.2019 OF HONBLE DELHI HIGH COURT; BY FOLLOWING THE PRECE DENTS IN ASSESSEES OWN CASE IN AFORESAID ORDERS DATED 28.05.2019 AND 11.07.2019 PA SSED BY CO-ORDINATE BENCHES OF ITAT, DELHI. THE LD. COUNSEL FOR ASSESSEE SUBMITTE D THAT FACTS AND CIRCUMSTANCES FOR THIS YEAR I.E. ASSESSMENT YEAR 2010-11 ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES FOR ASSESSMENT YEARS 2010-11 , 2011-12 AND 2012-13 TO W HICH THE AFORESAID ORDERS DATED 29.04.2019, 28.05.2019 AND 11.07.2019. THE LD. DEP ARTMENTAL REPRESENTATIVE (LD. DR, FOR SHORT) AGREED WITH THE SUBMISSIONS OF THE ASSES SEE. (D) WE HAVE HEARD BOTH SIDES. WE HAVE PERUSED THE MAT ERIALS AVAILABLE ON RECORD. WE HAVE ALSO CONSIDERED THE PRECEDENTS WHICH WERE BROU GHT TO OUR ATTENTION, AT THE TIME OF HEARING. IT IS NOT IN DISPUTE THAT ON IDENTICAL IS SUES IN DISPUTE, THE FACTS AND CIRCUMSTANCES FOR THIS YEAR ARE IDENTICAL TO FACTS AND CIRCUMSTAN CES FOR ASSESSMENT YEARS 2011-12 AND 2012-13 TO WHICH THE AFORESAID ORDERS DATED 29.04.2 019, 28.05.2019 AND 11.07.2019 PERTAIN. NO DISTINGUISHING FACTS AND CIRCUMSTANCES HAVE BEEN BROUGHT TO OUR ATTENTION BY EITHER SIDE TO PERSUADE US TO TAKE A VIEW DIFFERENT FROM VIEW TAKEN BY CO-ORDINATE BENCH OF ITAT, DELHI IN AFORESAID ORDERS DATED 28.05.2019 AN D 11.07.2019 FOR ASSESSMENT YEARS 201-12 AND 2012-13 RESPECTIVELY. IN VIEW OF THE FO REGOING, AND AS BOTH SIDES HAVE AGREED TO THIS AT THE TIME OF HEARING BEFORE US, WE SET AS IDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE IN DISPUTE IN THE PRESENT APPEAL BEFORE US TO THE FILE OF THE ASSESSING ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 10 OF 11 OFFICER WITH THE DIRECTION TO PASS FRESH ORDER GIVE N BY IN ACCORDANCE WITH DIRECTION HONBLE DELHI HIGH COURT FOR ASSESSMENT YEAR 2010-11 VIDE A FORESAID ORDER DATED 29.04.2019. (E) IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4/12/2019. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/12/2019 POOJA/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 4463/DEL/2014 NALINI JEWELLERS. PAGE 11 OF 11 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER