DCIT-1(3)(2), MUMBAI V. M/S WEISSER TRADING COMPANY PVT LTD., MUMBAI

ITA 4595/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MITALI GO
• Assessee Lawyers: T S KHALSA
• Keywords: Speculation loss; Revised return
• Section: 43(5); 13; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , G BENCH MUMBAI BEFORE : SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M.BALAGANESH, A CCOUNTANT M EMBER ITA NO. 4595 /MUM/ 20 19 ( ASSESSMENT YEAR : 2012 - 13 ) DY. CIT - 1(3)(2), MUMBAI 540, AAYAKAR BHAVAN M.K.ROAD , MUMBAI VS. M/S. WEISSER TRADING COMPANY PVT. LTD., D - 407, TURAKHIA PARK, M.G. ROAD OPP. SWIMMING POOL KANDIVALI (E) MUMBAI 400 020 PAN/GIR NO. AAACW8358E (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI T.S. KHALSA REVENUE BY MS. MITALI GOPANI DA TE OF HEARING 07 / 06 /202 1 DATE OF PRONOUNCEMENT 11 / 06 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 4595/MUM/2019 FOR A.Y. 2012 - 13 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUM BAI IN APPEAL NO. CIT(A) - 3/IT - 10122/2018 - 19 DATED 30/04/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 19/01/2015 BY THE LD. DCIT (1)(3)(2), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 4595/MUM/2019 M/S. WEISSER TRADING COMPANY PVT. LTD. , 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN ALLOWING THE LOSS OF RS. 627,41 / 471/ - DERIVED ON CURRENCY DERIVATIVE TRANSACTION AS BUSINESS LOSS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN ALLOWING THE LOSS OF THE ASSESSEE AS BUSINESS LOSS DERIVED BY THE ASSESSEE ON CURRENCY DERIVATIVE TRANSACTION BY RELYING ON THE JUDGEMENT OF IVF ADVISORS (P) LTD. [39 ITR(TRIB.)541], WHEREIN, THE FACTS OF THE SAID CASE, IS ENTIRELY DIFFERENT THAN THE FACTS OF THE CASE OF THE ASSESSEE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN ALLOWING SPECULATION LOSS DERIVED BY THE ASSESSEE ON CURRENCY DERIVATIVE TRANSACTION AS BUSINESS LOSS, IN VIOLATION OF PROVISION OF SECTION 43(5) OF THE INCOME TAX ACT, 1961, READ WITH SECTION 2(AC) OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 BY INCLUDING TH E CURRENCY DERIVATIVE, WITHIN THE DEFINITION OF DERIVATIVES. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CI T(A) ERRED IN ALLOWING THE ADDITIONAL CLAIM OF THE ASSESSEE MADE IN THE REVISED RETURN OF INCOME WHICH WAS FIL ED BEYOND THE TIME ALLOWED U/S, 139 OF THE ACT. 5. THE APPELLANT CRAVES TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THIS APPEAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND ID ENTICAL GROUNDS WERE ADJUDICATED BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.4657/MUM/2017 FOR A.Y.2013 - 14 DATED 18/01/2018. BOTH THE PARTIES MUTUALLY AGREED THAT THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES OF THE INSTANT CASE FOR THIS ASSESSMENT Y EAR WHEN COMPARED TO THE FACTS PREVAILING IN A.Y.2013 - 14. THE FACTS OF THE ASSESSMENT YEAR 2013 - 14 TOGETHER WITH THE DECISION RENDERED THEREON ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE : - 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND SECURITIES, FINANCING OF LOANS AND ADVANCES AND TRADING OF FABRICS. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO DISALLOWED ASSESSEES CLAIM OF ITA NO . 4595/MUM/2019 M/S. WEISSER TRADING COMPANY PVT. LTD. , 3 BUSINESS LOSS AND TRADING OF CURRENCY DERIVATIVES ON RECOGNISED EXCHANGE, BY TREATING THE SAME AS SPECULATION IN NATURE. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH IN CAS E OF IVF ADVERTISERS PVT. LTD., 39 ITR 541, WHEREIN TRIBUNAL HELD AS UNDER: - THE ASSESSES WAS AN INVESTMENT MANAGEMENT CONSULTANT. FOR THE ASSESSMENT YEAR 2009 - 10, IT CLAIMED LOSS - ON ACCOUNT OF FOREIGN CURRENCY FUTURES. THE ASSESSING OFFICER HELD THAT TH E LOSS COULD NOT BE ALLOWED IN THE LIGHT OF THE PROVISIONS OF SECTION 43(5) OF THE INCOME - TAX ACT, 1961 READ WITH SECTION 2(AC) OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956. THE COMMISSIONER (APPEALS) CONFIRMED THIS. ON APPEAL: HELD, ALLOWING THE AP PEAL, THAT DERIVATIVES INCLUDE FOREIGN CURRENCY. CALL OPTIONS OR PUT OPTIONS WERE TRANSACTIONS OF DERIVATIVE MARKETS AND COULD NOT BE TERMED SPECULATIVE IN NATURE. THEREFORE, THE LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF FOREIGN CURRENCY FUTURES WAS ALLOW ABLE.' 6. THE QUESTION RAISED IN THIS APPEAL READS AS UNDER: - 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE HELD THAT CLAUSE (D) OF THE PROVISO TO SECTION 43(5) OF THE INCOME - TAX A CT, 1961 ('THE ACT')/ WAS APPLICABLE TO THE TRANSACTIONS IN FOREIGN CURRENCY FUTURES ENTERED INTO BY THE APPELLANT AND THEREFORE THAT THE LOSS FROM THESE TRANSACTIONS WAS NOT IN THE NATURE OF SPECULATION LOSS.' 7. THE TRIBUNAL DECIDED THE ISSUE AS UNDER: - CONSIDERING THE RELEVANT PROVISIONS OF THE RELEVANT ACTS, DISCUSSED HERE - IN - ABOVE IN THE LIGHT OF THE HON'BLE MADRAS HIGH COURT AND THE ANSWERS GIVEN TO FREQUENTLY ASKED QUESTIONS BY THE SECURITIES AND EXCHANGE BOARD INDIA AND THE INCORPORATION OF EXCHAN GE TRADED CURRENCY DERIVATIVE FROM AUGUST, 2008, THERE REMAIN NO IOTA OF DOUBT THAT THE TRANSACTION OF THE ASSESSEE CANNOT BE TREATED AS SPECULATIVE TRANSACTION. WE HAVE ALSO GONE THROUGH THE COPIES OF THE CONTRACT NOTES INCORPORATED IN THE PAPER BOOK FILE D BEFORE US. A PERUSAL OF THE CONTRACT NOTE SHOWS THAT THE ASSESSEE HAS ' EITHER ENTERED INTO A CALL OPTION OR PUT OPTION AND ON THE SETTLEMENT DAY THE TRANSACTION HAS BEEN SETTLED BY DELIVERY, EITHER THE ASSESSEE HAS PAID US DOLLAR ON THE SETTLEMENT DAY O R HAS TAKEN DELIVERY OF US DOLLAR. TO SUM UP, THE DERIVATIVES INCLUDE FOREIGN CURRENCY AND CALL OPTION/PUT OPTION, ARE TRANSACTIONS OF DERIVATIVE MARKETS AND CANNOT BE TERMED AS SPECULATIVE IN NATURE. CONSIDERING THE TOTALITY OF THE FACTS AND IN THE LIGHT OF THE JUDICIAL DISCUSSION HEREINABOVE, WE HAVE NO HESITATION IN SETTING ASIDE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ITA NO . 4595/MUM/2019 M/S. WEISSER TRADING COMPANY PVT. LTD. , 4 8. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR ARE S AME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 3.1. WE FIND THAT THE LD. CIT(A) HAD FOLLOWED THIS TRIBUNAL ORDER RENDERED IN ASSESSEES OWN CASE FOR A.Y.2013 - 14 AND HAD HELD THAT THE LOSS OF RS.627,41 ,471/ - IS A REGULAR BUSINESS LOSS AND NOT SPECULATIVE IN NATURE. NO OTHER CONTRARY DECISION WAS POINTED OUT BY THE REVENUE BEFORE US ON THE IMPUGNED ISSUE. WE FIND THAT THE DECISION RENDERED FOR A.Y. 2013 - 14 BY THIS TRIBUNAL SHALL APPLY MUTATIS MUTANDIS TO THE YEAR UNDER CONSIDERATION ALSO IN VIEW OF IDENTICAL FACTS, EXCEPT WITH VARIANCE IN FIGURES. HENCE W E DO NOT FIND ANY INFIRMITY IN THE SAID ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 11 / 06 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 11 / 06 / 2021 KARUNA , SR.PS ITA NO . 4595/MUM/2019 M/S. WEISSER TRADING COMPANY PVT. LTD. , 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//