M/s. Agrim Corporate Services Ltd., New Delhi V. ITO, New Delhi

ITA 4767/DEL/2010

• Counselvise Citation: 476720114 RSA 2010
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: TARUN KUMAR S; KAILASH MITTAL
• Keywords: Principle of natural justice; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI SHAMIM, YAHYA SHAMIM, YAHYA SHAMIM, YAHYA SHAMIM, YAHYA, AM , AM , AM , AM ITA NO. ITA NO. ITA NO. ITA NO.4767 4767 4767 4767/DEL/201 /DEL/201 /DEL/201 /DEL/2010 00 0 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 200 200 200 2006 66 6- -- -07 0707 07 M/S AGRIM CORPORATE M/S AGRIM CORPORATE M/S AGRIM CORPORATE M/S AGRIM CORPORATE SERVICES LIMITED, SERVICES LIMITED, SERVICES LIMITED, SERVICES LIMITED, C/O RRA TAXINDIA, C/O RRA TAXINDIA, C/O RRA TAXINDIA, C/O RRA TAXINDIA, D DD D- -- -28, SOUTH EXTENSION, 28, SOUTH EXTENSION, 28, SOUTH EXTENSION, 28, SOUTH EXTENSION, PART PART PART PART- -- -I, I,I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 049. 110 049. 110 049. 110 049. PAN : PAN : PAN : PAN : AAACC9553D. AAACC9553D. AAACC9553D. AAACC9553D. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, COY. WARD COY. WARD COY. WARD COY. WARD- -- -1(2), 1(2), 1(2), 1(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAILASH MITTAL AND SHRI TARUN KUMAR, ADVOCATES. RESPONDENT BY : MS.Y.S.KAKKAR, SR.DR. ORDER ORDER ORDER ORDER PER PER PER PER R.P.TOLANI, JM R.P.TOLANI, JM R.P.TOLANI, JM R.P.TOLANI, JM : : : : THIS IS ASSESSEES APPEAL. FOLLOWING GROUNDS ARE RAISED:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ACTION OF LD.A.O. IN TREATING THE LO SS ARISING OUT OF SALE OF SHARES AS SPECULATIVE LOSS AND HAS F URTHER ERRED IN APPLYING THE PROVISIONS OF EXPLANATION TO SECTION 73. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD.CIT(A) IN CONFIRMING THE ACTION OF LD. A.O. IN DISALLOWING THE LOSS OF RS.3,75,000/- IS CONTRARY T O LAW AND FACTS AND VOID ABINITIO. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ACTION OF LD.A.O. IN FRAMING THE ASS ESSMENT IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS PASSING THE IMPUGNED ORDER BY RECORDING INCORRECT F ACTS AND FINDINGS AND WITHOUT PROVIDING ADEQUATE OPPORTU NITY OF ITA-4767/DEL/2010 2 HEARING TO THE ASSESSEE AND THE SAME IS NOT SUSTAIN ABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 2. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDS TH AT THE ASSESSING OFFICER HAS WRONGLY APPLIED EXPLANATION T O SECTION 73. BEFORE THE LEARNED CIT(A), THIS PLEA WAS RAISED REL YING ON ITAT JUDGMENT IN THE CASE OF NARAYAN PROPERTIES LTD. VS. ACIT 11 SOT 1 (LUCKNOW) AND DCIT VS. VENKETASHWARA INVESTMENTS & FINANCE (P) LTD. 93 ITD 177 (CAL.)(SB). 3. THE LEARNED CIT(A) WITHOUT ADJUDICATING THIS ISS UE, HOWEVER, INSISTED FOR PRODUCTION OF CONTRACT NOTE ON DEMAT A CCOUNT AND ON THIS BASIS ALONE, THE ASSESSEES CLAIM HAS BEEN REJECTED . THE LEARNED COUNSEL PLEADS THAT ALL THE DETAILS WERE FILED BEFO RE THE LOWER AUTHORITIES. IT IS A MATTER OF FACT THAT THE CONTR ACT NOTE OF PURCHASE COULD NOT BE PRODUCED BY THE ASSESSEE AS THE SAME H AD BECOME VERY OLD. HOWEVER, THE ASSESSEE HAD SOLD THE SHARES ON THE BASIS OF DELIVERY, THE PROFIT WHEREOF HAS BEEN OFFERED TO TA X. ALL OTHER DETAILS OF PURCHASE OF SHARES HAVE BEEN SUPPLIED TO THE ASSESS ING OFFICER ALONGWITH WRITTEN SUBMISSIONS DATED 28.11.2008 IN W HICH IT HAS BEEN CATEGORICALLY STATED THAT :- (A) THE ASSESSEES PRINCIPLE BUSINESS IS OF GRANTING LO ANS AND ADVANCES. (B) THE COMPANY HAD CAPITAL OF `49,25,000/- AND THE TOT AL LOANS AND ADVANCES MADE BY THE ASSESSEE WERE TO THE TUNE OF `49,94,105/-. THUS, THE ENTIRE CAPITAL WAS USED FO R LOANS AND ADVANCES AND NOT FOR SHARES. (C) THE DEFINITION OF INVESTMENT COMPANY IS DYNAMIC AND IS TO BE SEEN FROM YEAR TO YEAR. AS PER PROFIT & LOSS ACCOU NT, THE ASSESSEES RECEIPTS COMPRISED OF FOLLOWING INCOMES: - ITA-4767/DEL/2010 3 SALE OF SHARES/SECURITIES 1,100,000.00 CONSULTANCY/SERVICE CHARGES 1,342,149.00 INTEREST RECEIVED 159,737.00 MISC. RECEIPTS 15,000.00 4. THUS, NOT ONLY THE EMPLOYMENT OF CAPITAL WAS FOR LOANS AND THE ASSESSEE WAS AN INVESTMENT COMPANY, BUT ON THE OTHE R HAND, THE MAIN INCOME WAS NOT FROM SALE OF SHARES AND SECURITIES. THE ASSESSING OFFICER HAS NOT DOUBTED ABOUT THE SHARES BEING DELI VERY BASED BUT THE SAME HAS BEEN HELD TO BE LOSS FROM SPECULATION ONLY BY MISAPPLYING EXPLANATION TO SECTION 73. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED ON ITA T JUDGMENT IN THE CASE OF PRIYASHA MEVEN FINANCE LTD. VS. ITO ( 2010) 005 ITR (TRIB) 0441. IN OUR VIEW, THIS JUDGMENT IS NOT APPLICABLE TO THE ASSESSEES CASE AS IT WAS A SHARE BROKER HAVING INCOME FROM BR OKERAGE AND TRADING IN SHARES WHEREAS THE FACTS IN THIS CASE AS MENTIONED ABOVE ARE TOTALLY DIFFERENT. THE LEARNED DR RELIED ON TH E ORDERS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE RELEVANT MATERIAL ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF LEARNED COUNSEL FOR THE ASSESSEE. IT HAS NOT BEEN DISPUTED THAT THE MAJOR ACTIVITY OF THE ASSESSEE WAS IN ADVANCING LOANS. B ESIDES, THE MAIN INCOME ALSO DOES NOT COMPRISE OF INCOME FROM SHARES . THIS BEING SO, ON BOTH THE ACCOUNTS, ASSESSEES INCOME FROM SHARES CANNOT BE HELD TO BE SPECULATIVE IN NATURE. IN OUR VIEW, THE ASSE SSING OFFICER HAS NOT RAISED ANY DOUBT ABOUT THE NON-DELIVERY OF SHARES A S IN THAT CASE, THERE WOULD HAVE BEEN NO NECESSITY TO APPLY EXPLANA TION TO SECTION 73. SINCE THE ASSESSING OFFICER HAS NOT DISPUTED T HE FACT OF SHARES BEING DELIVERY BASED, IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES, WE ITA-4767/DEL/2010 4 HOLD THAT THE ASSESSEES LOSS IS NOT FROM SPECULATI VE TRANSACTIONS. THE SAME IS TO BE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 28 TH NOVEMBER, 2011. SD/- SD/- ( (( (SHAMIM YAHYA SHAMIM YAHYA SHAMIM YAHYA SHAMIM YAHYA) )) ) (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 28.11.2011 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR