JCIT 17(1), MUMBAI V. ABHISHEK P. BANSAL, MUMBAI

ITA 5059/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71475 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: DEVESH VASAVADA
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND SANJAY ARORA (AM) . . , , & ./I.T.A. NO.5059/MUM/2012 ( / ASSESSMENT YEAR:2008-09) ASSTT. COMMISSIONER OF INCOME TAX -17(1), ROOM NO.113, 1ST FLOOR, PIRAMAL CHAMBERES, LALBAUG, MUMBAI-400011 / VS. SHRI ABHISHEK P.BANSAL, 11, ONGC BUILDING NO.3, RECLAMATION; OPP. LILAVATI HOSPITAL, BANDRA (W), MUMBAI. ./ ./PAN/GIR NO. : AJGPB2574F ( / APPELLANT) .. ( / RESPONDENT) / APPELLANT BY : SHRI SURENDRA KUMAR /RESPONDENT BY : SHRI DEVE SH VASAVADA ' / DATE OF HEARING : 25.9.2013 ' /DATE OF PRONOUNCEMENT : 09.10.2013 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2007-08 AGAINST ORDER DATED 23.5.2012 OF LD CIT(A)-34, MUMBAI DISPUTING THE DISALLOWANCE OF LOSS OF RS.31,55,000/-. 2. RELEVANT FACTS ARE THAT THE ASSESSEE CLAIMED LOS S OF RS.31,55,500/- ON TRADING OF CASTER SEED IN AHMEDABAD SEED MERCHANT ASSOCIATI ON PVT.LTD (ASMAPL). AO DID NOT ALLOW SET OFF OF THE SAID LOSS OF RS.31,55,500/- AGAINST THE PROFIT ON TRADING IN COMMODITY DERIVATIVES ON THE GROUND THAT ASMAPL IS UNRECOGNIZED COMMODITY EXCHANGE /ASSOCIATION AND ADDED BACK THE SAID AMOUN T TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. I.T.A. NO.5059/MUM/2012 2 3. ASSESSEE MADE FOLLOWING SUBMISSIONS BEFORE LD. C IT(A), AS MENTIONED IN PARA 2.3 OF THE IMPUGNED ORDER AS UNDER: '2.3 THE AR OF THE APPELLANT MADE THE FOLLOWING SU BMISSIONS ON THIS ISSUE : THE APPELLANT IS ENGAGED IN THE BUSINESS OF TRADIN G IN COMMODITY, COMMODITY DERIVATIVES, FUTURE AND OPTIONS IN SECURI TIES. THE APPELLANT HAD EARNED INCOME UNDER THE HEAD SALARY, HOUSE PROPERTY , BUSINESS AND INCOME FROM OTHER SOURCES. THE APPELLANT IS A MEMBE R OF MCX, NCDEX AND NMCE. THE APPELLANT IS ALSO REGISTERED WITH SEV ERAL BROKERS OF DIFFERENT COMMODITY DERIVATIVE EXCHANGES. THE APPEL LANT HAD EARNED OUT TRANSACTIONS IN COMMODITY DERIVATIVES ON THE EXCHAN GES IN PRO ACCOUNT AND HAD CARRIED OUT TRANSACTIONS ON VARIOUS OTHER C OMMODITY EXCHANGES AS MEMBER OF THE BROKER OF RESPECTIVE EXCHANGES. TH E APPELLANT HAD TRADED IN SHARES AND SHARE FUTURES. THE APPELLANT H AD TRADED IN SHARES PURCHASED UNDER IPO CATEGORY. THE APPELLANT HAD INC URRED LOSS IN COMMODITY DERIVATIVE FOR RS.31,55,500/- ON ACCOUNT OF TRANSACTIONS CARRIED OUT ON ONE OF THE REGIONAL EXCHANGES VIZ AH MEDABAD SEED MERCHANT ASSOCIATION PVT. LTD. (RENAMED AS AHMEDABA D COMMODITY EXCHANGE LTD) LOSS ON SUCH TRANSACTION WAS SET OFF AGAINST INCOME OF SIMILAR NATURE OF TRANSACTIONS VIZ. PROFIT ON TRADI NG IN COMMODITY DERIVATIVES. THE APPELLANT HAD CLAIMED LOSS TO BE S ET OFF UNDER ONE HEAD AGAINST INCOME FROM OTHER SOURCE UNDER THE SAME HEA D OF INCOME U/S 70 OF THE INCOME-TAX ACT, 1961. WHILE COMING TO CONCLUSION THAT AHMEDABAD SEED MERC HANT ASSOCIATION PRIVATE LTD. IS NOT A RECOGNIZED COMMODITY EXCHANGE BY FORWARD MARKET COMMISSION, THE AO RELIED UPON THE 'LIST OF RECOGNI ZED COMMODITY EXCHANGES/ASSOCIATION BY FORWARD MARKET COMMISSION, GOVERNMENT OF INDIA' WHICH IS ANNEXED TO THE ORDER U/S 143(3) AS ANNEXURE-2. THE APPELLANT WITH DUE RESPECT SUBMITS THAT NAME OF 'THE AHMEDABAD SEED MERCHANT ASSOCIATION PRIVATE LIMITED' WAS CHAN GED TO ACE DERIVATIVES AND COMMODITY EXCHANGE LTD' WITH EFFECT FROM 18/05/2010 AS EVIDENCED BY THE FRESH CERTIFICATE OF INCORPORAT ION CONSEQUENT UPON CHANGE OF NAME ISSUED BY REGISTRAR OF COMPANIES, GU JARAT, DADRA AND NAGAR HAVELI. COPY OF THE SAID CERTIFICATE IS ENCLO SED HEREWITH FOR YOUR KIND PERUSAL.' 4. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS STATED THAT THE NAME OF 'ASMAPL' WAS RE-NAMED AS ACE DERIVATIVES AND COMMODITY EXCHANGE LTD, AS PER THE CERTIFICATE OF INCORPORATION UPON CHANG E OF NAME FILED BY ASSESSEE BEFORE HIM. LD. CIT(A) HAS STATED THAT THE ORIGINAL NAME I.E. ASMAPL GOT RENAMED AS ACE DERIVATIVES AND COMMODITY EXCHANGE LTD. SINCE FOR WARD MARKET COMMISSION HAS RECOGNIZED THIS EXCHANGE, THE LOSS INCURRED BY ASS ESSEE WHILE CARRYING OUT THE TRANSACTIONS THROUGH THE SAID RECOGNIZED COMMODI TY EXCHANGE CANNOT BE CONSIDERED AS ILLEGAL LOSS. HENCE LD. CIT(A) DIRECTED THE AO TO ALLOW LOSS INCURRED BY ASSESSEE, AS I.T.A. NO.5059/MUM/2012 3 IT IS A GENUINE LOSS INCURRED THROUGH TRADING IN TH E COMMODITY EXCHANGE. HENCE, THIS APPEAL BY THE DEPARTMENT. 5. LD. DR IN HIS SUBMISSIONS SUPPORTED THE ORDER OF AO. HOWEVER, LD.AR MADE HIS SUBMISSIONS ON THE LINES OF THE SUBMISSIONS MADE B EFORE LD. CIT(A) AND ALSO FILED A COPY OF CERTIFICATE FROM THE OFFICE OF THE ASSIST ANT REGISTRAR OF COMPANIES, GUJARAT, DADRA AND NAGAR HAVELI STATING NAME OF 'ASMAPL' WAS CHANGED TO ACE DERIVATIVES AND COMMODITY EXCHANGE LTD., AND NEW NAME IS ONLY MENTIONED IN THE LIST OF RECOGNIZED COMMODITY EXCHANGE/ASSOCIATION BY FORWAR D MARKET COMMISSION, GOVERNMENT OF INDIA, AS PER ANNEXURE-2 TO THE ASSES SMENT ORDER AND THE FORMER NAME DOES NOT APPEAR IN THE SAID LIST OF RECOGNIZED COM MODITY EXCHANGE /ASSOCIATION. THEREFORE, IT IS NOT KNOWN AS TO WHETHER 'ASMAPL' WAS A RECOGNIZED STOCK EXCHANGE WHEN THE TRANSACTION HAD TAKEN PLACE IN RESPECT OF WHICH THE ASSESSEE INCURRED LOSS. 6. LD. AR IN HIS STATEMENT SUBMITTED THAT 'ASMAPL' WAS ALSO RECOGNIZED BY THE FORWARD MARKET COMMISSION, GOVERNMENT OF INDIA AND HE WOULD FURNISH COPY OF THE REQUISITE CERTIFICATE IN THAT REGARD. LD. AR WAS D IRECTED BY THE BENCH TO FILE REQUISITE CERTIFICATE THAT 'ASMAPL WAS RECOGNIZED BY THE FO RWARD MARKET COMMISSION FOR TRADING CASTOR SEED. LD. AR SUBSEQUENTLY FILED T HE COPY OF CERTIFICATE FROM THE FORWARD MARKET COMMISSION, GOVERNMENT OF INDIA DATED 8.12.1 961 EVIDENCING THAT ASMAPL WAS RECOGNIZED BY THE FORWARD MARKET COMMISSION, TO CONDUCT FORWARD TRADING INTERALIA IN RESPECT OF CASTOR SEED, THE COMMODITY IN WHICH THE ASSESSEE HAS STATED TO HAVE INCURRED LOSS WHICH HAS BEEN CLAIMED IN THE AS SESSMENT YEAR UNDER CONSIDERATION. THE COPY OF THE SAID CERTIFICATE IS ON RECORD. 7. CONSIDERING THE ABOVE FACTS AND THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES, WE HOLD THAT THE TRADING OF CASTOR SEE D IN ASMAPL IN THE ASSESSMENT YEAR UNDER CONSIDERATION WAS NOT ILLEGAL. THE DEPARTMEN T HAS NOT DISPUTED THE GENUINENESS OF LOSS OF RS.31,55,500/- ON ACCOUNT OF TRADING OF CASTOR SEED, COMMODITY. IN VIEW OF ABOVE FACTS, WE HOLD THAT THE LOSS INCURRED BY ASSE SSEE FOR CONDUCTING FORWARD TRADING IN CASTOR SEED IN THE ASSESSMENT YEAR UNDER CONSIDE RATION AT 'ASMAPL IS NOT ILLEGAL. THUS, LD. CIT(A) HAS RIGHTLY DIRECTED AO TO ALLOW LOSS INCURRED BY ASSESSEE AS IT IS A GENUINE LOSS INCURRED THROUGH A RECOGNIZED COMMODIT Y EXCHANGE. HENCE, WE UPHOLD THE ORDER OF LD. CIT(A) REJECTING THE GROUNDS OF AP PEAL TAKEN BY DEPARTMENT. I.T.A. NO.5059/MUM/2012 4 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH OCTOBER , 2013 ( * + 9TH OCTOBER, 2013 SD SD ( /SANJAY ARORA) ( . . 1 /B.R.MITTAL) / ACCOUNTANT MEMBER ( / JUDICIAL MEMBER MUMBAI; ON THIS 9TH DAY OF OCTOBER, 2013 . . ./ SRL , SR. PS * +, -, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 2 ( ) / THE CIT(A)- 4. 2 / CIT 5. 3 5 , ' 5 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , / ITAT, MUMBAI