ACIT CIR 15(1), MUMBAI V. DEEPSANG CORPORATION, NAVI MUMBAI

ITA 506/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1805 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DIPAK KUMAR SINHA
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Business income; Opportunity of being heard

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI .. , ! ' #. $.. % , & ', ' BEFORE SHRI R.S.SYAL, AM AND DR.T.M.PAVALAN, JM ITA NO.506/MUM/2012 : ASST.YEAR 2008-2009 THE JOINT COMMISSIONER OF INCOME-TAX (OSD), CIRCLE 15(1) MUMBAI. M/S.DEEPSANG CORPORATION 431, 4 TH FLOOR, SANGHRAJKA HOUSE D.B.MARG, OPERA HOUSE MUMBAI 400 004. PAN :AAEFD6966A. ( () / // / APPELLANT) % % % % / VS. ( +,()/ RESPONDENT) () - -- - . . . . / APPELLANT BY : SHRI DIPAK KUMAR SINHA +,() - . - . - . - . / RESPONDENT BY : SHRI ASHOK J.PATIL % - /! / / / / DATE OF HEARING : 30.01.2013 012 - /! / DATE OF PRONOUNCEMENT : 05.02.2013 ' 3 ' 3 ' 3 ' 3 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 04.11.2 011, IN RELATION TO THE ASSESSMENT YEAR 2008-2009. 2. THE ONLY EFFECTIVE GROUND IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF LOSS INCURRED IN DERIVATIVES EVEN THOUGH THE ASSESS EE FAILED TO SUBMIT ANY EVIDENCE THAT THESE LOSSES ARE ACTUALLY SETTLED AT THE YEAR END IN CASH. ITA NO.506/MUM/2012. M/S.DEEPSANG CORPORATION. 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE DID TRADING IN SHARES AND SECURITIES, WHICH IS NON-DELI VERY BASED TRANSACTIONS OF SECURITIES AND SHOWED MARK TO MARKE T LOSS OF ` 2,98,49,207. THIS MTM LOSS WAS ADJUSTED AGAINST THE REGULAR BUSINESS INCOME. ON VERIFICATION OF THE DETAILS, TH E ASSESSING OFFICER NOTICED THAT THE CONTRACT NOTES DID NOT POINT OUT UNIQUE CLIENT CODE (UCC), WHICH IS REQUIRED TO BE MANDATORILY MENTION ED FOR ALL THE TRANSACTIONS ENTERED THROUGH STOCK EXCHANGE. IN PAR A 8.4 OF THE ASSESSMENT ORDER, THE A.O. OBSERVED THAT THE ASSESS EE EVEN FAILED TO PROVIDE ANY EVIDENCE THAT THESE MTM MARGIN WAS EVER SETTLED BY ACTUAL CASH SETTLEMENT OR CARRIED FORWARD. IN VIEW OF THESE FACTS THE ASSESSING OFFICER REFUSED TO SET OFF SUCH MTM LOSS AGAINST THE NORMAL BUSINESS INCOME. THE LEARNED CIT(A) CALLED F OR THE REMAND REPORT FROM THE ASSESSING OFFICER TO VERIFY THE MAT TER OF UCC. VIDE REPORT DATED 04.10.2011, THE A.O. CONFIRMED THAT TH E ASSESSEE HAD UCC. BASED ON THIS, THE LEARNED CIT(A) REVERSED THE FINDING OF THE ASSESSING OFFICER. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT TH E ASSESSING OFFICER DID NOT ALLOW SET OFF OF MTM LOSS AGAINST THE REGUL AR BUSINESS INCOME ON TWO GROUNDS, VIZ., FIRSTLY, THE ASSESSEE DID NOT HAVE UCC AND SECONDLY, THE ASSESSEE FAILED TO PROVIDE ANY EV IDENCE THAT THIS MTM MARGIN WAS EVER SETTLED BY ACTUAL CASH SETTLEME NT OR CARRIED FORWARD. THE LEARNED CIT(A) DELETED THE DISALLOWANC E SIMPLY BY ITA NO.506/MUM/2012. M/S.DEEPSANG CORPORATION. 3 CONSIDERING ONE ASPECT, BEING THE AVAILABILITY OF U CC. THERE IS NO DISCUSSION WHATSOEVER AS REGARDS THE SECOND ASPECT ON WHICH THE ASSESSING OFFICER DID NOT ALLOW SET OFF OF LOSS. TH E LEARNED AR WAS FAIR ENOUGH TO CONCEDE THAT THERE IS NO DISCUSSION ON THE SECOND ASPECT IN THE IMPUGNED ORDER. IT IS EVIDENT FROM TH E TEXT OF GROUND REPRODUCED ABOVE THAT THE REVENUE IS AGGRIEVED AGAI NST THE REVERSAL OF THE A.O.S ACTION THOUGH THE ASSESSEE FAILED TO SUBMIT ANY EVIDENCE THAT THESE LOSSES WERE ACTUALLY SETTLED AT THE YEAR ENDING. WITHOUT GOING INTO THE MERITS OF THE CASE, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE LEARNED CIT(A ) FOR DECIDING THE SECOND ASPECT AFRESH AS PER LAW AFTER ALLOWING A RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 05 TH DAY OF FEBRUARY, 2013. ' 3 - 012 4'%5 1 - 6 SD/- SD/- (DR.T.M.PAVALAN) (R.S.SYAL) & ' & ' & ' & ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 4'% DATED : 05 TH FEBRUARY, 2013. DEVDAS* ITA NO.506/MUM/2012. M/S.DEEPSANG CORPORATION. 4 ' 3 - +&/78 9 82/ ' 3 - +&/78 9 82/ ' 3 - +&/78 9 82/ ' 3 - +&/78 9 82// COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. +,() / THE RESPONDENT. 3. : () / THE CIT(A)-26, MUMBAI. 4. : / CIT 5. 8=6 +&/&% , , / DR, ITAT, MUMBAI 6. 6 > / GUARD FILE. ' 3% ' 3% ' 3% ' 3% / BY ORDER, ,8/ +&/ //TRUE COPY// ? ? ? ?/ // /@ A @ A @ A @ A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI