DCIT 9(3), MUMBAI V. SAMRUDH FINSTOCK P.LTD, MUMBAI

ITA 5213/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92536 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: RISHABH S HAH
• Keywords: Transactions in derivatives; Speculation loss
• Section: 43(5)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO ( JM ) AND D. KARUNAKAR A RAO, (AM) , . , ./ I.T.A.NO . 5213 / MUM/20 1 2 ( / ASSESSMENT YE A R : 20 0 6 - 07 ) DY.COMMISSIONER OF I NCOME TAX ,9(3), ROOM NO. 229 , 2ND FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 4000 20 / VS. M/S S AMARADHA FINSTOCK PVT LTD., 12 - B, SAIRAJ NAGAR , IRANI WAD I, M G ROAD, KANDIVALI (W), MUMBAI - 400067 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AA F CS 3316K / REVENUE BY SHRI NEIL PHILIP / ASSESSEE BY S HRI RISHABH S HAH / DATE OF HEARING : 6 .5.2015 / DATE OF PRONOUNCEMENT : 22 .5. 2015 / O R D E R PER VIJAY PAL RAO ( JM ) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DAT ED 26. 06. 201 2 OF LD. CIT(A) FOR THE ASSESSMENT YEAR 200 6 - 07 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) IS RIGHT IN TREATING THE F&O LOSS OF RS.2 , 38 , 49 , 589 / - INCURRED PRIOR TO 25.1.2006 AS BUSINESS LOSS, INSTEAD OF SPECULATION LOSS AS HELD BY THE AO IN VIEW OF NOTIFICATION NO. 2/2006 DATED 25.1.2006 AS THE LOSS CLAIMED BY THE ASSESS EE IS INCURRED PRIOR TO 25.1.2006 AND ACCORDINGLY IS NOT COVERED BY CLAUSE ( D) OF SECTION 43(5) 3 . THE ASSESSEE HAS DEBITED TO THE PROFIT AND LOSS ACCOUNT FUTURE AND OPTION LOSS OF RS.2,38,49,589/ - . THE AO OBSERVED THAT AT PER NOTIFICATION NO. 2/2006 DATED 25.1.2006 , BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE ARE 5213/ MUM/201 2 2 NOTIFIED AS RECOGNIZED EXCHANGES FOR THE PURPOSE OF CLAUSE (B) OF THE PROVISIONS OF SECTION 43(5) OF T HE INCOME TAX ACT, 1961 (THE ACT) . THUS, THE AO HELD THAT SPECULATIVE DERIVATIVE TRANSACTIONS ENTERED IN THESE STOCK EXCHANGES WITH EFFECT FROM 25.1 .2006 SHALL NOT BE DEEMED TO BE SPECULATIVE TRANSACTION BUT THE TRANSACTIONS PRIOR TO 25.1.2006 SHALL BE SPECULATIVE TRANSACTION AND LOSS ARISING THERE FROM CANNOT BE SET OFF AGAINST THE OTHER THAN SPECULATION PROFIT. 4 . ON APPEAL, THE LD. CIT(A) HAS ALL OWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT THE TRANSACTION OF TRADING FOR THE ENTIRE YEAR RELEVANT TO THE ASSE SS MENT YEAR 2006 - 07 CANNOT BE TREATED AS SPECULATIVE AND THEREFORE LOSS OF THESE TRANSACTIONS CAN BE SET OFF AGAINST THE BUSINESS PROFIT. TH E LD. CIT(A) HAS RELIED UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF GAJENDRA KUMAR T. AGARWAL V/S ITO [2011] 11 ITR (TRIB) 640 (ITAT[MUM]) AS WELL AS THE DECISION IN THE CA S E OF PREM ASSOCIATE ADVERTISING AND MARKETING . 5 . WE HAVE HEARD THE LD. DR AND LD.AR AS WELL AS CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS SUBMITTED THAT THIS ISSUE HAS REPEATEDLY BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE . HE HAS RELIE D UPON THE DECISION OF DELHI BENCH OF THE T RIBUNAL IN THE CASE OF G K ANAND BROS BUILDWELL (P) LTD V/S ITO (2009) 34 SOT 439 (DELHI) AS WELL AS THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF CHIRAG D TANNA V/S ACIT IN ITA NO.4227/MUM/2010 (AY - 2006 - 07) DATED14.3.2012 . THE ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHIRAG D TANNA (SUPRA) HAS DEALT WITH THIS ISSUE ON IDENTICAL FACTS AND CIRCUMSTANCES AND VIDE PARAS 5 AND 6 HELD AS UNDER : 5. BOTH THE PARTIES CONCEDED BEFORE US THAT SIMILAR ISSUE WAS CONSIDERED BY MUMBAI 'J' BENCH OF THE TRIBUNAL IN M/S. PREM ASSOCIATES ADVERTISING & MARKETING V/S JCIT, ITA NO.6547/MUM./2009, ORDER DATED 17TH SEPTEMBER 2010, WHEREIN THE TRIBUNAL, VIDE PARA - 7, HELD AS FOLLOWS: - '7. WE FIND THAT IT IS UNDISPUTED POSITION THAT THE ST OCK EXCHANGES, ON WHICH THE IMPUGNED TRANSACTIONS WERE CARRIED OUT, WERE DULY NOTIFIED ON 25TH JANUARY 2006, AND THAT IN ACCORDANCE WITH THE VIEWS OF THE CO - ORDINATE BENCH IN THE CASE OF ANAND BUILDWELL (SUPRA), AS ALSO WITH THE VIEWS OF HON'BLE GUJARAT HI GH COURT IN THE CASE OF CLARIS LIFESCIENNCES (SUPRA), ONCE THE APPROVAL IS GRANTED IN THE RELEVANT PREVIOUS YEAR, AND IN THE ABSENCE OF ANYTHING INDICATED TO THE CONTRARY, THE APPROVAL HAS TO BE TAKEN AS EFFECTIVE FROM THE 5213/ MUM/201 2 3 BEGINNING OF THE RELEVANT YEAR. T HE ISSUE IS THUS COVERED, IN FAVOUR OF THE LINE OF REASONING ADOPTED BY THE ASSESSEE, BY DECISION OF THE COORDINATE BENCH IN THE CASE OF ANAND BROTHERS (SUPRA) AND BY HON'BLE GUJARAT HIGH COURT'S JUDGMENT IN THE CASE OF CLARIS LIFESCIENCES (SUPRA). WE RESP ECTFULLY FOLLOWING THESE DECISIONS, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND HOLD THAT THE DERIVATE TRANSACTIONS, ENTERED INTO BY THE ASSESSEE AT THE RECOGNIZED STOCK EXCHANGES EVEN PRIOR TO THE DATE OF NOTIFICATION IN THE RELEVANT PREVIOUS YEAR, ARE TO BE TREATED AS COVERED BY THE EXCLUSION CLAUSE SET OUT IN SECTION 43(5)(D). THE ASSESSEE GETS THE RELIEF ACCORDINGLY.' 6. KEEPING IN VIEW THE AFORESAID DECISION OF THE TRIBUNAL, WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE COMMISSIONER (APPEALS) A ND DISMISS THE GROUNDS RAISED BY THE REVENUE. 6 . A SIMILAR VIEW HAS BEEN TAKEN BY THIS T RIBUNAL IN THE CASE OF G K ANAND BROS BUILDWELL (P) LTD(SUPRA) . ACCORDINGLY, FOLLOWING THE ORDERS OF CO - ORDINATE BENCHES OF THIS TRIBUNAL, WE DO NOT FIND ANY E RROR OR ILLEGALITY IN THE ORDER OF LD. CIT(A). 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22ND MAY , 201 5 . 22ND MAY , 2015 SD SD ( . / D. KARUNAKAR A RAO) ( / VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: 22ND MAY , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDEN T. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI