THE ACIT 5(2), MUMBAI V. M/S. ODYSSEY CAPITAL (P) LTD., MUMBAI

ITA 5446/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7597 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Assessee Lawyers: H S PARIKH
• Keywords: Speculation loss
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI T.R. SOOD, AM AND SHRI V. DURGA RAO ,JM I.T.A. NO. 5446/MUM/08 ASSESSMENT YEAR :2005-06 DY. COMMISSIONER OF INCOME-TAX-5(2), ROOM NO.571,5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. ODYSSEY CAPITAL (P) LTD., SADHNA HOUSE, 4 TH FLOOR, 570, PANDURANG BUDHKAR MARG, WORLI, MUMBAI 400 018 PAN: AAAC0 2528A (APPELLANT) (RESPONDENT) APPELLANT BY :: SHRI VIJAY VARMA RESPONDENT BY :: SHRI H.S. PARIKH O R D E R PER T.R. SOOD (AM): IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWIN G GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING TO ALLOW THE LOSS ON DERIVATIVES WITHOUT APPRECIATING THE FACT THAT THE LOSS ON DERIVATIVES IS A SPECULATION LOSS. 2. BEFORE US, AT THE OUTSET, THE LEARNED COUNSEL FO R THE ASSESSEE FAIRLY ADMITTED THAT THE ISSUE RAISED BY THE REVENUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SHREE CAPITAL SERVICES LTD. V. ACIT (2009) 121 ITD 498 (SB), WHEREIN IT WAS HELD THAT CLAUSE (D) OF THE PROVISO TO SECTION 43(5) WHICH WAS INSERTED BY THE FINANCE ACT, 2005 WITH EFFECT FROM 1.4.2006 IS OF P ROSPECTIVE NATURE AND WILL BE EFFECTIVE ONLY FROM THE DATE ON WHICH THE LEGISLATURE MADE IT EFFE CTIVE I.E. FROM 01.04.2006. THEREFORE, ACCORDINGLY, IT WAS OBSERVED THAT WHERE THE ASSESSE E SUFFERED LOSS ON ACCOUNT OF FUTURES AND OPTIONS WERE A FORM OF DERIVATIVES IN WHICH UND ERLYING ASSET WAS SHARES, THE SAID LOSS WAS RIGHTLY DISALLOWED BY THE REVENUE AUTHORITIES B Y INVOKING THE PROVISIONS OF SECTION 43(5) OF THE ACT. RESPECTFULLY FOLLOWING THIS DECISION, W E SET ASIDE THE ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 3. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 23RD FEBRUARY, 2010. SD. SD. (V. DURGA RAO) (T.R. SOOD ) JUDICIAL MEMBER ACCOUNTANT MEMBR MUMBAI, DATED THE 23RD FEBRUARY, 2010. 2 KN COPY TO: 1. THE ASSESSEE. 2. THE DCIT-5(2), MUMBAI 3. THE CIT MC-V, MUMBAI 4. THE CIT(A)-V, MUMBAI 5. THE DR, C BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, I.T.A.T.MUMBAI 3