M/s Survottam Mercantile Private Limited, Kolkata V. ITO,Ward-5(1), Kolkata, Kolkata

ITA 571/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8055 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP MOOSADEE
• Keywords: Speculation loss
• Section: 143(3); 43(5); 263

Judgement Text

I.T.A. NO.571/ KOL. / 2012 AS SESSMENT YEAR : 2007-08 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER), AND SHRI MAHAVIR SINGH (JUDICIAL MEMBER) I.T.A. NO.: 571/ KOL. / 2012 ASSESSMENT YEAR : 2007-08 M/S. SURVOTTAM MERCANTILE PVT. LTD.....APPEL LANT 10C, MIDDLETON ROW, KOLKATA-700 071 [PAN : AAECS 3915 M] -VS.- INCOME TAX OFFICER, ...,....RESPONDENT, WARD-5(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 8 TH FLOOR, KOLKATA-700 069 APPEARANCES BY: SANDEEP MOOSADEE, A.R., FOR THE APPELLANT A.K. SINGH, D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : NOVEMBER 8, 2012 DATE OF PRONOUNCING THE ORDER : NOVEMBER 8, 2012 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED LEARNED COMMISSIONERS ORDER DATED 22 ND FEBRUARY, 2012, PASSED UNDER SECTION 263 R.W.S. 143(3) OF THE INCOME TAX ACT, 19 61, FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS :- (1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT HAS ERRED IN REVISING THE ORDER U /S. 263 OF THE ACT PASSED BY THE ASSESSING OFFICER, WHICH IS W ITHOUT JURISDICTION. I.T.A. NO.571/ KOL. / 2012 AS SESSMENT YEAR : 2007-08 PAGE 2 OF 4 (2) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT HAS ERRED IN HOLDING HEDGING DIFFERENCE OF RS.51,03,597/- AS SPECULATIVE LOSS WHEN THE SAME IS DERIVATIVE NON-SPECULATIVE BUSINESS LOSS BEING COVE RED UNDER PROVISO (A) OF SECTION 43(5) OF THE I.T. ACT, 1961. 2. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF UNDISPUTED MATERIAL FACTS. THE SCRUTINY ASSESSMENT UNDER SECTI ON 143(3) WAS FINALIZED ON 25.11.2009, BUT SUBSEQUENTLY ASSESSEE WAS SERVED A SHOW- CAUSE NOTICE DATED 12.01.2012 WHICH READS AS FOLLOW :- I HAVE CALLED FOR AND EXAMINED THE ASSESSMENT RECO RD IN YOUR CASE FOR ASSESSMENT YEAR 2007-08. IT APPEARS T HAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVE NUE. YOU ARE REQUESTED TO APPEAR BEFORE ME EITHER PERSONALLY OR THROUGH AN AUTHORIZED REPRESENTATIVE IN THIS REGARD ON 24.01.2012 AT 2:00 P.M.. 3. EVEN THOUGH NO SPECIFIC REASON FOR INITIATING RE VISION PROCEEDINGS WAS SET OUT IN THE SHOW CAUSE NOTICE, ITS EVIDENT F ROM THE FOLLOWING EXTRACTS FROM IMPUGNED REVISION ORDER, THE REVISION PROCEEDINGS WERE IN RESPECT OF COMMODITIES SPECULATION LOSS, WHICH W AS CLAIMED TO BE OF HEDGING IN NATURE, BEING TREATED AS SPECULATION LOS S :- BEFORE ME, IT WAS SUBMITTED ON BEHALF OF THE APPEL LANT THAT THE ASSESSEE HAD HEDGED BLACK PEPPER IN THE RE LEVANT ASSESSMENT YEAR ANTICIPATING FUTURE LOSS. THE HEDGI NG WAS DONE TO MITIGATE THE PRICE RISK ASSOCIATED WITH TRA DING IN THIS COMMODITY. THE HEDGING WAS DONE IN THE RECOGNIZED COMMODITY EXCHANGE (MCX, MCDEX) THROUGH REGISTERED BROKERS. THE TOTAL PROFIT & LOSS DURING THE YEAR WA S BOOKED BY THE ASSESSEE IN HEDGING DIFFERENCE ACCOUNT. THE N ET LOSS OF RS.51,03,597/- WAS BOOKED AS HEDGING DIFFERENCE IN THE PROFIT & LOSS ACCOUNT. IT WAS CONTENDED THAT THE ASSESSEE S CASE WAS COVERED UNDER PROVISO (A) OF SECTION 43(5) OF THE I .T. ACT. CERTAIN CASE LAWS WERE RELIED UPON AS ALSO AN ORDER [A.A.R. I.T.A. NO.571/ KOL. / 2012 AS SESSMENT YEAR : 2007-08 PAGE 3 OF 4 NO. 508 OF 2000] OF THE AUTHORITY FOR ADVANCE RULIN GS, DATED MAY 31, 2004. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSES SEE. THE VERY FACT THAT THE ISSUE HAS GONE BEYOND THE RE VENUE AUTHORITIES FOR ADJUDICATION ENTAILS THAT THE FINAL WORD HAS TO COME FROM THE COURT(S). THE LAW ON THIS DISPUTE IS NOT SETTLED AS YET. THE A.O. IS DIRECTED TO WITHDRAW THE COMMODITIES SPECULATION LOSS OF RS.51,03,597/-. THE ASSESSMENT IS REVISED ACCORDINGLY. 4. INTERESTINGLY, EVEN AS THERE IS NO FINDING ABOUT THE ORDER SOUGHT TO BE REVISED BEING ERRONEOUS, THE COMMISSIONER HAS SET IT ASIDE ON THE GROUND THAT THE VERY FACT THAT THE ISSUE HAS GONE BEYOND THE R EVENUE AUTHORITIES FOR ADJUDICATION ENTAILS THAT THE FINAL WORDS HAS TO COME FROM COURT(S) AND THAT THE LAW ON THE DISPUTE IS NOT SETTLED YET . AGGRIEVED BY THE STAND SO TAKEN BY THE COMMISSIONER, THE ASSE SSEE IS IN APPEAL BEFORE US. 5. HAVING HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD, IN OUR VIEW LEARNED COMMISSIONERS PERCEPTION OF THE S COPE OF POWERS UNDER SECTION 263 TO SAFEGUARD REVENUES INTEREST I N SUCH CASES, I.E. WHERE THE ISSUE IS SUBJECT MATTER OF LITIGATION BEF ORE JUDICIAL OR QUASI JUDICIAL AUTHORITIES, IS NOT, HOWEVER, SHARED BY HO NBLE COURTS ABOVE. 6. IN THE CASE OF MALABAR INDUSTRIES CO. LTD. (2000 ) 243 ITR 83, HONBLE SUPREME COURT HAS HELD THAT POWERS UNDER SECTION 263 CANNOT BE INVOKED WHEN THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS OF THE MATTER EVEN THOUGH COMMISSIONER DOES NOT AGREE WITH THE VIEWS OF THE A.O., UNLESS SUCH VIEW IS NOT SUSTAINABLE IN LAW. CLEARLY, THEREFORE, THESE I.T.A. NO.571/ KOL. / 2012 AS SESSMENT YEAR : 2007-08 PAGE 4 OF 4 POWERS CANNOT BE INVOKED WHEN A POSSIBLE VIEW OF TH E MATTER IS TAKEN, EVEN THOUGH A CONTRARY VIEW, WHICH IS EQUALLY POSSI BLE, WOULD SERVE THE INTERESTS OF REVENUE BETTER. THIS IS PRECISELY WHAT COMMISSIONER HAS DONE IN THE IMPUGNED REVISION ORDER. WE, THEREF ORE, VACATE THE IMPUGNED REVISION ORDER AS WE HOLD IT UNSUSTAINABLE IN LAW. THE ASSESSEE GETS RELIEF ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF NOVEMBER, 2012. SD/- SD/- MAHAVIR SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 8 TH DAY OF NOVEMBER, 2012 COPIES TO : (1) THE ASSESSEE (2) THE DEPARTMENT (3) CIT (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.