The ITO, Ward-1(3), Veraval V. Shri Hirenkumar Madhusudan Dattani, Veraval

ITA 60/RJT/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67276 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-06-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 25-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MA THEWS D R REI
• Assessee Lawyers: MEHUL RANPURA CA I
• Keywords: Income from undisclosed sources; Question of law; Speculation loss
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . . X OR . . BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO. 6 0/RJT/2011 R R / ASSESSMENT YEAR 200 1 - 02 INCOME - TAX OFFICER, WARD - 1 ( 3 ), VERAVAL. ( / APPELLANT) SHRI HIRENKUMAR MADHUSUDAN DATTANI BHAGWATI KRUPA, PRAKASH COMPLEX, STREET NO.2, VERAVAL. PAN NO. A FSPS1942E N / RESPONDENT D I / REVENUE BY SHRI K. C. MA THEWS, D R. REI / ASSESSEE BY SHRI MEHUL RANPURA , CA. I / DATE OF HEARING 05 - 06 - 2013 I / DATE OF PRONOUNCEMENT 07 - 0 6 - 2013 / ORDER . . X , OR / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 24 - 12 - 2010 IN APPEAL NO. CIT (A) XXI/ABD/289/10 - 11 BY THE CIT (A) - XXI, AHMEDABAD FOR THE ASSESSMENT YEAR 200 1 - 02. 2. THE FACTS IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DOING THE BUSINESS OF TRADING IN SHARE. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE A.O. FRAMED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE I.T. ACT ON 31 - 12 - 200 7 AT TOTAL INCOME OF RS.2,72,000/ - AS AGAINST THE NET LOSS OF DECLARED AS PER RETURN OF INCOME RS.11,47,463/ - . IN THIS ASSESSMENT ORDER, AO DISALLOWED THE LOSS OF RS. 11,44,756/ - ON THE GROUND THAT IT HAS BEEN INCURRED IN CONNECTION WITH TRANSACTIONS FOR WHICH DELIVERY WAS NOT GIVEN/TAKEN THEREFORE, THIS LOSS IS OF SPECULATIVE IN N ATURE. ON APPEAL IN THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE DISALLOWANCE FOR THE DETAILED REASONS GIVEN IN PARA - 5, WHICH READ AS UNDER: - 5. THE OTHER GROUND OF APPEAL IS AGAINST THE NON ALLOWANCE OF SET OFF OF CURRENT YEAR LOSS AGAINST THE CURRE NT YEAR INCOME FROM OTHER HEADS OF INCOME. THE LEARNED A.O. HAS NOT ALLOWED SET OFF OF CURRENT YEARS BUSINESS LOSSES FROM THE INCOME FROM UNDISCLOSED SOURCES. THE LEARNED ITA 6 0 - 201 1 2 A.R. HAS SUBMITTED IN HIS WRITTEN SUBMISSION THAT THE LOSS INCURRED DURING THE YEAR UNDER APPEAL IS BUSINESS LOSSES FROM SHAR E TRADING IN DERIVATIVES I.E. F & O AND IS NOT SPECULATIVE BUSINESS AS PER THE PROVISION OF SEC.45(5)(D) OF THE ACT WHICH WAS INTRODUCED BY FINANCE ACT, 2005 W.E.F. 01.04.2006 SINCE THE SAME IS CLARIFICATORY IN NAT URE IT SHOULD BE CONSIDERED AS APPLICABLE IN THE YEAR UNDER APPEAL ALSO. I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION OF THE LEARNED A.R. AND SATISFIED THAT THE AMOUNT OF CURRENT YEARS LOSS OF RS.11,47,463/ - IS BUSINESS LOSS INCURRED FROM SHARE TRA DING (F & O) TRANSACTION AND THE LEARNED A.O. HAS NOT QUESTIONED THE ABOVE LOSSES. THEREFORE, I AM SATISFIED THAT THE CLAIM FOR SET OFF OF BUSINESS LOSS OF RS.11,47,463/ - IS ALLOWED AGAINST THE ASSESSED INCOME FOR THE YEAR. THEREFORE I DIRECT THE LEARNED A.O. TO RECOMPUT THE INCOME AFTER ALLOWING SET OFF OF CURRENT YEARS LOSS OF RS.11,47,463/ - . AGGRIEVED WITH THE ORDER OF LD. CIT(A) , THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUND: - THE LD. CIT (A), HAS ERRED IN LAW AND ON FACTS I N DIRECTING THE AO TO ALLOW THE SET OFF OF THE LOSS OF RS.1147463/ - AGAINST THE INCOME, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT BEEN FILED HIS RETURN OF INCOME WITHIN THE TIME PRESCRIBED U/S. 139(3) OF THE ACT. 3 . AT THE TIME OF HEARING BE FORE US, ON BEHALF OF REVENUE, SHRI K. C. M A THEWS, DR APPEARED AND POINTED OUT THAT AO VIDE LETTER DATED 29 - 10 - 2012 HAS RAISED FOLLOWING TWO ADDITIONAL GROUNDS WHICH READ AS UNDER: - (1) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO TREAT TH E LOSS OF RS.11,47,463/ - AS BUSINESS LOSS INCURRED FROM SHARE TRADING (F & O) TRANSACTION AND ALLOWING ASSESSEES CLAIM OF SET OFF OF BUSINESS LOSS OF RS.11,47,463/ - . (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. TREATING THE LOSS AS SPECULATIVE LOSS AND THEREFORE NOT ELIGIBLE FOR SET OFF IN VIEW OF SECTION 73(1) OF THE I.T. ACT, AS THERE WAS NO PROFIT AND GAIN OF ANOTHER SPECULATION BUSINESS IN THE CASE OF THE ASSESSEE. 4 . FOR ADMISSION OF THE A FORESAID TWO ADDITIONAL GROUNDS, THE LD. D.R. POINTED OUT THAT BOTH THESE GROUNDS ARE ARISING FROM THE ORDER OF AO, INVOLVE S PURE QUESTION OF LAW THEREFORE FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER LTD. VS. CIT ( 1989) 229 ITR 383(SC), THE SE BE ADMITTED. HE FURTHER SUBMITTED THAT CONSIDERING THE REASONING GIVEN IN THE ASSESSMENT ORDER, VIEW TAKEN BY AO TREATING THE LOSS OF RS.11,47,463/ - NOT ELIGIBLE FOR SET OFF IN VIEW OF SEC.73(1) OF THE I.T. ACT, 1961 BE UPHELD , AS THERE WAS NO PROFIT AND GAINS FOR ANOTHER SPECULATIVE BUSINESS. AS AGAINST THIS, COUNSEL OF THE ASSESSEE POINTED OUT THAT HE HAS NO OBJECTION IF THE ADDITIONAL GROUNDS BE ADMITTED BUT SINCE THE PLEA NOW RAISED IN THE ADDITIONAL GROUNDS IS ITA 6 0 - 201 1 3 NOT CONSIDE RED BY THE LD. CIT (A), THEREFORE FOLLOWING THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. TOLLA RAM HASSOMAL 298 ITR 22 (MP), THE CIT (A) BE ASKED TO DECIDE THE ADDITIONAL GROUNDS. 5 . HEAVING HEAR D BOTH THE SIDES, WE HAVE CAREFU LLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE BOTH ADDITIONAL GROUNDS NOW RAISED BEFORE US INVOLVES PURE QUESTION OF LAW WHICH IS ARISING IN ASSESSMENT ORDER. WE THEREFORE, ADMIT BOTH THE ADDITIONAL GROUNDS AND FOLLOWING THE JUDGMENT OF HONBLE M .P. HIGH COURT IN THE CASE OF CIT VS. TOLLA RAM HASSOMAL (SUPRA), DIRECT THE LD. CIT (A) TO DECIDE THE PLEA RAISED IN BOTH THE AFORESAID GROUNDS OF APPEAL IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES. 6 . IN THE R ESULT, FOR THE STATISTICAL PURPOSES, APPEAL OF THE REVENUE IS ALLOWED. 7 . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . D D. K. SRIVASTAVA ) ( . . R / T. K. SHARMA) / ACCOUNTANT MEMBER D / JUDICIAL MEMBER / ORDER DATE 07 - 0 6 - 2013. /RAJKOT NVA/ - 7 RJ / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - INCOME - TAX OF FICER, WARD - 1 ( 3 ), VERAVAL. 2 . N / RESPONDENT - SHRI HIRENKUMAR MADHUSUDAN DATTANI, VERAVAL 3 . / CONCERNED CIT - III, RAJKOT. 4 . - / CIT (A) - XX I, AHMEDABAD. 5 . ` N , , / DR, ITA T, RAJKOT 6 . R / GUARD FILE. / BY ORDER TRUE COPY SENIOR PRIVATE SECRETARY, ITAT, RAJKOT