Lohia Securities Ltd., Kolkata V. DCIT, Circle-6, Kolkata, Kolkata

ITA 608/KOL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3527 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: DILIP KUMAR PATNI
• Keywords: Transactions in derivatives; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.608/KOL/2017 ( / ASSESSMENT YEAR: 2009-10) LOHIA SECURITIES LTD. 4, BIPLABI TRAILOKYA MAHARAJ SARANI (BRABOURNE ROAD), 5 TH FLOOR, KOLKATA-1. VS. DCIT,CIRCLE-6, KOLKATA ./ ./ PAN/GIR NO. : AAACL 5834 A (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI DILIP KUMAR PATNI, FCA RESPONDENT BY : SHRI SUP RIYO PAL, JCIT, SR. DR / DATE OF HEARING : 22/10/2019 /DATE OF PRONOUNCEMENT : 13/11/2019 / O R D E R PER DR. A. L. SAINI, AM: SINCE THERE WAS A DIFFERENCE OF OPINION BETWEEN THE LD. MEMBERS CONSTITUTING THE DIVISION BENCH OF ITAT, KOLKATA WI TH REGARD TO THE FOLLOWING QUESTIONS, THE MATTER WAS REFERRED TO THIRD MEMBER U/S 255(4) OF THE I.T. ACT FOR HIS OPINION: 1. WHETHER THE LOSS INCURRED ON PURCHASE AND SALE OF S HARES IN RESPECT OF DELIVERY BASED TRANSACTIONS COULD BE CONSTRUED AS S PECULATION LOSS WITHIN THE MEANING OF EXPLANATION TO SECTION 73 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE? LOHIA SECURITIES LTD. ITA NO.608/KOL/2017 ASSESSMENT YEAR:2009-10 2 2. WHETHER THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT PER SE COULD BE MADE APPLICABLE TO THE FACTS AND CIRCUMSTA NCES OF THE INSTANT CASE? 2. HONBLE PRESIDENT, ITAT NOMINATED SHRI P. M. JAG TAP, HONBLE VICE PRESIDENT (KZ) AS THIRD MEMBER. THE HONBLE THIRD MEMBER VIDE HIS ORDER DATED 01/10/2019 HAS CONCURRED WITH THE FINDINGS OF LD. A CCOUNTANT MEMBER OBSERVING THE FOLLOWINGS: 17. THE LEGAL POSITION THAT EMANATES FROM THE JUDI CIAL PRONOUNCEMENTS DISCUSSED ABOVE THUS IS THAT THE EXPLANATION TO SEC TION 73 DOES NOT DIFFERENTIATE BETWEEN DELIVERY BASED TRANSACTIONS AND DERIVATI VE TRANSACTIONS IN F & O SEGMENT AND THE SAME APPLIES TO THE ENTIRE BUSINES S OF PURCHASE AND SALE OF SHARES, WHETHER SUCH TRADING IS DELIVERY BASED OR N ON-DELIVERY BASED, WHETHER THERE IS PROFIT OR LOSS FROM SUCH BUSINESS. IN THE PRESENT CASE, THE ASSESSEE- COMPANY HAS TREATED THE ENTIRE ACTIVITY OF PURCHASE AND SALE OF SHARES, WHICH COMPRISED OF BOTH THE DELIVERY BASED AND NON-DELIVE RY BASED TRADING AS ONE COMPOSITE BUSINESS AND ACCORDINGLY CLAIMED SET OFF OF THE LOSS INCURRED IN DELIVERY BASED TRADING AGAINST PROFIT DERIVED FROM DERIVATIVE TRADING. IF THE RATIO OF THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE IS A PPLIED TO THE FACTS OF THE ASSESSEES CASE, IT FOLLOWS THAT THE AGGREGATION OF THE SHARE TRADING LOSS AND PROFIT FORM DERIVATIVES TRANSACTION SHOULD BE DONE BEFORE APPLICATION OF EXPLANATION TO SECTION 73 OF THE ACT AND SINCE THER E WAS SURPLUS PROFIT ON SUCH AGGREGATION, EXPLANATION TO SECTION 73 WOULD NOT BE APPLICABLE. I, THEREFORE, AGREE WITH THE VIEW TAKEN BY THE LD. ACCOUNTANT MEM BER. 18. IN THE LIGHT OF THE ABOVE DISCUSSION, THE MATTE R MAY NOW BE PLACED BEFORE THE REGULAR BENCH FOR AN APPROPRIATE ORDER IN ACCORDANC E WITH LAW. THEREFORE, IN ACCORDANCE WITH THE MAJORITY VIEW, TH E APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13.11.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 13/11/2019 ( SB, SR.PS ) LOHIA SECURITIES LTD. ITA NO.608/KOL/2017 ASSESSMENT YEAR:2009-10 3 COPY OF THE ORDER FORWARDED TO: 1. LOHIA SECURITIES LTD. 2. DCIT, CIRCLE-6, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES