The ITO, Ward-11(4), Ahmedabad V. Smt. Bhagwatidevi M.Jain, Ahmedabad

ITA 640/AHD/2012

• Counselvise Citation: 64020514 RSA 2012
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Speculation loss
• Section: 142(1); 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE S/SHRI N. S. SAINI, A.M. & RAJPAL YADAV, JM . ITA NO.640/AHD/2012 ASST. YEAR 2008-09 .INCOME-TAX OFFICER, WARD -11(4), AHMEDABAD. VS SMT. BHAGWATIDEVI M. JAIN, 113, NEW CLOTH MARKET, O/S RIPUR GATE, RAIPUR, AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO.AAZPJ5132B APPELLANT BY SHRI M. K. SINGH, SR.DR RESPONDENT BY NONE DATE OF HEARING: 10/6/2015 DATE OF PRONOUNCEMENT: 24/06/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 16 TH JANUARY, 2012 PASSED FOR AY 2008-09. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) ERRED I N DELETING THE ADDITION OF RS.12,93,066/- MADE BY THE AO BY HOLDIN G THAT ASSESSEE HAD A SPECULATION LOSS IN SHARE TRANSACTION WHICH C ANNOT BE SET OFF AGAINST ANY OTHER INCOME EXCEPT SPECULATION PROFIT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HER RETURN OF INCOME ON 8.10.2008 DECLARING TOTAL INCOM E OF RS.1,71,367/- THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ITA NO.640/AHD/2012 ASST. YEAR 2008-09 2 NOTICE UNDER SECTION 143(2) WAS ISSUED ON 31.8.2009 . IT APPEARS THAT THE PROCEEDINGS WERE BECOME DORMANT AND AO HAD ISSU ED NOTICE U/S 142(1) ON 29.01.2010 FIXING THE DATE OF HEARING ON 12.02.2010. AGAIN THEREAFTER FOR MORE THAN 8 MONTHS HE DID NOT TAKE UP THE PROCEEDINGS AND ISSUED THE NOTICE ON 06/09/2010 WHI CH WAS TO BE COMPLIED BY 21 ST SEPTEMBER, 2010. ACCORDING TO THE AO THE ASSESSEE DID NOT COMPLY WITH THESE NOTICES AND THEREAFTER HE ISSUED NOTICE IN THE MONTH OF NOVEMBER AND PASSED ASSESSMENT ORDER O N 19.11.2010. ON SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT ASSESSEE HAS A SPECULATION LOSS IN SHARE TRANSACTIO N AMOUNTING TO RS.12,93,066/-. THE AO MADE REFERENCE TO SECTION 73 OF THE INCOME- TAX ACT AND OBSERVED THAT SPECULATION LOSS CAN BE S ET OFF AGAINST SPECULATION PROFIT. IT CANNOT BE SET OFF AGAINST NO RMAL PROFIT AND GAINS OF THE PROFESSION. HE ACCORDINGLY DISALLOWED ALLEG ED SPECULATION LOSS AND MADE ADDITION OF RS.12,93,066/-. 3. DISSATISFIED WITH THE ORDER OF AO ASSESSEE CARRI ED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN IT WA S CONTENDED THAT THE AO DID NOT GRANT PROPER OPPORTUNITY OF HEARING. THE REPRESENTATIVE OF THE ASSESSEE HAD APPEARED ON 11.11.2010 AND THEREAF TER WENT TO THE AO FOR SUBMITTING THE COMPLETE DETAILS BUT HE DID N OT ACCEPT THOSE DETAILS AND PASSED THE ASSESSMENT ORDER. THE ASSESS EE HAS CONTENDED THAT THE AUDITOR HAS INACCURATELY BROUGHT OUT THE LOSS IN SHARE TRANSACTION. IT WAS ADMITTED BY THE ASSESSEE THAT SHE IS IN THE BUSINESS OF SHARE TRADING. SHE HAD MADE PURCHASES A ND SOLD THROUGH TWO BROKERS NAMELY M/S KHANDWALA INT. FINANCIAL SE RVICES PVT. LTD. AND M/S ACTIVE FINSTOCK PVT. LTD. ALL THE TRANSACTI ONS WERE ROUTED ITA NO.640/AHD/2012 ASST. YEAR 2008-09 3 THROUGH BSE AND NSE. THE ASSESSEE HAS SUBMITTED THE DETAILS AS PER BROKERS STATEMENT. ACCORDING TO THE ASSESSEE TH ERE WAS A NET PROFIT IN THE SHARE TRANSACTION AND NO SPECULATION LOSS WAS AVAILABLE. THE FOLLOWING DETAILS FROM THE SUBMISSIONS OF ASSES SEE REPRODUCED BY THE CIT(A) ARE PERTINENT TO NOTE :- IN NUTSHELL PICTURE EMERGES AS UNDER :- PROFIT/LOSS AS PER BOOKS AS PER BROKER STATEMENT PAGE NO. INTRADAY(SPECULATION) (12,93,285) (1,05,461) 21B DELIVERY (NET OF STOCK) 13,33,736 1,89,801 21B PROFIT FROM SHARE TRADING 40,451 84,341 21B THE LD. FIRST APPELLATE AUTHORITY HAS CALLED FOR A REMAND REPORT FROM THE AO ON THE GROUND THAT AO HAS NOT PROVIDED SUFFI CIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. BUT SOMEHOW THE LD. AO FIRSTLY DID NOT SUBMIT THE REPORT AND THEREAFTER HE JUST REITERATED HIS STAND AS WAS IN THE ASSESSMENT ORDER. THE LD. AO DID NOT GO THROUGH THE EVIDENCE SUBMITTED BY THE ASSESSEE AND ON WHICH REMAND REPOR T WAS CALLED FOR. UNDER THESE COMPELLING CIRCUMSTANCES, THE LD. FIRST APPELLATE AUTHORITY HAS EXAMINED THE FACTS AND DELETED THE DI SALLOWANCE. THE FOLLOWING OBSERVATIONS OF LD. FIRST APPELLATE AUTHO RITY ARE WORTH TO NOTE 3.4 THE SALES FIGURES OF INTRADAY SHARE TRANSACTI ONS WAS VERIFIABLE FROM THE 10DB REPORT BUT THE ASSESSING OFFICER HAD NOT CONSI DERED THESE FIGURES. THE DETAILS OF PURCHASES AND SALES OF INTRADAY SHARE TR ANSACTIONS ARE AS PER THE STATEMENTS OF BOTH THE BROKERS AND CONSIDERED AS CO RRECT. SINCE THE APPELLANT HAD PAID THE STT OF RS.65,428/- (RS.39,740/- + RS.2 5,688/-) ON THE SALES OF INTRADAY SHARES TRANSACTIONS AS PER 10DB REPORT, TH E SALES FIGURES CANNOT BE DOUBTED. AS PER THE ABOVE WORKING, THERE WAS A PROF IT OF RS.1,89,801/- IN THE SHARES TRANSACTIONS OF DELIVERY BASED SHARES AND TH ERE WAS A LOSS OF RS.1,05,461/- IN THE INTRADAY SHARES TRANSACTIONS A ND THE NET RESULT WAS THE PROFIT ITA NO.640/AHD/2012 ASST. YEAR 2008-09 4 OF RS.84,340/- ON ACCOUNT OF THE TRANSACTIONS IN SH ARES. THE AO HAD MENTIONED IN THE ASSESSMENT ORDER THAT SPECULATION LOSS IS DI SALLOWABLE U/S 73 OF THE ACT. HOWEVER, THE PROVISIONS OF SEC.73 CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE AFTER THE AMENDMENT OF THE PROVISIONS OF SECTION 43 (5). ALL THE TRANSACTIONS HAVE BEEN ROUTED THROUGH THE STOCK EXCHANGES (BSE AND NS E) THROUGH THE TWO BROKERS AND STT HAD ALSO BEEN PAID WHICH IS VERIFIA BLE FROM THE 10DB REPORT. THUS, THE INTRADAY SHARE TRANSACTIONS CANNOT BE CON SIDERED AS SPECULATION TRANSACTIONS BUT WILL BE CONSIDERED AS BUSINESS TRA NSACTIONS AND THE RESULTANT PROFIT OR LOSS WILL BE CONSIDERED AS BUSINESS INCOM E OR THE BUSINESS LOSS. THEREFORE, THE SHARE TRANSACTION LOSS OF RS.105,461 /- IS TO BE SET OFF AGAINST THE SHARE TRANSACTION PROFIT OF RS.1,89,801/- ON DELIVE RY BASED SHARES. THE AO IS THEREFORE, DIRECTED TO CONSIDER THE PROFIT OF RS.84 ,340/- ON ACCOUNT OF SHARES TRANSACTIONS. THUS THERE WAS NO LOSS FOR THE ADDITI ON OF RS.12,93,066/- AND THE SAME IS HEREBY DELETED. THE AO IS DIRECTED TO REPLA CE THE ABOVE WORKING IN THE RETURN OF INCOME IF REQUIRED. THE SECOND AND THIRD GROUND OF APPEAL ARE ACCORDINGLY ALLOWED. 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH THE RECORD CAREFULLY. THE IMPORTANT FEATURE EMERGES OUT IN THIS APPEAL IS WHETHER CIT(A) HAS COMMITTED AN ERROR BY CONSIDE RING THE BROKERS NOTE, DETAILS OF STT PAYMENT AND REPORT IN FORM 10D B OVER AND ABOVE THE AUDIT REPORT. IF WE GO BY THE AUDIT REPOR T THEN THERE IS A LOSS IN THE SHARE TRADING TRANSACTIONS. IF WE ACCEPT AND APPRECIATE THE FINDINGS OF CIT(A) ON THE BASIS OF EVIDENCES SUBMIT TED BY THE ASSESSEE THEN, THERE IS A PROFIT IN THE SHARE TRANS ACTIONS. IN THAT SITUATION IT IS ALSO TO BE APPRECIATED THAT ALL THE SHARES I.E. DELIVERY BASE AS WELL AS INTRADAY TRANSACTION WERE ROUTED TH ROUGH STOCK EXCHANGES AND SUBJECT TO STT PAYMENT. IN SUCH SITUA TION THE TRANSACTIONS OF THE ASSESSEE WOULD NOT BE CONSIDERE D AS A SPECULATIVE TRANSACTION IN VIEW OF SECTION 43(5) OF THE I.T. ACT. THE LD. AO DID NOT COMMENT ON THESE EVIDENCES IN SPITE OF P ROVIDING OPPORTUNITY TO HIM. HE SIMPLY STUCK TO HIS STAND WH ICH WAS HARBORED ON THE BASIS OF EX PARTE EXAMINATION OF THE DETAILS . WE FURTHER FIND THAT THE AO HAD ISSUED NOTICES ON 29 TH JANUARY, 2010 AND 6 TH ITA NO.640/AHD/2012 ASST. YEAR 2008-09 5 SEPTEMBER, 2010 FOR THE SAKE OF ISSUANCE OF NOTICES . HE DID NOT PURSUE THE PROCEEDINGS AFTER ISSUANCE OF NOTICES. B ECAUSE THERE IS ALMOST 9 MONTHS GAP BETWEEN THESE TWO DATES WHILE H E HAD NOT ISSUED NOTICE IN BETWEEN. THUS IF WE WEIGH THE MANN ER IN WHICH THE ASSESSMENT ORDER HAS BEEN PASSED VIS--VIS THE DETA ILS APPRECIATED BY THE LD. FIRST APPELLATE AUTHORITY THEN THE SCALE WOULD CERTAINLY TILT IN FAVOUR OF FIRST APPELLATE AUTHORITY. THE LD. CIT(A) HAS GONE THROUGH THE EVIDENCES SUBMITTED BY THE ASSESSEE AND THEREAFTER WORKED OUT THE FIGURE THAT ASSESSEE HAS A PROFIT IN THE SHARE TRAN SACTIONS. AFTER CONSIDERING THE ORDER OF CIT(A) WE DO NOT SEE ANY R EASON TO INTERFERE IN IT. THE APPEAL OF REVENUE IS DEVOID OF ANY MERIT , HENCE DISMISSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24/6/2015 SD/- SD/- N. S. SAINI ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER DATED 24/6/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO.640/AHD/2012 ASST. YEAR 2008-09 6 1. DATE OF DICTATION: 17/6/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER:17/06/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 24/6/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: