DCIT, Jaipur V. EASTERN JEWELS PVT. LTD., Jaipur

ITA 640/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99519 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: RAJEEV SOGANI C A DHK
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NOS. 640/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 . DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S. EASTERN JEWELS PVT. LTD., 507, MAHAR BHAVAN, THAKUR PACHWAR KA RASTA, RAMGANJ BAZAAR, JAIPUR. L LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACE 3394 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI RAJEEV SOGANI (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19.11.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/11/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)-I, JAIPUR DATED 26.04.2013. THE SOLITARY GROUND RAISED IN THE APPE AL IS AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE SET O FF OF SPECULATION LOSS OF RS. 1,38,60,740/- AGAINST THE INCOME DERIVED FROM D ELIVERY BASED SHARES TRANSACTIONS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF SILVER AND GOLD JEWELLERY, PRECIOUS AND SEMI-PRE CIOUS STONES, BRASS AND COPPER ARTICLES AND ALSO DEALING IN SHARES. THE ASSESSEE C OMPANY HAS FILED ITS RETURN OF INCOME 2 ITA NO. 640/JP/2013 A.Y. 2010-11. DCIT VS. M/S. EASTERN JEWELS PVT. LTD., JAIPUR. ON 21.09.2010 DECLARING TOTAL INCOME OF RS. 96,14,7 20/-. THE CASE WAS SELECTED FOR SCRUTINY AND ORDER WAS PASSED UNDER SECTION 143(3) OF THE IT ACT ON 19.12.2012 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 2,27, 13,568/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN PROFIT OF RS. 1,84,71,778/- FROM SHARE BUSINESS WITH THE BROUGHT FORWARD SPECULATIVE LOSS OF RS. 1, 38,60,740/- AND THE RESULTANT PROFIT OF RS. 46,11,038/- ONLY HAS BEEN OFFERED FOR TAXATI ON. THE ISSUE OF THIS ADJUSTMENT, SETTING OFF AS PER THE ASSESSEES VERSION WAS ARGUE D UPON BY LD. A/R AND ON BEING ASKED BY THE AO, THE LD. A/R EXPLAINED VIDE HIS LET TER DATED 26.11.2012 AS UNDER :- I) DURING THE YEAR, THE ASSESSEE COMPANY EARNED PR OFIT FROM DEALING IN SHARES AMOUNTING TO RS. 1,84,71,778/-. IT HAS CA RRY FORWARD SPECULATIVE LOSS AMOUNTING TO RS. 1,38,60,740/- ORI GINATED IN THE ASSESSMENT YEAR 2009-10, WHICH WERE SET OFF AGAINST CURRENT YEAR SHARE PROFIT. COPY OF COMPUTATION AND IT ACKNOWLEDG EMENT FOR THE A.Y. 2009-10 ARE ENCLOSED. II) THE PROFIT FROM DEALING OF SHARES ARE SPECULATI VE PROFIT IN VIEW OF THE EXPLANATION TO SECTION 73 WHICH PROVIDES AS UNDE R :- [EXPLANATION- WHERE ANY PART OF THE BUSINESS OF A C OMPANY {OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONS ISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTE REST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES], OR A COMPANY THE PRIN CIPAL BUSINESS OF WHICH IS THE BUSINESS OF BANKING OR THE RANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHAR ES OF OTHER COMPANIES, SUCH COMPANY SHALL FOR THE PURPOSES OF T HIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SAL E OF SUCH SHARES] III) THE PROFIT OF SHARE BUSINESS OF THE ASSESSEE C OMPANY ARE BASED ON DELIVERY EXCEPT SHARE DIFFERENCE PROFIT AMOUNTING T O RS. 8,71,070/- WHICH IS NON-DELIVERY PROFIT. IV) THE PROFIT/LOSS FROM SHARE BUSINESS ARE TREATED BY THE ASSESSEE COMPANY AS SPECULATIVE SINCE A.Y. 2002-03. DETAILS OF THEIR SET OFF IN SUBSEQUENT ASSESSMENT YEARS ARE AS UNDER :- 3 ITA NO. 640/JP/2013 A.Y. 2010-11. DCIT VS. M/S. EASTERN JEWELS PVT. LTD., JAIPUR. AMOUNT (RS.) REMARKS SPECULATIVE LOSSES OF A.Y. 2002 - 03 AS PER RETURN FILED 6,54,288/ - ADD: SPECULATIVE LOSSES FOR A.Y. 2003-04 AS PER RETURN FILED SUB TOTAL 59,92,973/ - LESS : SPECULATIVE LOSSES SET OFF AS PER RETURN FILED A.Y. 2004 - 05 29,53,748/ - A.Y. 2005 - 06 14,37,418/ - ALLOWED U/S 143(3) A.Y. 2006 - 07 16,01,807/ - ALLOWED U/S 143(3) TOTAL NIL SPECULATIVE LOSSES OF A.Y. 2007 - 08 AS PER RETURN FILED. 16,87,012/ - CLAIMED FOR SET OFF IN A.Y. 2008-09 AND DISALLOWED BY AO U/S 143(3). ALLOWED BY CIT (A). V) IN THE ASSESSMENT YEAR 2003-04, THE ASSESSEE COM PANY CLAIMED THAT SHARE TRADING IS NOT SPECULATIVE LOSS. THE SAM E WAS DENIED TO BE SET OFF HOLDING IT TO BE SPECULATIVE LOSS. THE H ONBLE ITAT IN THE ITA NO. 651/JP/2008 FOR THE A.Y. 2003-04 OBSERVED T HAT SHARE TRADING BY COMPANY WILL RESULT INTO SPECULATIVE BUS INESS ONLY (PARA 7 OF THE ORDER). COPY OF ORDER IS ENCLOSED. VI) IN THE ASSESSMENT YEAR 2008-09, THE LD. A.O. WH ILE PASSING THE ASSESSMENT ORDER U/S 143(3) TREATED THE SHARE PROFI T AS NON- SPECULATIVE AND DENIED THE SET OFF. HOWEVER, CIT (A ) ALLOWED THE SET OFF CLAIM VIDE ORDER DATED 11.10.2011. WE HAVE ALREADY SUBMITTED THE COPIES OF ASSESSMENT ORDER AND CIT (A ). 2.1. THE EXPLANATION OF THE ASSESSEE COULD NOT FIND FAVOUR. THE AO OBSERVED THAT THE ASSESSEE HAS EARNED PROFIT OF RS. 1,84,71,778/- FRO M SHARE TRADING AND UNDISPUTEDLY THIS PROFIT IS BASED ON DELIVERY EXCEPT PROFIT AMOU NTING TO RS. 8,71,070/- WHICH IS A NON DELIVERY PROFIT. THUS AS PER THE SECTIONS APPEARING IN CHAPTER IV OF THE IT ACT (WHICH DETERMINES HEADS OF INCOME) THE ASSESSEE HAD NORMAL BUSINESS PROFIT FROM SHARE TRADING AT RS. 1,76,00,708/- (RS. 18471778- RS. 871 070) WHICH CANNOT BE SET OFF AGAINST THE BROUGHT FORWARD SPECULATIVE LOSS BECAUS E AN EXPLANATION ADDED TO THE MAIN 4 ITA NO. 640/JP/2013 A.Y. 2010-11. DCIT VS. M/S. EASTERN JEWELS PVT. LTD., JAIPUR. SECTION CANNOT EXTEND THE AMBIT OF THE MAIN SECTION . THEREFORE, THE AO HELD THAT SPECULATIVE LOSS SHALL BE ALLOWED TO SET OFF TO THE EXTENT OF SPECULATIVE PROFIT OF RS. 8,71,070/- AND REMAINING SPECULATIVE LOSS OF RS. 1, 29,89,670/- (RS. 1,38,60,740 8,71,070) SHALL BE ALLOWED TO CARRY FORWARD. THUS H E MADE AN ADDITION OF RS. 1,76,00,708/-. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO DELETED THE ADDITION MADE BY THE AO. WHILE DELETING THE ADD ITION, THE LD. CIT (A) PLACED RELIANCE ON THE ORDER OF THE JAIPUR BENCH OF THE TR IBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1134/JP/2011 DATED 17.01.2013 FOR THE A.Y. 2008 -09 WHEREIN THE TRIBUNAL TREATING THE PROFITS/LOSS FROM SHARE TRANSACTIONS BY THE ASS ESSEE AS SPECULATION LOSSES/PROFITS FOR THE PURPOSE OF SEC. 73 IN A.Y. 2008-09 AND THE FAIL URE OF THE AO TO BRING ANYTHING ON RECORD TO CONTROVERT HIS FINDING THE PROFITS FROM T HE SHARE TRANSACTIONS WHETHER DELIVERY BASED OR OTHERWISE ARE TREATED AS SPECULATIVE TRANS ACTIONS AS PER EXPLANATION TO SEC. 73(1) FOR PURPOSES OF ALLOWING SET OFF OF BROUGHT F ORWARD SPECULATION LOSSES. RELIANCE IS ALSO PLACED ON THE JUDICIAL PRONOUNCEMENT BY HONBL E CALCUTTA HIGH COURT IN THE CASE OF PAHARPUR COOLING TOWERS LTD. VS. CIT, (2011) 239 CT R (CAL.). 4. NOW THE REVENUE IS BEFORE US. THE LD. D/R FOR T HE REVENUE SUPPORTED THE ORDER OF THE AO AND REQUESTED TO SUSTAIN THE ADDITION MAD E BY THE A.O. 4.1. AT THE OUTSET, THE LD. A/R OF THE ASSESSEE SUP PORTED THE ORDER OF LD. CIT (A) AND SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y . 2008-09. HE REQUESTED TO CONFIRM THE ORDER OF LD. CIT (A). 5 ITA NO. 640/JP/2013 A.Y. 2010-11. DCIT VS. M/S. EASTERN JEWELS PVT. LTD., JAIPUR. 4.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003-0 4 IN ITA NO. 651/JP/2008 DATED 26.06.2009 AND A.Y. 2008-09 IN ITA NO. 1134/JP/2011 DATED 17.01.2013. THE FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION ARE SIMILA R TO THE FACTS FOR THE ASSESSMENT YEARS 2003-04 AND 2008-09 IN THE ABOVE INCOME-TAX A PPEALS. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION IN THE ABOVE MENTIONED CASES , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) AND THE SAME IS CONFIRMED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/11/201 5. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/11/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S. EASTERN JEWELS PVT. LTD., JAIPU R. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 640/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 6 ITA NO. 640/JP/2013 A.Y. 2010-11. DCIT VS. M/S. EASTERN JEWELS PVT. LTD., JAIPUR.