Deepak Sureshchandra Sanghvi, Jalgaon V. DCIT, Cir.-2, Jalgaon

ITA 649/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4345 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: C H NANIVADEKAR
• Keywords: Business income; Opportunity of being heard; Speculation loss; Revised return; Futures and options; Speculative transactions
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.649PN/2011 (ASSESSMENT YEAR 2006-07) DEEPAK SURESHCHANDRA SANGHVI NILONS HOUSE, NATIONAL HIGHWAY, NO. 6, JALGAON 425001. PAN NO. ABLPS 7194R .. APPELLANT VS. DCIT, CIRCLE-2, JALGAON. .. RESPONDENT ASSESSEE BY : SRI CH. NANIVADEKAR REVENUE BY : MS. ANN KAPTHUAMA DATE OF HEARING : 16-04-2013 DATE OF PRONOUNCEMENT : 14-05-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 31-03-2011 OF THE CIT(A)-II, NASHIK RELATING TO AS SESSMENT YEAR 2006-07. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND IS TRADING IN SECURITIES AND ALSO RECEIVED REMUNERATIO N FROM NILONS ENTERPRISES PVT. LTD. JALGAON. HE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30-10-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS SHOWN LOSS FROM SPECULATION BUSINESS AT RS.6,65,995/-. OUT OF THE ABOVE, RS.40,198/- WAS ON ACCOUNT OF COMMODITY TRADING LOSS AND THE BA LANCE LOSS OF RS.6,25,798/- WAS ON ACCOUNT OF SHARES FUTURES AND OPTIONS TRADING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE SUBMITTED THAT THE LOSS ON ACCOUNT OF SHARES FUTURES AND OPTIONS TRADI NG HAS BEEN WRONGLY DISCLOSED AS RS.6,25,798/- AS SPECULATION LOSS IN STEAD OF CORRECTLY 2 DISCLOSING THE SPECULATION LOSS OF RS.3,16,818/- WH ICH HAS ACCRUED BEFORE 25-01-2006 AND THE BUSINESS LOSS OF RS.10,49,348/- WHICH HAS ACCRUED AFTER 25-01-2006, THE SAME BEING THE DATE ON WHICH TRANSA CTIONS IN SHARES FUTURES AND OPTIONS HAVE BEEN CONSIDERED AS NORMAL BUSINESS AND NOT SPECULATIVE BUSINESS. RELYING ON VARIOUS CASE LAWS THE ASSESSEE CLAIMED THAT THE BUSINESS LOSS OF RS.10,49,348/- SHOULD BE ALLOWED. 3. HOWEVER, THE ASSESSING OFFICER HELD THAT THE CLA IM OF BUSINESS LOSS OF RS.10,49,348/- BY THE ASSESSEE CANNOT BE ENTERTA INED AT THIS STAGE SINCE THE ASSESSEE HAS NOT FILED ANY REVISED RETURN AND T HE ASSESSEE CLAIMED THE LOSS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZ (INDI A) LTD. VS. CIT REPORTED IN 284 ITR 323 THE ASSESSING OFFICER REJEC TED THE CLAIM OF BUSINESS LOSS OF RS.10,49,348/- TO BE SET OFF AGAIN ST THE OTHER BUSINESS INCOME OR INCOME FROM OTHER SOURCES. FURTHER, THE ASSESSING OFFICER HELD THAT BUSINESS LOSS OF RS. 10,49,348/- AND SPECULATI ON LOSS OF RS.3,16,818/- WILL NOT BE CARRIED FORWARD AS PER SECTION 80 OF TH E INCOME TAX ACT SINCE THE LOSSES HAVE NOT BEEN DETERMINED IN THE RETURN O F INCOME. 4. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE HONBLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD. (SUPRA) HAS SPECIFICALLY HELD THAT CLAIM OR A DEDUCTION NOT MADE IN THE RETURN CANNOT BE ENTERTAINED BY THE ASSESSING OFFIC ER OTHERWISE THAN BY FILING A REVISED RETURN. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND : 3 THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDI NG AOS ACTION IN NOT CONSIDERING ASSESSEES CLAIM OF SET-OFF OF BUSINESS LOSS OF RS.10,49,348/-. HE FAILED TO APPRECIATE THAT THE CLAIM WAS SPECIFICALL Y MADE DURING THE COURSE OF ASSESSMENT AND WAS NECESSITATED DUE TO CHANGE IN LA W. THE CIT(A) FURTHER ERRED ON APPLYING HONBLE SUPREME COURTS DECISION IN GOE TZ INDIAS CASE (284 ITR 323) WITHOUT APPRECIATING THE TRUE IMPORT OF THE SA ID DECISION. 6. THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND WHICH READS AS UNDER: THE APPELLANT CRAVES FOR CONSIDERATION OF ADDITIONA L GROUND OF APPEAL TO CONSIDER THE ENTIRE INCOME FROM TRANSACTION IN FUTU RES AND OPTIONS IN SHARES ON RECOGNISED STOCK EXCHANGES (BSE AND NSE) FOR FINANC IAL YEAR 2005-06 AS BUSINESS INCOME. THE APPELLANT HUMBLY BEGS TO CONSIDER THE APPELLANT S PLEA FOR ADMITTING THE ADDITIONAL GROUND OF APPEAL HAVING REGARD TO THE RE CENT JUDGMENT OF HONBLE B BENCH OF ITAT DELHI AND TREAT THE TRANSACTIONS OF F UTURE AND OPTIONS AS BUSINESS TRANSACTIONS WITHOUT BIFURCATING THE TRANSACTIONS P RIOR TO/AND POST 25-01-2006 (BEING THE DATE OF GRANT OF RECOGNITION TO THESE EX CHANGES). 7. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED IN THIS APPEAL IS A.Y. 2006-07 AND THE ISSUE INVOLVED IN THE APPEAL IS AS TO WHETHER THE P ROFIT/LOSS FROM TRADING IN FUTURES AND OPTIONS IS A SPECULATION INCOME OR NORM AL BUSINESS INCOME. HE SUBMITTED THAT THE ASSESSEE HAS CARRIED OUT CERT AIN TRANSACTIONS IN FUTURES AND OPTIONS ON NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE PRIOR TO AMENDMENT TO SECTION 43(5) VIDE F INANCE ACT 2005 (W.E.F. 01-04-2006). THESE TRANSACTIONS WERE TO BE REGARDED AS SPECULATIVE TRANSACTIONS. HOWEVER, POST AMENDMENT, THESE TRANS ACTIONS, IF CARRIED OUT ON NOTIFIED STOCK EXCHANGES ARE TO BE TREATED AS NO RMAL BUSINESS INCOME. 7.1 REFERRING TO NOTIFICATION NO. 02/2006 DATED 25- 01-2006 ISSUED BY CBDT HE SUBMITTED THAT NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE HAVE BEEN NOTIFIED FOR THE PURPOSE OF SECT ION 43(5), PROVISO (D). HE SUBMITTED THAT THE ISSUE SOUGHT TO BE RAISED THR OUGH THIS ADDITIONAL 4 GROUND IS WHETHER ONLY THOSE TRANSACTIONS ENTERED I NTO AFTER 25-01-2006, I.E. DATE OF NOTIFICATION ONLY ARE TO BE CONSIDERED AS N ORMAL BUSINESS TRANSACTIONS OR WHETHER ENTIRE TRANSACTIONS CARRIED OUT IN A.Y. 2006-07 (INCLUDING THOSE ENTERED PRIOR TO 25-01-2006) ARE T O BE TREATED AS NORMAL BUSINESS TRANSACTIONS. SINCE THE ISSUE INVOLVED IS PURELY LEGAL ONE AND DOES NOT REQUIRE ANY ADDITIONAL INVESTIGATION OF FACTS H E SUBMITTED THAT THE ADDITIONAL GROUND SHOULD BE ADMITTED. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF G.K. ANA ND BROS. BUILDWELL (P) LTD. REPORTED IN 34 SOT 439 HE SUBMITTED THAT THE E NTIRE INCOME FOR A.Y. 2006-07 RELEVANT TO F.Y. 2005-06 WAS TREATED AS BUS INESS INCOME. HE ACCORDINGLY SUBMITTED THAT THE ADDITIONAL GROUND RA ISED BY THE ASSESSEE SHOULD BE ADMITTED. 7.2. SO FAR AS THE MERIT OF THE CASE IS CONCERNED H E SUBMITTED THAT THE LD. CIT(A) IN A SUMMARY MANNER HAS REJECTED THE CLAIM O F THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT THE ISSUE MAY BE SET-ASI DE TO THE FILE OF THE LD. CIT(A). 8. THE LD. DR ON THE OTHER HAND WHILE SUBMITTING T HAT HE HAS NO OBJECTIONS FOR ADMISSION OF THE ADDITIONAL GROUND F URTHER SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE F ILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. 9. AFTER HEARING BOTH THE SIDES THE ADDITIONAL GROU ND RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. SINCE THE L D. CIT(A) WHILE ADJUDICATING THE ISSUE HAS NOT CONSIDERED THE NOTIF ICATION NO.02/2006 DATED 5 25-01-2006 ISSUED BY CBDT, WE DEEM IT PROPER TO RES TORE THE ISSUE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. 10. SO FAR AS ENTERTAINING OF A CLAIM OR A DEDUCTI ON NOT MADE IN THE RETURN IS CONCERNED IT IS TRUE THAT THE SAME CANNOT BE ENTERTAINED BY THE ASSESSING OFFICER OTHERWISE THAN BY FILING A REVISE D RETURN IN VIEW OF THE BINDING DECISION OF THE HONBLE SUPREME COURT IN TH E CASE OF GOETZ (INDIA) LTD. REPORTED IN 284 ITR 323. HOWEVER, THE TRIBUNA L HAS THE POWER TO ADMIT THE ADDITIONAL GROUND OR THE CLAIM BY THE ASS ESSEE WHEN ALL THE FACTS ARE ON RECORD. THE HONBLE SUPREME COURT IN THE CA SE OF GOETZ (INDIA) LTD. (SUPRA) HAS HELD THAT THE DECISION IN THE CASE OF N TPC VS. CIT REPORTED IN 229 ITR 383 WAS RESTRICTED TO THE POWER OF THE ASSE SSING AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN AND DID NOT IMPINGE ON THE POWER OF THE APPELLATE TRIBUNAL U/S.254 OF THE INCOME TAX ACT, 1961. IN VIEW OF THE ABOVE, WE RESTORE TH E ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AND AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES PRONOUNCED IN THE OPEN ON THIS THE 14 TH DAY OF MAY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED THE 14TH MAY 2013. 6 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // PRIVATE SECRETARY, INCOME TAX APPELLATE T RIBUNAL, PUNE.