M/s K.K. Patel Finace Ltd, V. The I T O 5 (3),

ITA 65/IND/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9524 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: K C AGARWAL
• Keywords: Speculation loss
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCK4282G I.T.A.NO. 65/IND/2009 A.Y. : 2005 - 06 K.K.PATEL FINANCE LIMITED, ITO, WARD 5(3), INDORE. VS INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.C. AGARWAL, C. A. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 21 . 0 3 .201 3 DATE OF PRONOUNCEMENT : 12 . 0 4 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) DATED 16.12.2008, FOR THE ASS ESSMENT YEAR 2005-06, WHEREIN FOLLOWING GROUNDS HAVE BEEN T AKEN BY THE ASSESSEE :- -: 2: - 2 1. THE PETITIONER SUBMITS THAT THE LD. CIT(A)-I, IN DORE, HAS ERRED IN MAINTAINING THE DISALLOWANCE MADE OUT OF COMPUTER EXPENSES T RS. 8,000/- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE SAME ARE FULLY ALLOWABLE 2. THE PETITIONER SUBMITS THAT THE LD. CIT(A)-I, IN DORE, HAS ERRED IN MAINTAINING THE TREATMENT OF SHARE TRADING LOSS SHOWN AT RS. 37,91,272/-, AS SPECULATIVE LOSS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SAME IS INCURRED IN THE NORMAL BUSINESS ACTIVITIES OF THE PETITIONER AN D HENCE, ALLOWABLE AS NORMAL BUSINESS LOSS. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE ASSESSEE COMPANY IS DEALING IN SHARES, FINANCE AND INVESTMENT. DURING THE COURSE OF SCRUTINY ASSES SMENT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD SHOWN TO HAVE SUFFERED A LOSS OF RS. 37,97,225/- IN RESPECT OF SH ARE TRANSACTION, THE ASSESSING OFFICER TREATED THE LOSS FROM SHARE TRADING AS SPECULATIVE IN NATURE WITHIN THE MEANING OF SECTION 43(5) BY OBSERVING THAT THE ASSESSEE COULD NOT PROV E THAT -: 3: - 3 TRANSACTIONS WERE DELIVERY BASED AS BILLS OF M.BHIW ANIWALA & CO. WERE NOT PRODUCED THE ASSESSING OFFICER ALSO S TATED THAT DETAILS OF TRANSACTION OF SHREE RANI SATI SHARES AN D SECURITIES PVT.LIMITED, COULD NOT BE VERIFIED AND CONTRACT NOT ES COULD NOT BE PRODUCED BY THE ASSESSEE FOR VERIFICATION. BY TH E IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER BY OBSERVING THAT COPY OF CONTRACT NOTE IN CASE OF TRANSACTIONS CLAIMED TO BE CARRIED OUT THROUGH M.BH IWANIWALA & CO. AND COPY OF BILLS WITH REFERENCE TO TRANSACTI ON CLAIMED TO HAVE BEEN CARRIED OUT THROUGH SHREE RANI SATI SHARE S AND SECURITIES PVT.LIMITED, COULD NOT BE PRODUCED. THE LD. CIT(A) ALSO STATED THAT DETAILS OF POOL ACCOUNT OF BROKER WAS ALSO NOT PRODUCED, WHEREIN SHARES WERE ALLEGED TO BE KEPT IN POOL ACCOUNT AND SOLD SUBSEQUENTLY. 3. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. SHRI K. C. AGARWAL, APPEARED ON BEHALF OF THE ASSES SEE AND CONTENDED THAT ASSESSEE HAS DULY FURNISHED COPY OF DEMAT ACCOUNT STATEMENT ALONGWITH STOCK SUMMARY BEFORE TH E ASSESSING OFFICER. AS PER LD. AUTHORIZED REPRESENTA TIVE , THE -: 4: - 4 INFORMATION CALLED BY THE ASSESSING OFFICER U/S 133 (6) WAS RECEIVED BY THE ASSESSING OFFICER ON 31.12.2007. OU R ATTENTION AS ALSO INVITED TO DEMAT ACCOUNT, CONTRACT NOTE AND STT CERTIFICATE IN RESPECT OF TRANSACTIONS DONE THROUGH M.BHIWANIWALA & CO., WHICH IS A RECOGNIZED STOCK BROKER AND HAD FILED ALL INFORMATION IN RESPONSE TO QUERY RAISED BY THE ASSESSING OFFICER U/S 133(6). HE SUBMITTED THAT BROKER HAD ISSUED CONTRACT NOTE AND DELIVERY OF SHARES SO PURCHASED WAS RECEIVED IN THE DEMAT ACCOUNT OF THE ASSESSEE A ND DELIVERY WERE EFFECTED AGAINST THE SALE SO MADE THROUGH BROK ERS. 5. IN VIEW OF THE ABOVE DOCUMENTARY EVIDENCE, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT THE ACTIO N OF THE LOWER AUTHORITIES FOR TREATING LOSS INCURRED IN SHA RE TRANSACTIONS AS SPECULATIVE LOSS WAS NOT CORRECT. 6. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE ORDERS OF LOWER AUTHORITIES AND CONTENDED THAT THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE DELIVERY OF SH ARES, SO THAT THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING TH E LOSS INCURRED ON SHARE TRANSACTION AS SPECULATIVE LOSS W ITHIN THE MEANING OF SECTION 43(5) OF THE ACT. -: 5: - 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS PAPER BOOK FILED BEFORE US. FROM THE RECORD, WE FOU ND THAT IN CASE OF SHREE RANI SATI SHARES AND SECURITIES PVT.L IMITED, THE ASSESSEE HAVE FILED FOLLOWING DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE LD. CI T(A) :- A) COPY OF THE BILLS RAISED BY THE BROKER PLACED A T PAGE NO. 53 TO 86 OF PAPER BOOK. B) COPY OF THE DEMAT ACCOUNT OF THE ASSESSEE PLACE D AT PAGES NO. 47 & 48 OF PAPER BOOK. C) COPY OF BANK ACCOUNT OF SHREE RANI SATI SHARES AND SECURITIES PVT.LIMITED, PLACED AT PAGES NO. 8 7 TO 89 OF PAPER BOOK. D) COPY OF CHEQUES ISSUED IN FAVOUR OF SHREE RANI SATI SHARES AND SECURITIES PVT.LIMITED PLACED AT PAGES NO. 9 TO 96 OF PAPER BOOK. 8. IN RESPECT OF TRANSACTION ENTERED IN DEMAT ACCOUNT, THE SAME CANNOT BE REGARDED AS SPECULATIVE TRANSACTION IN SO FAR AS DELIVERY IS REQUIRED TO BE GIVEN IN THE CASE OF SUCH -: 6: - 6 TRANSACTION. DELIVERY OF SHARES CANNOT BE DOUBTED U NLESS ANY CONTRARY MATERIAL IS BROUGHT ON RECORD. AS PER RULE S OF SEBI DELIVERY IS MANDATORY AND IT CANNOT BE PRESUMED THA T NO DELIVERY WAS DONE IN RESPECT OF TRANSACTION ENTERED IN THE DEMAT ACCOUNT. WE FOUND THAT EXISTENCE OF SHREE RAN I SATI SHARES AND SECURITIES PVT.LIMITED, WAS NEVER DOUBTE D BY THE LOWER AUTHORITIES. THE COPY OF BANK ACCOUNT, MASTER DATA OF ROC, COPY OF DEMAT SLIPS CLEARLY ESTABLISHES EXISTE NCE OF SHREE RANI SATI SHARES AND SECURITIES PVT.LIMITED. THE AS SESSEE HAD ALSO FILED ALL THE BILLS OF PURCHASE AND SALE OF B ROKER COMPANY, M.BHIWANIWALA & CO., WHICH IS REGISTERED WITH SEBI. FOLLOWING DOCUMENTS WERE FILED BEFORE THE LD. ASSESSING OFFIC ER / LD. CIT(A) :- A) CONTRACT NOTES OF M. BHIWANIWALA & CO. (PAGE 31-35). B) DEMAT ACCOUNT OF THE ASSESSEE (PAGE 47 48) C) COPY OF ACCOUNT OF M. BHIWANIWALA & CO., ( PAGE 29 ). D) COPY OF S.T. T. CERTIFICATE IN THE CASE OF M. BHIWANIWALA & CO. -: 7: - 7 E) COPY OF BILLS OF SHREE RANI SATI SHARES AND SECURITIES P.LTD., ( PAGE 63-86) F) COPY OF LEDGER IN THE BOOKS OF SHREE RANI SATI SHARES AND SECURITIES P. LTD., PAGE 50 - 52 ) G) COPY OF DEMAT INSTRUCTION SLIPS ISSUED IN FAVOUR OF SHREE RANI SATI SHARES AND SECURITIES P.LTD.,( PAGE 97) 9. IT APPEARS THAT LOWER AUTHORITIES HAVE NOT PROPERL Y APPRECIATED THE EVIDENCE FILED BY THE ASSESSEE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE BAC K TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDE RING EVIDENCES FILED BY THE ASSESSEE AS DISCUSSED HEREIN ABOVE. 10. THE ASSESSEE IS ALSO AGGRIEVED FOR DISALLOWANCE OF RS. 8000/- BEING COMPUTER RENT. FROM THE RECORD, WE FOU ND THAT THE ASSESSEE HAS CLAIMED A SUM OF RS. 60,000/- ON A CCOUNT OF COMPUTER RENT BESIDES COMPUTER EXPENSES OF RS. 800 0/-. THE ASSESSING OFFICER MADE AN AD HOC DISALLOWANCE OF RS . 8000/-. WE FOUND THAT EXPENSES WERE GENUINELY INCURRED FOR THE PURPOSE OF BUSINESS, THEREFORE AD HOC DISALLOWANCE OF RS. -: 8: - 8 8000/- WAS WRONGLY MADE BY THE ASSESSING OFFICER. W E DIRECT TO DELETE THE SAME. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12TH APRIL, 2013. SD/ - SD / - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH APRIL, 2013. CPU* 1012.4