M/S. TRIUMPH INTERNATIONAL FINANCE INDIA LTD, MUMBAI V. THE ACIT CEN CIR-40, MUMBAI

ITA 650/MUM/2008

• Counselvise Citation: 65019914 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 18-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 25-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Assessee Lawyers: RAJIV KHANDELWAL
• Keywords: Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 650/MUM./2008 (ASSESSMENT YEAR : 2002-03 ) DATE OF HEARING: 18.5.2011 TRIUMPH INTERNATIONAL FINANCE (I) LTD., OXFORD CENTRE, 10 SHROFF LANE, COLABA CAUSEWAY, MUMBAI 400 005 PAN AAACE0308A .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-40, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : DR. P. DANIEL ASSESSEE BY : MR. RAJIV KHANDELWAL O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 12 TH DECEMBER 2007, PASSED BY THE COMMISSIONER (APPEALS)-VII, MUMBAI, FOR ASSESSMENT YEAR 2002-03. 2. THE REGISTRY HAS ISSUED A DEFECT MEMO HOLDING THAT THE APPEAL FEE, IN THIS CASE, WAS SHORT PAID BY ` 9,500. THE ASSESSEE SUBMITS THAT THE ASSESSED INCOME IS A LOSS AND IN SUCH CIRCUMSTANCES, THE APP EAL FEE OF ` 500, PAID IS IN ACCORDANCE WITH SUB-CLAUSE (A) OF SECTION 253(6) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). HE ALSO SUBMITS THAT THE ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF HON'BLE HIGH COU RT TRIUMPH INTERNATIONAL FINANCE (I) LTD. ITA NO.650/MUM./2008 2 3. IN VIEW OF THE ABOVE, WE ADMIT THIS APPEAL. 4. THE SOLE GROUND RAISED BY THE ASSESSEE, READS AS FO LLOWS:- THE LEARNED CIT(A), CENTRAL-VII, MUMBAI, ERRED IN C ONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING A S UM OF ` 1,08,81,027, BEING LOSS IN SHARE TRADING ACTIVITY. 5. WE HAVE HEARD THE LEARNED COUNSEL, MR. RAJIV KHANDE LWAL, APPEARING ON BEHALF OF THE ASSESSEE AND SPECIAL COUNSEL, DR. P. DANIAL, APPEARING ON BEHALF OF THE REVENUE. 6. ON A CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS , WE HOLD AS FOLLOWS:- I) THE COMMISSIONER (APPEALS) HAS BROUGHT OUT THE CONT ROVERSY AT PARAS- 7 AND 7.1, WHICH ARE EXTRACTED BELOW FOR READY REFE RENCE:- 7. IN GROUND NO.IV, THE APPELLANT HAS AGITATED DISA LLOWANCE OF SHARE TRADING LOSS AMOUNTING TO ` 1,08,81,027, AS A NON-GENUINE LOSS AND DENIED THE CARRY FORWARD OF SUCH LOSS FOR SET O FF IN FUTURE YEAR. 7.1 ACCORDING TO THE ASSESSMENT ORDER, THE APPELLAN T HAD CLAIMED SHARE TRADING LOSS OF ` 1.08 CR. THOUGH THE APPELLANT HAD FILED CERTAIN DETAILS IN SUPPORT OF THE TRANSACTIONS, IT WAS NOTE D BY THE ASSESSING OFFICER THAT THE SHARES IN WHICH THE APPELLANT HAD INCURRED LOSS IN VALUATION WERE THE SAME, THE PRICE OF WHICH THE GRO UP MANIPULATED AS FOUND BY SEBI AND ALSO BY THE JCP. THUS, SUCH A LOS S WAS NOT CONSIDERED GENUINE AND WAS DISALLOWED. THE ASSESSIN G OFFICER HAS ALSO REFERRED TO THE ASSESSMENT ORDER FOR A.Y. 2001-02, IN WHICH SIMILAR LOSS WAS DISALLOWED TREATING THE SAME AS NON-GENUIN E. II) AT PARA-8, THE COMMISSIONER (APPEALS) HELD AS FOLLO WS:- 8. I HAVE CAREFULLY CONSIDERED THE FACTS AND THE C IRCUMSTANCES OF THE CASE. THE FACTS ARE EXACTLY SIMILAR AS NARRATED IN THE ASSESSMENT ORDER FOR A.Y. 2001-02. IT MAY BE STATED HERE THAT THE UNDERSIGNED HAS ALREADY DECIDED THE APPEAL FOR THE SAID YEAR VI DE APPEAL ORDER NO.CIT(A)C-VII/DCCC-40/IT-28/04-05 DATED 18.10.2007 , AND THE ACTION OF THE ASSESSING OFFICER HAS BEEN UPHELD. SI NCE IN THE PRESENT APPEAL, THE FACTS ARE SIMILAR, I DO NOT FIND ANY RE ASON FOR DEVIATION IN THE CONCLUSION DRAWN BY HIM IN THE ABOVE APPEAL. AC CORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN TR EATING THE SHARE TRADING LOSS AS NON-GENUINE AND DISALLOWING THE SAM E. THE ACTION OF THE ASSESSING OFFICER IS, ACCORDINGLY, UPHELD. TRIUMPH INTERNATIONAL FINANCE (I) LTD. ITA NO.650/MUM./2008 3 III) IT CAN BE SEEN FROM THE ABOVE THAT THE COMMISSIONER (APPEALS) HAS FOLLOWED HIS ORDER FOR ASSESSMENT YEAR 2001-02 AND UPHELD THE ORDER OF THE ASSESSING OFFICER. IV) J BENCH OF THE TRIBUNAL IN ITA NO.7049/MUM./2007, IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02, AT PAGE-9 / P ARA-8, HELD AS FOLLOWS:- 8. COMING TO THE ISSUE OF GENUINENESS OF THE LOSS CLAI MED, IT WAS THE ASSESSEES SUBMISSION THAT HE HAS GIVEN ALL THE DETAILS BEFORE THE A.O. AND THE CIT(A). AS SEEN FROM THE WRITTEN SUBMI SSIONS FILED BEFORE THE CIT(A) ALSO THE ASSESSEE WAS REFERRING TO THE V ARIOUS DOCUMENTS PLACED BEFORE THE A.O. IN PROVING THE GENUINENESS O F THE TRANSACTIONS. NEITHER THE A.O. NOR THE CIT(A) EXAMINED OR REFERRE D TO THIS DOCUMENTS. EVENTHOUGH GENERAL COMMENTS WERE PASSED THAT THE ASSESSEE FAILED TO FURNISH EVIDENCES WE FAIL TO UND ERSTAND HOW THESE FINDINGS ARE GIVEN WHEN THE ASSESSEE HAS PLACED DOC UMENTS SUPPORTING THE TRANSACTIONS BEFORE THE A.O. AND CIT (A). BE THAT AS IT MAY, THE FACT REMAINS THAT NEITHER THE A.O. NOR THE CIT(A) EXAMINED THESE DOCUMENTS IN ITS CORRECT PERSPECTIVE BUT CARR IED AWAY MORE BY THE OBSERVATIONS OF THE SEBI AND JPC IN THE GROUP C ASES WHICH MAY OR MAY NOT BE RELEVANT IN THE GIVEN SET OF FACTS. THE LEARNED COUNSEL ALSO REFERRED TO THE SPECIAL AUDITORS REPORT WHICH DOES NOT INDICATE ANY VIOLATION OF TRANSACTIONS. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE A.O. HAS TO EXAMINE THE DOCUMENTS PLACED BEFORE HIM SPECIFICALLY AND GIVE A CLEAR FINDING WHETHER THE TRANSACTIONS ARE D ELIVERY BASED TRANSACTION OR NOT, WHETHER THE TRANSACTIONS HAVE O CCURRED IN STOCK EXCHANGE OR OF-MARKET TRANSACTIONS AND FINALLY WHET HER THE LOSSES CLAIMED ARE GENUINE OR NOT KEEPING IN VIEW THE FUN D FLOW AND OTHER ASPECTS WHICH THE SEBI AND JPC COMMENTED ABOUT TRAN SACTIONS IN THE GROUP CASES. SINCE THE FACTS OF EACH CASE ARE DIFFE RENT, ONE CANNOT TAKE GENERALISED OPINION IN DISALLOWING THE LOSSES WHICH MIGHT HAVE OCCURRED IN THE TRADES UNDERTAKEN BY THE ASSESSEE C OMPANY. WITHOUT GIVEN ANY CONCLUSIONS ABOUT THE VARIOUS TRANSACTION S UNDERTAKEN BY THE ASSESSEE, WE ARE OF THE OPINION THAT THE ISSUE REQUIRES RE- EXAMINATION BY THE A.O. AND FOR THIS MATTER THE A.O . HAS TO EXAMINE ASSESSEES TRANSACTIONS TO DETERMINE WHETHER THE LO SS CLAIMED ARE GENUINE OR NOT. EVEN THE QUANTUM OF LOSS SUFFERED B Y THE ASSESSEE REQUIRES EXAMINATION AS STATED ABOVE. FOR THESE REA SONS WE SET ASIDE THE ORDERS OF THE A.O. AND CIT(A) TO THAT EXTENT AN D RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY FOR EXPLAINING THE TRANSACTIONS AND THE CLAIM OF LOSS. IT IS NOT OUT OF PLACE TO MENTION THAT THE LOSSES ARE TO BE CONSIDERED AS SPECULATIVE LOSS AS THE ASSESSEE ITSELF HAS OFFERED SPECULATION LOSS IN VIEW OF THE EXPLANATION TO SECTION 73. THE ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. FOR FRESH CONSIDERATION AFTER DUE EXAMINATION OF THE FACTS. ASSESSEES GROUNDS ARE CONSIDERED ALLOWED. TRIUMPH INTERNATIONAL FINANCE (I) LTD. ITA NO.650/MUM./2008 4 V) CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINAT E BENCH OF THE TRIBUNAL, WE SET ASIDE THE MATTER TO THE FILE OF AS SESSING OFFICER FOR DENOVO ADJUDICATION. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.5.2011 SD/- N.V. VASUDEVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 20.5.2011 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, J BENCH, ITAT, MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI