ITO, WD-30(1), KOLKATA, Kolkata V. Shri Dinkar Maheswari, Kolkata

ITA 703/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1492 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Keywords: Speculation loss

Judgement Text

1 ITA NO.703/KOL/2014 & CO NO.09/KOL/2017 DINKAR MAHESWARI., AY 2007-08 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 703/KOL/2014 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WD-30(1), KOLKATA VS. SHRI DINK AR MAHESWARI (PAN: AEZPM1510L) APPELLANT RESPONDENT & C.O. NO.09/KOL/2017 IN I.T.A. NO. 703/KOL/2014 ASSESSMENT YEAR: 2007-08 SHRI DINKAR MAHESWARI VS. INCOME-TAX OFFICER, WD-30(1), KOLKATA CROSS OBJECTOR RESPONDENT DATE OF HEARING 07.06.2017 DATE OF PRONOUNCEMENT 26.07.2017 FOR THE REVENUE N O N E FOR THE ASSESSEE SHRI DEEPAK SHARMA, AR ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FLED BY ASSESSEE ARE AGAINST THE ORDER OF LD. CIT(A)-XIV, KOLKATA DATED 07.01.20 14 FOR AY 2007-08. 2. NONE APPEARED ON BEHALF OF REVENUE, BUT AN ADJOU RNMENT PETITION DATED 05.06.2017 IS PLACED ON RECORD. AFTER PERUSING THE ADJOURNMEN T PETITION AND GOING THROUGH THE APPEAL AND THE CO WE ARE INCLINED TO DISPOSE OF THE APPEAL AND THE CO AFTER HEARING THE LD. AR 2 ITA NO.703/KOL/2014 & CO NO.09/KOL/2017 DINKAR MAHESWARI., AY 2007-08 AND THEREFORE, WE REJECT THE ADJOURNMENT PETITION F ILED BY THE REVENUE AND PROCEED TO HEAR THE APPEAL AND THE CO EX PARTE QUA REVENUE. 3. ON A PERUSAL OF THE GROUNDS OF APPEAL OF THE REV ENUE, WE NOTE THAT THE SOLE ISSUE IS AGAINST THE ACTION OF THE LD. CIT(A), WHO HAVE TREA TED THE DERIVATIVE LOSS OF RS.74,32,789/- AS BUSINESS LOSS INSTEAD OF SPECULATION LOSS, WHICH ACCORDING TO REVENUE WAS DONE IN VIOLATION OF RULE 46A OF THE I. T. RULES, 1962 BY A CCEPTING FRESH EVIDENCE WITHOUT GIVING AN OPPORTUNITY TO THE AO. WE ALSO NOTE THAT THE ASSESS EE HAS FILED THE CROSS OBJECTION IN SUPPORT OF THE ORDER OF LD. CIT(A). 4. WE HAVE HEARD LD. AR AND CAREFULLY PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO TREATED THE LOSS INCURRED ON DERIV ATIVE TRADING OF RS.75,32,789/- AS SPECULATION LOSS WHICH WAS CLAIMED BY THE ASSESSEE AS NORMAL BUSINESS LOSS. ON APPEAL, THE LD. CIT(A) HELD THAT THE ACTION OF THE AO IN THE TR EATMENT OF LOSS INCURRED BY THE ASSESSEE ON DERIVATIVE TRADING AS SPECULATION LOSS IS ERRONE OUS AND MISCONCEIVED AND NOT BASED ON ACTUAL FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT THE AO HAS NOT TAKEN NOTE OF THE RELEVANT PROV ISION OF LAW WHILE DENYING THE CLAIM OF THE ASSESSEE AS LOSS (BUSINESS LOSS) BECAUSE THE AO OVERLOOKED THE INSERTION OF PROVISO (D) TO SUB-SECTION (5) OF SEC. 43 WHICH WAS INSERTED BY THE FINANCE ACT, 2005, WHICH PROVIDES THAT AN ELIGIBLE TRANSACTION I.R.O TRADING IN DERIVATIVE S REFERRED TO IN CLAUSE (AC) OF SEC. 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1996) CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE SHALL NOT BE DEEMED TO BE A SPECULAT IVE TRANSACTION . HENCE, THE LD. CIT(A) TAKING NOTE OF THE FACT THAT THE DERIVATIVE TRADING WAS DONE BY THE ASSESSEE ON THE NATIONAL STOCK EXCHANGE WHICH IS A RECOGNIZED STOC K EXCHANGE DIRECTED THE AO TO TREAT THE LOSS OF RS.75,32,789/- FROM TRADING IN DERIVAT IVES AS NORMAL BUSINESS LOSS OF THE ASSESSEE AND ALLOWED THE SAME TO BE CARRIED FORWARD AS A BUSINESS LOSS. AGGRIEVED BY THE SAID ACTION OF LD. CIT(A), THE REVENUE IS BEFORE US . WE FIND THAT THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY TAKING NOTE OF PROVISO (D) TO SUB-SECTION (5) OF SECTION 43 OF THE FINANCE ACT, 2005 (SUPRA). THE LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE BY TAKING DUE NOTE OF THE PROVISIONS OF TH E ACT CITED SUPRA AND THE FACTS STATED 3 ITA NO.703/KOL/2014 & CO NO.09/KOL/2017 DINKAR MAHESWARI., AY 2007-08 ABOVE, THEREFORE WE FIND NO INFIRMITY IN HIS ORDER AND THE SAME IS HEREBY UPHELD. THEREFORE, THE APPEAL OF REVENUE IS DISMISSED. THE CROSS OBJEC TION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF LD. CIT(A), THEREFORE, THE SAME IS ALSO DISMISSED BEING INFRUCTUOUS. 5. IN THE RESULT, BOTH THE APPEAL OF REVENUE AND TH E CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.07.2017 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :26TH JULY, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ITO, WARD-30(1), KOLKATA. 2 RESPONDENT SHRI DINKAR MAHESWARI, FLAT-A, TIVOLI COURT, 1A, BALLYGUNGE CIRCULAR ROAD, KOLKATA-700 019. . 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY