Shri Bonny Niranjanbhai Dalal, Surat V. The ACIT.,Circle-3, Surat

ITA 741/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76799 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: RAMESH KUMAR MA LPANI
• Keywords: Business income; Question of law; Speculation loss
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO. 741/AHD/2011 (ASSESSMENT YEAR: 2007-08) SHRI BONEY NIRANJABHAI DALAL 16, MASKATI PLOT, PARLE POINT SURAT V/S THE ACIT, CIRCLE-3, SURAT (APPELLANT) (RESPONDENT) PAN: ADYPD 8194Q APPELLANT BY : SHRI RAMESH KUMAR MALPANI A.R. RESPONDENT BY : SHRI O.P. BATHEJA, SR. D.R. ( )/ ORDER DATE OF HEARING : 28-04-2014 DATE OF PRONOUNCEMENT : 30 -05-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-II, SURAT DATED 07.01.2011 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO 741 /AHD/2011 . A.Y. 2007- 08 2 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM RENTAL INCOME FROM PROPERTY AND CAPITAL GAIN FROM SALE OF SHARES. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 07-08 ON 31.10.2007 DECLA RING TOTAL INCOME OF RS. 15,87,682/-. THE CASE WAS SELECTED FOR SCRUTIN Y AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 2 9.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 16,27,682/-. AG GRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 07.01.2011 DISMISSED THE APPEAL OF THE ASSESS EE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFO RE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE NOTICE ISSUED U/S 143(2) IS BEYOND THE TIM E LIMIT PRESCRIBED UNDER PROVISO TO SECTION 143(2)(II) OF THE ACT AND THUS ASSESSMENT PROCEEDIN GS CARRIED OUT AND ORDER PASSED THEREBY IS BAD IN LAW AND BEYOND THE LAW. 2. THAT HON'BLE CIT (A) HAS ERRED IN SUSTAINING THE TR EATMENT OF SHORT TERM CAPITAL GAIN OF RS. 15,16,203/- AS BUSINESS INCOME. 3. WITHOUT PREJUDICE TO ABOVE GROUND OF APPEAL, THE HO N'BLE CIT (A) HAS ERRED IN TREATING SHARES OF MOHIT INDUSTRIES LTD. ALSO AS STOCK IN TRADE WITH O THER SHARES AND THEREBY TAXING THE CAPITAL GAIN OF RS. 19,04,110/- FROM THE SAME AS BUSINESS INCOME . GROUND NO. 1 WAS NOT PRESSED AND THEREFORE DISMISSE D AS NOT PRESSED 4. ASSESSEE FURTHER VIDE LETTER DATED 21.04.2014 HAS M ADE AN APPLICATION FOR ADMITTING ADDITIONAL GROUND OF APPEAL WHICH READS A S UNDER:- '(6) THAT THE ID. AO HAS ERRED IN NOT GRANTING THE SET OFF OF LOSS OF RS. 9,65,2957-INCURRED IN TRADIN G OF DERIVATIVES (FUTURES & OPTIONS OF SHARES & SECURITI ES) WHICH IS NORMAL BUSINESS LOSS AS PER THE AMENDED PROVISIONS OF SECTION 43(5)(D) OF THE I. T. ACT, 1961 (THE ACT) W.E.F. A.Y. 2006-07 AND IS ELIGIBLE FOR SET OFF AGAINST ANY OTHER INCOME AS PE R THE PROVISIONS OF SS. 70 & 71 OF THE ACT. APPELLA NT PRAYS THAT THE SAID LOSS SHOULD BE ASSESSED AS NORM AL BUSINESS LOSS AS PER THE AMENDED PROVISIONS OF SEC. 43(5)(D) OF THE ACT AND SHOULD BE SET OFF AGAI NST OTHER INCOMES OF THE APPELLANT.' ITA NO 741 /AHD/2011 . A.Y. 2007- 08 3 5. WITH RESPECT TO ADMISSION OF ADDITIONAL GROUND, THE LD. A.R. SUBMITTED THAT THE ADDITIONAL GROUND INVOLVES A LEGAL ISSUE A ND ARISES FROM THE FACTS WHICH ARE ALREADY ON RECORD. IT WAS FURTHER SUBMIT TED THAT AS PER THE AMENDED PROVISIONS OF SECTION 43 (5)(D) WITH EFFECT FROM A.Y. 06-07. THE LOSS ON TRADING OF DERIVATIVES IS NOT A SPECULA TION LOSS BUT IS A NORMAL BUSINESS LOSS. HE FURTHER SUBMITTED THAT THE ASSES SEE WAS NOT AWARE OF THE AMENDED PROVISIONS OF SECTION 43(5)(D) AND DUE TO INADVERTENCE REFLECTED THE LOSS ON TRADING OF DERIVATIVES AS SPE CULATIVE LOSS IN THE RETURN OF INCOME. HE FURTHER SUBMITTED THAT DUE TO IGNORANCE AND INADVERTENCE, THE ADDITIONAL GROUND WHICH THE ASSES SEE NOW HAS RAISED BEFORE US COULD NOT BE RAISED BEFORE HONBLE CIT(A) . THE LD. A.R. THEREFORE PRAYED FOR ADMISSION OF THE ADDITIONAL GR OUND AND FOR WHICH HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF JUTE CORPORATION OF INDIA VS. CIT 187 ITR 688 (SC) AND NATIONAL THERMAL POWER COMPANY LTD. VS. CIT 229 ITR 383 (SC). 6. BEFORE US, ON THE OTHER HAND, THE LD. D.R. OBJECTED TO THE ADMISSION OF ADDITIONAL GROUND AND SUBMITTED THAT THE AMENDED PR OVISIONS OF SECTION 43(5)(D) WERE INTRODUCED WITH EFFECT FROM A.Y. 06-0 7 AND THE YEAR UNDER APPEAL WAS A.Y. 07-08 AND THEREFORE IT CANNOT BE SA ID THAT THE ASSESSEE WAS NOT AWARE OF THE AMENDED PROVISIONS. HE THUS O BJECTED TO THE ADMISSION OF ADDITIONAL GROUND. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, IT IS SUBMITTED ON BEHALF OF ASSESSEE TH AT ASSESSEE HAD SUFFERED LOSS OF RS. 9,65,295/- ON TRADING OF DERIV ATIVES WHICH HAS BEEN REFLECTED BY ASSESSEE AS SPECULATION LOSS IN THE RE TURN OF INCOME. IT IS ITA NO 741 /AHD/2011 . A.Y. 2007- 08 4 ALSO THE SUBMISSION OF THE ASSESSEE THAT THE PROFIT S EARNED ON SALE OF SHARES AMOUNTING TO RS. 15,16,203/- WHICH WERE TREA TED BY ASSESSEE AS SHORT TERM CAPITAL GAINS WAS CONSIDERED AS BUSINESS BY THE ASSESSEE. BUT AT THE SAME TIME, THE LOSS SUFFERED FROM TRADING OF DERIVATIVES WAS NOT CONSIDERED AS BUSINESS LOSS THROUGH AS PER THE PROV ISIONS OF THE ACT, IT IS A BUSINESS LOSS AND THEREFORE ELIGIBLE FOR SET OFF AGAINST THE OTHER INCOME. THE AFORESAID SUBMISSIONS HAVE NOT BEEN CONTROVERTE D BY REVENUE. WE FURTHER FIND THAT THE ADDITIONAL GROUND RAISED BEFO RE US BY THE ASSESSEE WITH RESPECT TO TREATING THE LOSS INCURRED ON TRADI NG OF DERIVATES AS BUSINESS LOSS AND NOT AS SPECULATIVE LOSS AND IS RA ISED BEFORE FOR THE FIRST TIME. IN THE CASE OF NATIONAL THERMAL COMPANY LTD. (SUPRA) THE HONBLE APEX COURT HAS CONCLUDED THAT TRIBUNAL HAS JURISDIC TION TO EXAMINE A QUESTION OF LAW WHICH ARISES FROM THE FACTS AS FOUN D BY THE AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE NOTWITHSTANDING THE FACT THAT THE SAME WAS NOT RAIS ED BEFORE THE LOWER AUTHORITIES. 8. IN VIEW OF THE AFORESAID FACTS AND RELYING ON THE A FORESAID DECISION OF HONBLE APEX COURT, WE ADMIT THE ADDITIONAL GROUND OF THE ASSESSEE. HOWEVER SINCE THE ADDITIONAL GROUND WHICH IS RAISED BEFORE US FOR THE FIRST TIME, WE ARE OF THE VIEW THAT THE MATTER NEED S TO BE EXAMINED AND THEREFORE WE REMIT THE GROUND TO THE FILE OF A.O TO DECIDE IT AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. SINCE THE ADDITIONAL GROUND RAISED IS ALSO INTERCONNECTED THE WITH OTHER GROUNDS RAISED BY THE ASSESSEE, THE OTHER GROUNDS ARE ALSO REMITTED BACK TO THE FILE OF A.O. ITA NO 741 /AHD/2011 . A.Y. 2007- 08 5 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 05 - 2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD