M/s. Sitaram Investment Limited , Kolkata V. ITO, Ward - 5(1), KOLKATA, Kolkata

ITA 751/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2750 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL CIT SR DR REVE
• Assessee Lawyers: S M SURANA
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER) ITA NO. 751/KOL/2018 ASSESSMENT YEAR: 2012-13 M/S. SITARAM INVESTMENT LTD.....................APPELLANT 15, INDIA EXCHANGE PLACE 3 RD FLOOR KOLKATA 700 001 [PAN : AACCS 4036 P] VS. INCOME TAX OFFICER, WARD-5(1), KOLKATA..............RESPONDENT APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI P.K. MONDAL, ADDL. CIT, SR. D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 24 TH , 2018 DATE OF PRONOUNCING THE ORDER : NOVEMBER 2 ND , 2018 ORDER PER J. SUDHAKAR REDDY, AM :- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 2, KOLKATA (HEREINAFTER THE LD. CIT(A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), DT. 10/04/2018, RELATING TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF SHARE TRADING AND INVESTMENT. THE ISSUE BEFORE ME FOR ADJUDICATION IS THE DISALLOWANCE OF THE LOSS ARISING FROM THE TRADING IN CURRENCY DERIVATIVES. THE ASSESSING OFFICER, RELYING ON THE STATEMENT OF SHRI SACHET SARAF, DIRECTOR OF M/S. MARI GOLD VANIJYA LTD., WHICH WAS RECORDED DURING THE COURSE OF SEARCH OPERATION CONDUCTED IN THE PREMISES OF M/S. MARI GOLD VANIJYA LTD., DISALLOWED THE LOSS CLAIMED BY THE ASSESSEE. 2.1. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE ASSESSEE ON THIS ISSUE. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE ME. 2 ITA NO. 751/KOL/2018 ASSESSMENT YEAR: 2012-13 M/S. SITARAM INVESTMENT LTD 3. I HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS:- AT PARA 3 PAGE 2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER RECORDED AS FOLLOWS:- 3. IN COURSE OF ASSESSMENT PROCEEDINGS THE A/R ON BEHALF OF THE ASSESSEE COMPANY PRODUCED AND SUBMITTED SOME RELEVANT DETAILS. IN THE MEANTIME LETTER REQUIRING INFORMATION U/S. 133(6) WAS SENT TO MCX SX STOCK EXCHANGE LTD. TO CONFIRM THE TRANSACTIONS HELD IN THE NAME OF THE ASSESSEE COMPANY. REPLY WAS RECEIVED VIDE LETTER NO. MCS-SX/ID/2015/862 DATED 20/02/201, WHEREFROM IT WAS CONFIRMED BY THE EXCHANGE THAT AGGREGATE SELL QUANTUM WAS RS.893402572.05, WHILE THE AGGREGATE QUANTUM OF BUY WAS RS.893408867.50. THE DIFFERENCE WORKED OUT THEREFROM WAS RS.6295.45. 3.1. FROM THE ABOVE, IT IS CLEAR THAT MCX SX STOCK EXCHANGE LTD . , CONFIRMED THE TRANSACTIONS IN QUESTION. THE C-D (COMPATIBLE DISK) CONTAINING ALL THE BUY AND SELL TRANSACTIONS MADE BY THE ASSESSEE COMPANY WERE CONFIRMED BY THE MCX SX STOCK EXCHANGE LTD. I FIND THAT ON FACTS, THIS ISSUE IS COVERED BY THE ORDER OF THE SMC BENCH OF THE TRIBUNAL IN THE CASE OF NAVIN KUMAR KAJARIA VS. ITO, ITA NO. 1762/KOL/2017, ORDER DT. 24 TH MAY, 2018 , AT PARA 4 OF THE ORDER, HELD AS FOLLOWS:- 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE CLAIM OF THE ASSESSEE FOR THE IMPUGNED LOSS INCURRED IN TRADING IN DERIVATIVES WAS DISALLOWED BY THE AUTHORITIES BELOW MAINLY ON THE GROUND THAT THE DIRECTOR OF THE BROKER COMPANY IN HIS STATEMENT HAD ADMITTED THAT HIS COMPANY WAS INDULGING IN PROVIDING BOGUS LOSS IN CURRENCY DERIVATIVES AS PER THE REQUIREMENT OF THE CLIENTS. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LEARNED DR HAS LAID EMPHASIS ON THIS ASPECT IN SUPPORT OF THE REVENUE'S CASE. HOWEVER, AS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THERE IS NOTHING IN THE STATEMENT OF SHRI SACHIT SARAF, DIRECTOR OF THE BROKER COMPANY NOR ANYTHING HAS BEEN BROUGHT ON RECORD BY THE A.O. TO SHOW THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE COMPANY THROUGH THE SAID BROKER WERE BOGUS. AS MATTER OF FACT, A PERUSAL OF THE ORDER OF THE A.O. SHOWS THAT ENQUIRY WAS DIRECTLY MADE BY HIM FROM MCX STOCK EXCHANGE LTD. BY ISSUING THE NOTICE U/S 133(6) OF THE ACT IN ORDER TO VERIFY THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE THROUGH M/S. MARIGOLD VANIJYA PVT. LTD. AND IN REPLY TO THE SAID NOTICE, MCX STOCK EXCHANGE LTD. HAD NOT ONLY CONFIRMED THE TRANSACTIONS BUT HAD ALSO FURNISHED THE REQUIRED INFORMATION ALONG WITH A CD CONTAINING DETAILS OF ALL TRANSACTIONS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION THROUGH BROKER MARIGOLD VANIJYA PVT. LTD. AS FOUND BY THE A.O. ON VERIFICATION OF THE SAID DETAILS, TOTAL TRANSACTIONS INVOLVING SALES OF RS. 33,81,68,663/- AND PURCHASES OF RS. 33,81,66,145/- WERE MADE BY THE ASSESSEE RESULTING INTO A PROFIT OF RS. 2,517/-. THIS RELEVANT EVIDENCE CONFIRMING THE GENUINENESS OF THE TRANSACTIONS MADE BY THE ASSESSEE ON MCX STOCK EXCHANGE LTD. WAS BRUSHED ASIDE BY THE A.O. ON THE GROUND THAT PROFIT SHOWN THEREIN WAS RS. 2,517/- WHEREAS THE ASSESSEE HAD CLAIMED A LOSS OF RS. 13,10,688/-. AS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) AS WELL AS BEFORE US, EXPENDITURE WAS INCURRED BY THE ASSESSEE RELATING TO THE SAID TRANSACTIONS ON 3 ITA NO. 751/KOL/2018 ASSESSMENT YEAR: 2012-13 M/S. SITARAM INVESTMENT LTD ACCOUNT OF BROKERAGE, SERVICE TAX AND OTHER CHARGES LEVIED BY THE BROKER AGGREGATING TO RS. 13,13,205/- AND ACCORDINGLY THE TOTAL LOSS AS CLAIMED BY THE ASSESSEE WAS TO THE TUNE OF RS. 13,10,688/-. AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THIS ADDITIONAL EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF BROKERAGE, SERVICE TAX AND OTHER CHARGES WAS DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE IN THE FORM OF RELEVANT BILLS ISSUED BY THE BROKER AND THERE WAS NO REASON WHATSOEVER GIVEN BY THE LD. CIT(A) FOR NOT ACCEPTING THIS EXPLANATION OF THE ASSESSEE. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE GENUINENESS OF THE TRANSACTIONS MADE BY THE ASSESSEE ON MCX STOCK EXCHANGE LTD. THROUGH BROKER MARIGOLD VANIJYA PVT. LTD. WAS DULY ESTABLISHED AND THE ACTION OF THE AUTHORITIES BELOW IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR THE RESULTANT LOSS IN DEALING IN CURRENCY DERIVATIVES IS NOT TENABLE. I, THEREFORE, DELETE THE SAID DISALLOWANCE AND ALLOW THE APPEAL OF THE ASSESSEE. 3.2. SIMILAR IS THE DECISION OF THE SMC BENCH OF THE TRIBUNAL IN THE CASE OF KAMLA PRASAD KAJARIA, ITA NO. 1760/KOL/2017; ASSESSMENT YEAR 2012-13, ORDER DT. MAY 24 TH , 2017. 3.3. THIS DECISION WAS FOLLOWED BY THE KOLKATA B BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. TIRUPATI AWAS P. LTD., ITA NO. 1560/KOL/2016, ASSESSMENT YEAR 2011-12, DT. 28 TH MARCH, 2018. 3.4. IN ALL THESE CASES, THE STATEMENT OF SHRI SACHET SARAF, WERE CONSIDERED. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACT IN THE CASES CITED ABOVE. HENCE APPLYING THE PROPOSITION OF LAW LAID DOWN IN THESE CASE LAW TO THE FACTS OF THIS CASE, I DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE LOSS DERIVED FROM TRADING IN CURRENCY DERIVATIVES IS A BOGUS LOSS. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 2 ND DAY OF NOVEMBER, 2018. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 02.11.2018 {SC SPS} 4 ITA NO. 751/KOL/2018 ASSESSMENT YEAR: 2012-13 M/S. SITARAM INVESTMENT LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. SITARAM INVESTMENT LTD 15, INDIA EXCHANGE PLACE 3 RD FLOOR KOLKATA 700 001 2 . INCOME TAX OFFICER, WARD-5(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES