DCIT, CHENNAI V. K.Ramadevan, CHENNAI

ITA 774/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5419 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: V CHANDRASEKAR
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 774/MDS/2013 ( / ASSESSMENT YEAR: 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(3) 121,N.H. ROAD, CHENNAI-34. VS MR. K.RAMADEVAN, 2, 1 ST STREET, B.N.ROAD, T.NAGAR, CHENNAI-17. PAN:AAEPR2346E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. N.MADHAVAN, JCIT /RESPONDENT BY : MR. V. CHANDRASEKAR, ADVOCATE /DATE OF HEARING : 19 TH JANUARY, 2015 /DATE OF PRONOUNCEMENT : 20 TH FEBRUARY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE (CAMP AT CHENNAI) DATED 15.02.2013 FOR THE ASSESSME NT YEAR 2004-05. THE ONLY GRIEVANCE OF THE REVENUE IN ITS A PPEAL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE PROPORTIONATE DISALLOWANCE OF INTEREST EXPENDIT URE INCURRED TOWARDS SPECULATIVE BUSINESS. 2. BRIEF FACTS ARE THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF T HE ACT 2 ITA NO.774 /MDS/2013 DISALLOWED INTEREST OF ` 11,78,619/- OUT OF ` 22,17,090/- ON THE GROUND THAT ASSESSEE HAS NOT ALLOCATED INTEREST EXPENDITURE FOR SPECULATION BUSINESS AND NON-SPECUL ATION BUSINESS. THE ASSESSING OFFICER WAS OF THE VIEW TH AT IN THE ABSENCE OF ANY ALLOCATION OF INTEREST TO SPECULATIO N AND NON- SPECULATION BUSINESS MADE BY THE ASSESSEE INTEREST OF ` 11,78,619/- OUT OF ` 22,17,090/- IS NOT ALLOWABLE EXPENDITURE. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE SAID DISALLOWANCE AGAINST WH ICH THE REVENUE IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSE E HAS NOT ALLOCATED INTEREST IN RESPECT OF HIS BUSINE SS FOR SPECULATION AND NON-SPECULATION. THEREFORE, ASSESSI NG OFFICER HAS RIGHTLY ALLOCATED THE EXPENDITURE AND T HE EXPENDITURE RELATABLE TO SPECULATION BUSINESS IS RI GHTLY DISALLOWED. 4. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 3 ITA NO.774 /MDS/2013 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THIS ISSUE HAS BEEN CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 4.2 AND 4.3 OF THE IMP UGNED ORDER AND WHILE DELETING THE DISALLOWANCE, THE COMM ISSIONER OF INCOME TAX (APPEALS) ANALYZED THE PROFIT AND LO SS ACCOUNT OF THE ASSESSEE AND THE DETAILS FURNISHED B Y THE ASSESSEE IN THE COURSE OF HEARING IN RESPECT OF SPE CULATION AND NON-SPECULATION BUSINESS. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT ASSESSEE SUFFERED SPECULAT ION LOSS OF ` 52,090/- TILL 26 TH JUNE, 2003 AND EARNED PROFIT OF ` 55,44,680/- IN THE MONTH OF JULY, 2003. THE COMMIS SIONER OF INCOME TAX (APPEALS) HELD THAT THE SAID PROFIT H AS COVERED THE SPECULATION LOSSES INCURRED BY THE ASSESSEE IN SPECULATION TRANSACTION AND AT THE END OF THE YEAR NET PROFIT ON SPECULATION TRANSACTION WAS ` 25,63,129/-. THEREFORE, COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINC E THE PROFITS EARNED IN SPECULATIVE BUSINESS FROM JULY, 2003 WERE AVAILABLE WITH THE ASSESSEE, IT CANNOT BE CONCLUDED THAT BORROWED FUNDS WERE UTILIZED FOR SPECULATIVE BUSINE SS. THUS, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E ADDITION. ON GOING THROUGH THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS), WE DO NOT FIND ANY STRONG REA SON TO 4 ITA NO.774 /MDS/2013 REVERSE HIS FINDING. THUS, WE AFFIRM THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 20 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 20 TH FEBRUARY, 2015 SOMU 12 32 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .