ADDL CIT RG 4(1), MUMBAI V. EDELWEISS SECURITIES P.LTD, MUMBAI

ITA 7792/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5838 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 7792 /MUM./2012 ( / ASSESSMENT YEAR : 20 09 10 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 4(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. EDELWEISS SECURITIES PVT. LTD. 294/3, EDELWEISS HOUSE OFF CST ROAD, KALINA SANTACRUZ (E), MUMBAI 400 098 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACK3792N / RE VE NUE BY : MR. ASHOK SURI / ASSESSEE BY : NONE / DATE OF HEARING 13 .0 3 .201 4 / DATE OF ORDE R 28.03.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE AFORESAID APPEAL HA S BEEN PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 10 TH OCTOBER 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS) V III , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) . THE SOLE DISPUTE IN THIS APPEAL IS, WHETHER OR NOT M/S. EDELWEISS SECURI TIES PVT. LTD. 2 THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF ` 96,00,244 ON ACCOUNT OF PROVISIONS FOR LOSS ON MARK TO MARKET , ON DERIVATIVE S OF ` 96,00,244 BY TREATING IT AS NOTIONAL LOSS. 2 . BRIEF FACTS, QUA T HE AFORESAID ISSUE, ARE THAT THE ASSESSEE HAS DEBITED SUM OF ` 96,00,244 IN THE PROFIT & LOSS ACCOUNT FOR PROVISIONS OF LOSS ON MARKED TO MARKET FOR OPEN CONTRACTS IN EQUITY INDEX / STOCK FUTURES , HOWEVER, THE ANTICIPATED PROFIT HAVE NOT BEEN TAKEN INTO AC COUNT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE GAVE DETAIL SUBMISSIONS VIDE LETTER DATED 7 TH SEPTEMBER 2011 AND ALSO RELIED UPON VARIOUS DECISIONS WHICH HAS BEEN INCORPORATED BY THE ASSESSING OFFICER FROM PAGE 7 TO 11 OF THE ASSESSMENT ORDER. HO WEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION AND DISALLOWED THE CLAIM OF LOSS AS IT IS AN UNASCERTAINED LIABILITY AND ALSO IT IS A NOTIONAL LOSS WHICH CANNOT BE ALLOWED. 3 . BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE SUBM ITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES GROUP COMPAN YS CASE IN EDELWEISS CAPITAL LTD., VIDE ITA NO. 5324/MUM./2007, FOR THE ASSESSMENT YEAR 2004 053. THE LEARNED COMMISSIONER (APPEALS), AFTER RELYING UPON THE DECISION FO THE TRIBUNAL AND ALSO THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 2008 09, ALLOWED THE ASSESSEES GROUND AFTER OBSERVING AND HOLDING AS UNDER: 5.4 THE APPELLANTS SUBMISSION HAS BEEN CONSIDERED. THE APPEL LANT HAS PLACED RELIANCE UPON THE DECISION IN THE CASE OF M/S. EDELWEISS CAPITAL LTD. (SUPRA) FOR A.Y. 2004 05, ENCLOSING A COPY OF THE ORDER. FROM THIS DECISION, I FIND THAT THE HON'BLE ITAT HAD BEEN PLEASED TO ALLOW THE APPEAL AGAINST DISALLOWANCE OF PRO VISIONS FOR LOSS ON MARK TO MARKET BASIS IN RESPECT OF TRADING IN DERIVATIVES WHICH INCLUDED EQUITY INDEX AND STOCK FUTURES OBSERVING THAT THE PROVISIONS REFLECTED IN SUBSTANCE IS THE LOSS ARISING ON ACCOUNT OF VALUATION OF CLOSING STOCK. EVEN IN APPEAL OF ASSESSMENT YEAR 2008 09, MY PREDECESSOR VIDE M/S. EDELWEISS SECURI TIES PVT. LTD. 3 APPELLATE ORDER NO.CIT(A) 8/CIR.4/340/10 11 DATED 21/6/2011 HAS FOLLOWED THE JUDGMENT OF HON'BLE ITAT AND ALLWOED THE CLAIM OF ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT IN THE CASE OF EDELWE ISS CAPITAL LTD. (SUPRA), I ALLOW THE APPELLANTS APPEAL IN THIS REGARD. THE ADDITION OF ` 96,00,244 IS THEREFORE, DELETED. THE APPEAL ON THIS GROUND IS ALLOWED. 4 . BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE FINDINGS OF THE A SSESSING OFFICER. 5 . AFTER CAREFULLY CONSIDERING THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS), WE FIND THAT NOT ONLY THIS ISSUE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V/S WOODW A RD GOVERNOR (INDIA) P. LTD. , [2009] 312 IT R 354 (SC) , BUT ALSO BY THE DECISION OF THE TRIBUNAL IN ASSESSEES GROUP COMPANY S CASE IN EDELWEISS CAPITAL LTD. (SUPRA). THUS, AS A MATTER OF JUDICIAL PRECEDENCE, WE FOLLOW THE RATIO OF THE HON'BLE SUPREME COURT AND WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE LEARNED COMMISSIONER (APPEALS) WHICH IS BASED ON THE DECISION OF THE TRIBUNAL PASSED IN ASSESSEES GROUP CONCERN ON SIMILAR ISSUE . ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6 . 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 28 TH MARCH 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 28 TH MARCH 2014 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 28 TH MARCH 2014 M/S. EDELWEISS SECURI TIES PVT. LTD. 4 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI