Ushita Trading & Agency Limited, Kolkata V. CIT-1, Kolkata, Kolkata

ITA 841/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4693 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2012
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: S JHAJHARIA
• Keywords: Speculation loss; Difference of opinion
• Section: 143(3); 263

Judgement Text

1 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI K. NARASIMHA CHARY, JM] I.T.A NO. 841/KOL/2012 ASSESSMENT YEAR: 2008-09 USHITA TRADING & AGENCY LIMITED VS. COMMISSIONER OF INCOME-TAX, (PAN: AAACU3269L) KOL-1, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 08.08.2016 DATE OF PRONOUNCEMENT: 11.08.2016 FOR THE APPELLANT: SHRI S. JHAJHARIA, CA FOR THE RESPONDENT: SHRI NIRAJ KUMAR, CIT, DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT-I, KOLKATA VIDE NO. CIT/KOL-1/263/USHITA TRADING/2011-12/7199-7201 DATE D 27.03.2012. ASSESSMENT WAS FRAMED BY ITO, WARD-2(4), KOLKATA U/S. 143(3) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS O RDER DATED 26.03.2010. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CIT IS JUSTIFIED IN INVOKING REVISIONARY JURISDICTION U/S 263 OF THE AC T IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2008-09 ON 27.9.2008 DISCLOSING TOTAL INC OME OF RS NIL. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 26.3.2010 DETERM INING THE TAXABLE INCOME AT RS.9,71,753/-. THE NATURE OF BUSINESS MENTIONED BY THE LD AO IS TRADING AND FINANCE AND THE SAME WAS ALSO MENTIONED IN THE TAX AUDIT REPORT OF THE ASSESSEE. THE LD CIT SOUGHT TO REVISE THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT BY INVOKING REVISIONARY JURISDICTION U/S 263 OF THE ACT FOR WHICH A SHOW CAUSE NOTICE WAS IS SUED TO THE ASSESSEE AS TO WHY THE LOSS INCURRED BY IT ON PURCHASE AND SALE OF SHARES AMOUN TING TO RS. 1,07,87,500/- SHOULD NOT BE TREATED AS SPECULATION LOSS BY INVOKING THE EXPLANA TION TO SECTION 73 OF THE ACT. IN RESPONSE TO THIS, THE ASSESSEE REPLIED THAT EXPLANATION TO S ECTION 73 OF THE ACT HAS GOT TWO EXCEPTIONS. THE EXPLANATION HAS TWO EXCEPTIONS. THE 1 ST ONE IS THAT IF ONES INCOME MAINLY CONSISTS OF 2 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 (A) INTEREST ON SECURITIES, (B) INCOME FROM HOUSE P ROPERTY, (C) CAPITAL GAINS AND (D)INCOME FROM OTHER SOURCES, IN THAT CASE THE PROVISIONS OF THIS EXPLANATION WILL NOT BE INVOKED. THE 2 ND EXCEPTION IS IN REGARD TO PRINCIPAL BUSINESS OF TH E COMPANY. IF THE ASSESSEE IS A BANKING COMPANY OR THE PRINCIPAL BUSINESS OF THE COMPANY IS GRANTING OF LOANS AND ADVANCES, IN THAT CASE THIS EXPLANATION OF DEEMING PROVISIONS WILL NO T BE INVOKED. 4. THE LD CIT OBSERVED THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE WAS NOT GRANTING OF LOANS AND ADVANCES AND THE CASE DOES NOT FALL UNDER THE EXCEPTION TO EXPLANATION TO SECTION 73 OF THE ACT AND FURTHER OBSERVED THAT ALTHOUGH TH E ASSESSEE IS HAVING NBFC REGISTRATION, THE PRINCIPAL BUSINESS IS ONLY SHARE TRADING. HENC E THE LOSS ARISING OUT OF SHARE TRADING IS TO BE CONSTRUED ONLY AS SPECULATION LOSS WHICH HAS NOT BEEN DONE BY THE LD. AO THEREBY MAKING HIS ORDER ERRONEOUS IN AS MUCH AS IT IS PREJ UDICIAL TO THE INTEREST OF THE REVENUE, WARRANTING REVISION U/S 263 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR LD. COMMISSIONER OF INCOME TAX WAS NOT JUS TIFIED IN SETTING ASIDE THE ORDER PASSED U/S 143(4) ON GROUND THAT EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT, 1961 IS APPLICABLE ON THE ASSESSEE COMPANY. THE ORDER PASSED IS ILLEGAL AGAINST THE FACTS ON RE CORD AND IS UNJUSTIFIED. 2. FOR THAT LD. C.I.T. WAS NOT JUSTIFIED AND ACTED AGAINST THE PROVISION OF LAW TO OBSERVE THAT EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT, 19 61 IS APPLICABLE ON THE ASSESSEE COMPANY. LD. ASSESSING OFFICER EXAMINED COMPLETE DETAILS AND HAVING SATISFIED PASSED THE ORDERS. ALL THE DETAILS WERE FURNISHED. THE DETAILS OF THE EXA MINATION WERE ALSO INTIMATED TO LD. C.I.T. HOWEVER, FOR DIFFERENCE OF OPINION AND CHANGE OF OP INION, LD. C.I.T. HELD THAT EXPLANATION TO SECTION 73 OF THE INCOME TAX ACT,1961 IS APPLICABLE PROVISIONS OF SECTION 263 ARE NOT ATTRACTED FOR AN ASSESSMENT WHICH HAS BEEN MADE AFT ER DUE VERIFICATION AND ENQUIRY. THE ORDER PASSED U/S 263, THEREFORE, IS ILLEGAL AND INC ORRECT. 3. FOR THAT IN ANY VIEW OF THE CASE, ORDER PASSED B Y LD. C.I.T. IS ILLEGAL, ARBITRARY AND FIT TO BE CANCELLED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THE LD CIT HAD ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS UNDER:- 3 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 4 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 5.1. WE FIND THAT THE LD CIT HAD ADMITTEDLY PROCEE DED TO ISSUE THE SHOW CAUSE NOTICE BY REFERRING TO NOTE NO. 8 IN SCHEDULE H OF THE AUDITE D FINANCIAL STATEMENTS FOR THE PREPARATION 5 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 OF PROFIT AND LOSS ACCOUNT IN RESPECT OF SHARE TRAD ING TRANSACTIONS. FOR THE SAKE OF CONVENIENCE, THE NOTE NO. 8 OF THE AUDITED FINANCIA L STATEMENTS IS REPRODUCED HEREUNDER:- ITEM DESCRIPTION UNIT QTY. VALUE (RS.) 31.3.08 31.3.07 31.3.08 31.3.07 ALUMINIUM SHEET OPENING STOCK CLOSING STOCK TIMBER OPENING STOCK CLOSING STOCK SHARE OPENING STOCK PURCHASE SALES CLOSING STOCK SHARE OPENING STOCK PURCHASES SALES CLOSING STOCK KGS. KGS. CFT CFT 6917 6917 639.40 639.40 935260 1266050 1120610 1080700 ---- 315100 ---- 315100 6917 6917 639.40 639.40 935260 ----- ----- 935260 ---- ---- ---- ---- 850.791 850.791 358.064 358.064 90392500 56245000 84150000 51700000 ---- 386624848.59 ---- 386621848.59 850.791 850.791 358.064 358.064 90392500 ---- ---- 90392500 ---- ---- ---- ----- 5.2. WE FIND THAT THE LD CIT HAVING REFERRED TO NO TE NO. 8 SUPRA HAD NOT DISPUTED THE FACT OF PURCHASE OF SAREES MADE BY THE ASSESSEE AND DISC LOSED THEREON EITHER IN HIS SHOW CAUSE NOTICE OR IN HIS REVISION ORDER U/S 263 OF THE ACT, THOUGH NO SPECIFIC MENTION WAS MADE BY THE ASSESSEE IN THAT REGARD DURING THE COURSE OF RE VISION PROCEEDINGS BEFORE THE LD CIT. WE FIND THAT THE TOTAL PURCHASES MADE BY THE ASSESSEE DURING THE YEAR AND AS CONFIRMED BY THE LD CIT IS RS. 44,28,66,850/- , THE BREAK-UP OF THE SAM E IS AS BELOW:- PURCHASE OF SHARES - RS. 5,62,45,000 PURCHASE OF SAREES - RS. 38,66,21,850 ------------------------------ RS. 44,2 8,66,850 5.3. THE LD DR ARGUED THAT THE FACT OF PURCHASE O F SAREES TO THE EXTENT OF RS. 38.66 CRORES WAS NEVER DISCLOSED BY THE ASSESSEE EITHER BEFORE T HE LD AO OR BEFORE THE LD. CIT AND THE SAME IS BROUGHT TO THE NOTICE OF THIS TRIBUNAL FOR THE FIRST TIME. HENCE HE ARGUED THAT NO VIEW SHOULD BE TAKEN ON THE SAME. HE ARGUED THAT THE ASPECT OF PRINCIPAL BUSINESS OF THE ASSESSEE WAS NEVER ENQUIRED BY THE LD. AO WHILE RAI SING A QUERY IN MARCH 2010 AS COULD BE SEEN FROM THE ORDER SHEET ENTRIES. HE STATED THAT THE LD. CIT HAD GIVEN A CATEGORICAL FINDING IN HIS ORDER THAT THE GRANTING OF LOANS IS NOT PRIN CIPAL BUSINESS OF THE ASSESSEE. BUT WE FIND THAT THE LD CIT HAD PROCEEDED THE REVISION PROCEEDI NGS ONLY BY LOOKING AT NOTE NO. 8 OF THE 6 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 AUDITED FINANCIAL STATEMENTS FILED BEFORE THE LD AO WHEREIN THE FACT OF ASSESSEE DEALING IN SHARES AS WELL AS IN SAREES WERE DULY MENTIONED WIT H QUANTITATIVE PARTICULARS THEREON. HENCE THE FACT WHICH IS STARING ON US FROM THE FACE OF TH E BALANCE SHEET READ TOGETHER WITH THE NOTES ON ACCOUNTS THEREON CANNOT BE IGNORED. 5.4. WE FIND FROM THE PAPER BOOK THAT THE ASSESSEE IS A NON BANKING FINANCE COMPANY HAVING CERTIFICATE OF REGISTRATION OBTAINED FROM RE SERVE BANK OF INDIA WITH EFFECT FROM 22.12.2004. WE FIND FROM THE COMPOSITION OF INCOME OF THE ASSESSEE, THAT THE INTEREST INCOME FROM LENDING ACTIVITIES WAS RS. 1,23,94,810/ - WHICH IS MUCH MORE THAN THE INCOME FROM SHARE TRADING. THEN THE ASSESSEES CASE WOULD FALL UNDER THE FIRST LIMB OF THE EXCEPTION PROVIDED IN EXPLANATION TO SECTION 73 OF THE ACT. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS MIDDLETON INVESTMENT & TRADING CO LTD IN ITA NO. 196 OF 1999 DATED 15.1.2014, WHEREIN IT WAS HELD THAT:- 8.8.1. ALTERNATIVELY, EVEN IF EXPLANATION TO SECT ION 73 IS TO BE APPLIED, WE HOLD THAT THE ASSESSEES CASE FALLS UNDER THE EXCEPTION PROVIDED IN THE FIRST LIMB OF EXPLANATION TO SECTION 73 OF THE ACT WHERE THE GROSS TOTAL INCOME OF THE A SSESSEE COMPRISES OF INCOME FROM OTHER SOURCES WHICH IS MUCH MORE THAN THE SPECULATION LOS S OF RS. 1,02,12,277/- . RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MIDDLETON INVESTMENT & TRADING CO LTD IN ITA NO. 19 6 OF 1999 DATED 15.1.2014 WHEREIN IT WAS HELD THAT:- THE LEARNED TRIBUNAL HELD AS FOLLOWS: ' ... THE NET LOSS UNDER THE HEAD 'PROFITS AND GAIN S OF BUSINESS OR PROFESSION' WOULD BE RS.8,72,972/- WHEREAS, THE INCOME SHOWN BY THE ASSE SSEE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IS TO THE TUNE OF RS.10,13,798/ -. WE ARE, THEREFORE, OF THE OPINION THAT THE ASSESSEE'S GROSS TOTAL INCOME CONSISTED MA INLY OF INCOME ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. IT THEREFORE, FOL LOWS THAT THE LOSS IN SHARE TRADING HAS TO BE TREATED AS BUSINESS LOSS. WE DIRECT THE A .O. ACCORDINGLY.' AGGRIEVED BY THE ORDER OF THE LEARNED TRIBUNAL, THE REVENUE HAS COME UP IN APPEAL. AT THE TIME OF HEARING, MR. SARAF, LEARNED ADVOCATE VERY F AIRLY DREW OUR ATTENTION TO THE JUDGMENT IN THE CASE OF CIT VS. DARSHAN SECURITIES (P) LTD. REP ORTED IN 341 ITR 556 WHEREIN THE FOLLOWING VIEW WAS TAKEN: 'THE AMBIT OF SUB-SECTION (1) OF SECTION 73 IS ONLY TO PROHIBIT THE SETTING OFF OF A LOSS WHICH HAS RESULTED FROM A SPECULATION BUSINESS, SAV E AND EXCEPT AGAINST THE PROFITS AND GAINS OF ANOTHER SPECULATION BUSINESS. IN ORDER TO DETERMINE WHETHER THE EXCEPTION THAT IS CARVED OUT BY THE EXPLANATION APP LIES, THE LEGISLATURE HAS FIRST MANDATED A COMPUTATION OF THE GROSS TOTAL INCOME OF THE COMPANY. THE WORDS 'CONSISTS MAINLY' ARE INDICATIVE OF THE FACT THAT T HE LEGISLATURE HAD IN ITS CONTEMPLATION THAT THE GROSS TOTAL INCOME CONSISTS PREDOMINANTLY OF INCOME FROM THE FOUR HEADS THAT ARE REFERRED TO THEREIN. OBVIOUSLY, IN COMPUTING THE GROSS TOTAL INCOME THE NORMAL PROVISIONS OF THE ACT MUST BE APP LIED AND IT IS ONLY THEREAFTER, THAT IT HAS TO BE DETERMINED AS TO WHETHER THE GROSS TOT AL INCOME SO COMPUTED CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEAD S REFERRED TO IN THE EXPLANATION. 7 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 CONSEQUENTLY, IN THE PRESENT CASE, THE GROSS TOTAL INCOME OF THE ASSESSEE WAS REQUIRED TO BE COMPUTED, INTER ALIA, BY COMPUTING THE INCOME UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION AS WELL. BOTH THE I NCOME FROM SERVICE CHARGES IN THE AMOUNT OF RS.2.25 CRORES AND THE LOSS IN SHARE TRAD ING OF RS.2.23 CRORES, WOULD HAVE TO BE TAKEN INTO ACCOUNT IN COMPUTING THE INCOME UN DER THAT HEAD, BOTH BEING SOURCES UNDER THE SAME HEAD. THE ASSESSEE HAD A DIVIDEND IN COME OF RS.4.7 LAKHS (INCOME FROM OTHER SOURCES). THE TRIBUNAL WAS JUSTIFIED, IN COMING TO THE CONCLUSION THAT THE ASSESSEE FELL WITHIN THE PURVIEW OF THE EXCEPTION C ARVED OUT IN THE EXPLANATION TO SECTION 73 AND THAT CONSEQUENTLY THE ASSESSEE WOULD NOT BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS FOR THE PURPOSE OF SECTION 7 3(1).' THE JUDGMENT CITED BY MR. SARAF IS DIRECTLY ON THE POINT SOUGHT TO BE AGITATED BY THE REVENUE. THERE IS NOTHING TO SHOW THAT THE VIEW TAKEN BY THE BOMBAY HIGH COURT IS ERRONEOUS. WE ARE, AS SUCH, OF THE OPINION THAT THE APPEAL MUST FAIL A ND IS HEREBY DISMISSED. 5.5. MOREOVER, ON FUNDS DEPLOYMENT CRITERIA, WE F IND FROM THE AUDITED ACCOUNTS THAT THE ASSESSEE HAD DEPLOYED RS. 5,12,00,000/- TOWARDS SHA RES AND RS. 26,21,97,762/- TOWARDS LOANS AND ADVANCES AS ON 31.3.2008. HENCE THE PRIN CIPAL BUSINESS OF ASSESSEE COULD BE CONSTRUED AS ONE ENGAGED IN THE BUSINESS OF GRANTIN G OF LOANS AND ADVANCES. WE FIND THAT THE LD CIT HAD COME TO A CONCLUSION THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE IS NOT GRANTING OF LOANS AND ADVANCES BASED ON THE FOLLOWING CHART PRE PARED BY HIM IN HIS ORDER:- 3. THE CONTENTIONS RAISED BY THE ASSESSEES COUNS EL HAVE BEEN CONSIDERED AND EXAMINED. FROM THE ACCOUNTS OF THE ASSESSEE THE FIGURES OF IN VESTMENT IN MERCHANDISE (TRADING STOCK) AND LOANS & ADVANCES AS AVAILABLE IN THE BALANCE SHEET ARE REPRODUCED AS UNDER: PARTICULARS AS ON 31.03.2008 AS ON 31.03.2007 INVENTORIES LOANS & ADVANCES GIVEN RS.43,95,30,704/- RS.26,16,97,703/- RS.9,16,01,355/- RS.11,29,505/- BUT WE FIND THAT THE LD CIT HAD TAKEN THE TOTAL INV ENTORIES OF RS. 43.95 CRORES AS STOCK OF SHARES, WHEREAS IT ADMITTEDLY INCLUDES CLOSING STOC K OF SAREES TO THE EXTENT OF RS. 38.66 CRORES, THEREBY LEAVING A BALANCE OF RS. 5 CRORES A PPROX TOWARDS THE CLOSING STOCK OF SHARES. FROM THE NOTE NO. 8 OF THE AUDITED FINANCIAL STATEM ENTS, THE ASSESSEE HAD GIVEN THE CLEAR BREAK UP OF CLOSING STOCK OF SHARES AND CLOSING STO CK OF SAREES. WE ALSO FIND THAT THE LD CIT IN HIS ORDER ITSELF IN PAGE 2 HAD STATED THAT THE C LOSING STOCK OF SHARES IS ONLY RS. 5,17,00,000/-. HENCE THE VERY BASIS FOR HIS DECIS ION BASED ON FUNDS DEPLOYED IN SHARE BUSINESS IS MORE THAN THAT DEPLOYED IN LOANS AND AD VANCES GETS DEFEATED. 5.6. ON BOTH THE COUNTS OF INCOME CRITERION AND FU NDS DEPLOYMENT CRITERION, IT COULD BE SAFELY CONCLUDED THAT THE ASSESSEES CASE SQUARELY FALLS UNDER THE TWO EXCEPTIONS PROVIDED IN EXPLANATION TO SECTION 73 OF THE ACT AND HENCE T HE ORDER PASSED BY THE LD AO IN THESE 8 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 CIRCUMSTANCES CANNOT BE TERMED AS ERRONEOUS MUCH LE SS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WARRANTING REVISIONARY JURISDICTION U/S 263 OF THE ACT. 5.7. APART FROM THIS, WE ALSO FIND THAT THE LD AO HAD MADE A SPECIFIC ENQUIRY WITH REGARD TO THE APPLICABILITY OF EXPLANATION TO SECTION 73 O F THE ACT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS FOR WHICH THE NECESSARY ORDE R SHEET ENTRIES WERE PLACED ON RECORD IN THE PAPER BOOK. WE FIND FROM THE SAID ORDER SHEET ENTRY ON 10.3.2010 AND 24.3.2010, A SPECIFIC QUERY WAS RAISED BY THE LD AO ON THE APPLI CABILITY OF EXPLANATION TO SECTION 73 OF THE ACT AND THE ASSESSEE HAD GIVEN DUE REPLY TO THE SAME AND THE FACT OF ASSESSEES REPLY IS ALSO MENTIONED IN THE SAID ORDER SHEET ENTRY RECORD ED ON 24.3.2010 BY THE LD AO. THE QUERIES RAISED BY THE LD AO AND THE REPLIES FILED T HEREON IN THIS REGARD ARE PART OF THE RECORDS. HENCE IN THESE CIRCUMSTANCES, IT COULD BE SAFELY CONCLUDED THAT THE LD AO ON DUE APPRECIATION OF THE REPLIES FILED IN THE GIVEN SET OF FACTS AND CIRCUMSTANCES AFTER MAKING REQUISITE ENQUIRIES THEREON, HAD COME TO A CONSCIO US CONCLUSION THAT PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT COULD NOT BE M ADE APPLICABLE TO THE ASSESSEE AND HAD TAKEN A POSSIBLE VIEW IN THE MATTER BY ALLOWING THE CLAIM OF SHARE TRADING LOSS IN THE SUM OF RS. 1,07,87,500/- IN THE ASSESSMENT TO BE SET OFF A GAINST SOME OTHER INCOME. IT IS WELL SETTLED THAT THIS POSSIBLE VIEW CANNOT BE THE SUBJE CT MATTER OF REVISION U/S 263 OF THE ACT BY THE LD CIT. RELIANCE IN THIS REGARD IS PLACED ON T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS CIT RE PORTED IN 243 ITR 83 (SC) AND HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GABRIEL IND IA REPORTED IN 203 ITR 108 (BOM) . MOREOVER, WE ALSO HOLD THAT THE VIEW TAKEN BY THE L D AO IN THE FACTS AND CIRCUMSTANCES IS THE ONLY POSSIBLE VIEW AND HENCE THERE IS NO SCOPE FOR ANY OTHER VIEW. THIS FACT IS FURTHER STRENGTHENED BY THE SUBSEQUENT ACTION OF THE LD AO IN ACCEPTING TO THE STAND OF THE ASSESSEE ON THE SAME ISSUE IN THE SCRUTINY ASSESSMENT PROCEE DINGS COMPLETED U/S 143(3) OF THE ACT DATED 29.10.2012 FOR THE ASST YEAR 2010-11 , WHEREI N THE LD AO HAD RECORDED IN HIS ORDER AS UNDER:- DURING THE COURSE OF SCRUTINY PROCEEDING, IT WAS F OUND THAT THE ASSESSSEE HAD RECEIVED AN INTEREST INCOME OF RS. 1.74 CRORES DURING THE FINAN CIAL YEAR WHICH WAS ADJUSTED WITH THE SHARE TRADING LOSS. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE SETTING OFF INTEREST INCOME WITH SHARE TRADING LOSS WILL NOT BE DISALLOWED IN T HE LIGHT OF EXPLANATION TO SECTION 73. THE ASSESSEE IN ITS REPLY STATED THAT THE ASSESSEE COMP ANY IS A NBFC COMPANY AND ITS PRINCIPAL BUSINESS IS GRANTING OF LOANS AND ADVANCES AND NOT SHARE TRADING AND THE COMPANY HAS UTILIZED MOST OF ITS FUNDS I.E RS. 18.26 CRORES TO LOANS AND ADVANCES TO EARN AN INTEREST INCOME OF RS. 1.74 CRORES. MOREOVER , THE INTEREST INCOME IS HIGHER THAN LOSS IN SHARE TRADING . THEREFORE THE LOSSES ARISING OUT OF SHARE TRANSACTI ON SHOULD NOT BE TREATED AS SPECULATION LOSS BUT SHOULD BE TREATED AS NORMAL BUSINESS LOSS AS TH E PRINCIPAL INCOME OF THE ASSESSEE DURING 9 ITA NO.841/KOL/2012 USHITA TRADING & AGENCY LTD.., AY 2008-09 THE AFORESAID ASSESSMENT YEAR CONSIST MAINLY OF ADV ANCING LOANS AND ADVANCES AND EARNING INTEREST INCOME. THE EXPLANATION OF THE ASSESSEE S EEMS REASONABLE. HENCE, THE SHARE TRADING LOSS IS BEING TREATED AS BUSINESS LOSS . 5.8. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTA NCES AND FINDINGS GIVEN THEREON AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELI ED UPON HEREINABOVE, WE HOLD THAT THE LD CIT HAD WRONGLY INVOKED REVISIONARY JURISDICTION U/ S 263 OF THE ACT AS THE ORDER PASSED BY THE LD AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO T HE INTEREST OF THE REVENUE WHICH IS THE CONDITION PRECEDENT FOR INVOKING REVISIONARY JURISD ICTION U/S 263 OF THE ACT. HENCE WE HEREBY QUASH THE REVISION ORDER PASSED U/S 263 OF T HE ACT BY THE LD CIT AND ALLOW THE GROUNDS OF THE ASSESSEE IN THIS REGARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.08.2016 SD/- SD/- (K. NARASIMHA CHARY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 11TH AUGUST, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT - USHITA TRADING & AGENCY LIMITED, 52, WE STON STREET, KOLKATA-700012. 2 RESPONDENT CIT, KOL-1, KOLKATA. 3 . THE ACIT, KOLKATA 4. 5. ITO,WD-2(4) , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .