Dy. CIT, Dhanbad V. Vijay Kumar Lal, Giridih

ITSSA 3/RAN/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0506 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 10-05-2013
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROSHAN SENIOR S CLD
• Assessee Lawyers: R N PRAASAD LD
• Keywords: Speculation loss
• Section: 43(5)

Judgement Text

1 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER IT (SS) A NO S . 03 & 05 / RAN / 13 A .Y S 2009 - 10 & 10 - 11 D.CIT,CC DHANABD VS. SHRI VIJAY KR .LAL [ DEPARTMENT ] [ RESPONDENT ] IT (SS) A NO . 04 / RAN / 13 A.Y . 2010 - 11 SHRI VIJAY KR.LAL VS. A .CIT,CC -- DHANBAD L [DEPRTMENT ] [ RESPONDENT ] FOR THE A SSESSEE/RESPONDENT : SHRI R.N PRAASAD LD.AR FOR THE RESPONDENT : SHRI DEEPAK ROSHAN, SENIOR S.C, LD.DR DATE OF HEARING : 05 - 12 - 2014 DATE OF PRONOUNCEMENT: 05 - 12 - 2014 ORDER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : TH E ASSESSEE HAS FILED TH IS APPEAL FOR THE ASSESSMENT YEARS 2010 10 - 11 AND THE REVENUE HAS FILED BOTH THE APPEALS FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN BOTH THE YEARS THE REVENUE IS AGGRIEVED BY THE ORDERS OF THE LD. CIT(A) IN TREATING THE GAIN/ LOSS ARISING ON SALE OF SHARES AS BUSINESS LOSS AS AGAINST THE DECISION BY THE LD.CIT(A) IN TREATING THE SAME AS SPECULATION LOSS. FURTHER, THE REVENUE IS ALSO AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN OBSERVING THAT THE INTEREST EXPENDITURE IS INCLUDED IN THE 2 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL SPECULATION LOSS 3. IN THE APPEAL FILED BY THE ASSESSEE, THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE DISALLOWANCE OF INTEREST IN ASSESSMENT YEAR 2010 - 11 . 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. ACCORDING TO THE ASSESSEE IT HAD CARRIED OUT THE PURCHASE AND SALE OF SHARES THROUGH THE D - MAT ACCOUNT BY TAKING DELIVERY OF SHARES . THE ASSESSEE HAS DECLARED THE LOSS ARISING ON SALE OF SHARES. HOWEVER, THE ASSESSING OFFICER TOOK THE VIEW THAT THE LOSS ARISING ON TRADING ON SALE OF SHARES IS SPECULATION LOSS. ACC ORDINGLY , HE DID NOT ALLOW THE SET OFF OF LOSS FROM SHARE ACTIVITY AGAINST THE OTHER INCOME OF THE ASSESSEE. THE ASSES SEE HAS ALSO CLAIMED INTEREST ON THE LOANS TAKEN BY IT ON THE GROUND THAT THE SAID L OANS WERE USED BY IT IN THE BUSINESS OF PURCHASE AND S ALE OF SHAR E S. THE ASSESSING OFFICER DISALLOWED THE INTEREST CLAIM ALSO. 5. IN THE APPELLATE PROCEEDINGS THE LD.CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT T HE TRANSACTION OF PURCHASE AND SALE OF SHARES BY TAKING DELIVERY WILL NOT FALL UNDER T HE CATEGORY OF SPECULATION LOSS. T HE LD.CIT(A) FURTHER OBSERVED THAT THE INTEREST DI SALLOWANCE IS ALSO INCLUDED IN THE SPECULATION LOSS. THOUG H THE ASSESSING OFFICER HAD DISALLOWED THE INTEREST CLAIM IN BOTH THE YEARS, YET THE ASSESSEE IS IN APPEAL AGAINST THE SAID DISALLOWANCE ONLY IN A.Y 2010 - 11. 3 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL 6. T HE PROVISIONS OF SECTION 43(5) OF THE ACT DEFINES THE EXPRESSION SPECULATION TRANSACTION . ACCORDING TO THE SAID DEFINITION, SPECULATIVE TRANSACTION MEANS TRANSACTION FOR PURCHASE OR SALE OF ANY COMMODI TIES INCLUDING STOCKS AND SHARES , IN WHICH THE TRANSACTION IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY ACTUAL DELIVERY OR TRANSFER OF COMMODITY OR SCRIPTS. IN THE INSTANT CASE , THE CONTENTION OF THE ASSESSEE IS THAT THE SHARES WERE ACTUALLY T AKEN AFTER DELIVERY AND THEREAFTER THEY WERE SOLD. IF THE CONTENTION OF THE ASSESSEE IS CORRECT , THEN THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT LOSS ARISING ON PURCHASE AND SALE OF SHARES IS A SPECULATION LOSS. ACCORDINGLY, THE VIEW TAKEN BY THE LD.CIT(A) IS CORRECT. HOWEVER, WE NOTICE THAT THE DETAILS OF PURCHASE AND SALE OF SHARES COULD NOT FOUND EITHER FROM THE ORDER OF THE ASSESSING OFFICER OR THE ORDER OF LD. CIT(A). BEFORE US ALSO THE ASSESSEE DID NOT FURNISH THE RELEVANT DETAILS TO S HOW THAT THE DELIVERY WAS TAKEN . HENCE, THE CLAIM OF THE ASSESSE E THAT IT HAD TAKEN DELIVERY OF THE SHARES NEEDS TO BE EXAMINED . ACCORDINGLY , WE UPHOLD THE PRINCIPLE EXPRESSED BY THE LD. CIT(A) T HAT LOSS ARISING ON DELIVERY BASIS TR ANSACTION HAS TO B E CONSIDERED AS BUSINESS LOSS IN BOTH THE YEARS . HOWEVER, THE CLAIM OF TAKING DELIVERY OF SHARES REQUIRE VERIFICATION IN BOTH THE YEARS . ACCORDINGLY, WE RESTORE THE MATTER TO THE FILE OF AO FOR THE LIMITED PURPOSE OF VERIFYING THE FACTUAL DETAILS . ACCO RDINGLY , THE ASSESSING OFFICER SHOULD VERIFY AS TO WHETHER THE ASSESSEE HAS TAKEN THE DELIVERY OF PURCHASE OF SHARES AND IF IT IS FOUND TO BE SO , THEN THE LOSS ARISING ON SALE OF SHARES SHOULD BE ASSESSED AS BUSINESS LOSS IN BOTH THE YEARS . 6. WITH REGA RD TO THE CLAIM OF THE DEPARTMENT THAT THE LD.CIT(A) HAD CLUBBED THE INTEREST ON LOAN S A L S O AS SPECULATION LOSS, WE NOTICE THAT THE 4 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL LD.CIT(A) HAS OBSERVED THAT INTEREST DISALLOWANCE IS ALSO INCLUDED WITH THE SPECULATION LOSS . WE DO NOT FIND ANY OBSERVAT ION IN THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, THE SAID OBSERVATIONS ARE AGAINST THE FACT AVAILABLE IN THE ASSESSMENT ORDER AND ACCORDINGLY, WE SET ASIDE THE OBSERVATION S OF THE LD.CIT(A) MADE IN THIS REGARD IN BOTH THE YEARS. 7. IN THE APPEAL FILED BY THE ASSESSEE FOR THE A.Y 2010 - 11 , THE ONLY ISSUE IS RAISED WITH REGARD TO THE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE. ACCORDING TO THE LD.AR THE ASSESSEE HAS BORROWED LOANS FOR THE PURPOSE OF BUYING OF SHARES. SINCE THE SHARE TRANSAC TIONS IS DISCLOSED AS BUSINESS ACTIVITY, THE LD A.R SUBMITTED THAT THE INTEREST CLAIM SHOULD BE ALLOWED. WE HAVE ALR EADY NOTICED THAT DELIVERY BASED TRANSACTION OF PURCHASE OF SHARES SHOULD BE TREATED AS BUSINESS ACTIVITY AND IN THAT CASE INTEREST CLAIME D ON LOAN TAKEN BY THE ASSESSEE FOR PURCHASE OF SHARES O N DELIVERY BASED TRANSACTION IS ALLOWABLE AS DEDUCTION. SINCE WE HAVE SET ASIDE THE MATT ER RELATING TO CLAIM OF PURCHASE OF SHAR E ON DELIVERY BASIS FOR VERIFICATION TO THE FILE OF THE ASSESSIN G OFFICER , W E SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO REEXAMINE THIS CLAIM IN THE LIGHT OF THE DISCUSSION MADE SUPRA . 8. IN THE RE SULT, THE APPEALS FIELD BY THE REVENUE ARE DISMISSED AND APPEAL OF THE ASSESS EE IS TREATED AS ALLOWED. PRONOUNCED ACCORDINGLY ON 0 5 - 12 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 05 - 12 - 2014 5 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : 2 THE RESPONDENT: 3..THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COP Y, BY ORDER, ASSTT. REGISTRAR 6 IT(SS) NOS. 3,4,5/RAN/20123 SH.VIJAY KR.LAL 1. DATE OF DICTATION ............ D/H 25 - 11 - 14 . ORDER PREPARED BY THE MEMBER IN HIS LAPTOP ........ DICTATION TAKEN .............. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BE FORE THE DICTATING MEMBER ........................OTHER MEMBER ............................... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PR ONOUNCEMENT.................................. 02 - 12 - 2014 ................................................... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ................... .................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ....................................................... .......................................... 9. DATE OF DESPATCH OF THE ORDER ..............................................................