M/s. V & U Caplease Pvt.Ltd., Ahmedabad V. The ACIT., Cent.Circle-2(3), Ahmedabad

ITSSA 464/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9502 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: P M MEHTA; S N SOPARKAR
• Keywords: Transactions in derivatives; Speculation loss
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO.331, 464/AHD/2010 A.YS. 2005-06 & 2006-07 V & U CAPLEASE PVT. LTD. AHMEDABAD, 3 RD FLOOR, SHUBHLAXMI PALACE, BHUYANGDEV CROSS ROAD, GHATLODIA, AHMEDABAD. PAN: AAACV 7384F VS ACIT CENTRAL CIRCLE- 2(3), AHMEDABAD. (APPELLANT) (RESPONDENT) IT(SS)A NO.469/AHD/2010 A.YS. 2006-07 DCIT CENTRAL CIRCLE-2(3), AHMEDABAD. VS V & U CAPLEASE PVT. LTD. AHMEDABAD, 3 RD FLOOR, SHUBHLAXMI PALACE, BHUYANGDEV CROSS ROAD, GHATLODIA, AHMEDABAD. PAN: AAACV 7384F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.L. KUREEL, SR.D.R. ASSESSEE(S) BY : S/SHRI S.N. SOPARKAR & P.M. MEHTA, A.R. / DATE OF HEARING : 20/11/2013 / DATE OF PRONOUNCEMENT: 29/11/2013 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THESE THREE APPEALS OF THE APPELLANT HAVE CONNECTE D ISSUES, THEREFORE, CONSOLIDATED AND HEREBY DECIDED BY THIS COMMON ORDER. IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 2 - A. IT(SS)A NO.331/AHD/2010, FOR A.Y. 2005-06 (ASSESSEE S APPEAL) 2. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF LEARNED CIT(A)-III, AHMEDABAD, DATED 15.02.2010. THE GROUNDS RAISED ARE AS UNDER:- IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE A PPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN REJECTING GROUND NO.1 O F THE APPELLANT'S APPEAL BEFORE HIM CHALLENGING THE VALIDITY OF THE ASSESSME NT ORDER PASSED U/S. 153A READ WITH SECTION 153C OF THE INCOME-TAX ACT, 1961 IMPUGNED BEFORE HIM, ON THE GR OUND THAT CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF SECTION 153A CANNOT B E ADJUDICATED UPON BY THE COMMISSIONER OF INCOME-TAX (APPEALS). IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWA NCE OF THE LOSS OF RS.2,16,59,338 IN COMMODITY FUTURE TRADING INCURRED BY THE APPELLANT IN THE COURSE OF ITS BUSINESS. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN REFUSING TO ENTERTAIN G ROUND NO. 3 OF THE APPELLANT'S APPEAL BEFORE HIM AFTER OBSERVING THAT THE ISSUE OF LEVY OF INTEREST U/S. 234A, 234B, 234C AND 234D WAS ONLY CONSEQUENTI AL IN NATURE. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN ORDERING FOR THE DISMIS SAL OF GROUND NO.6 OF THE APPELLANTS APPEAL BEFORE HIM BY OBSERVING THAT IT WAS PREMATURE. 3. AT THE OUTSET, LEARNED AR HAS MENTIONED THAT GRO UND NO.1 IS IN RESPECT OF CONSTITUTIONAL VALIDITY OF SECTION 153A. HENCE, NOT TO BE CHALLENGED BEFORE THE TRIBUNAL, THEREFORE, HE HAS E XPRESSED NOT TO PRESS THIS GROUND. IN RESPECT OF GROUND NOS.3 AND 4 BEING CONSEQUENTIAL; HENCE, NEEDS NO INDEPENDENT ADJUDICATION. ACCORDINGLY, THE SE THREE GROUNDS ARE HEREBY DISMISSED. NOW, WE ARE LEFT ONLY WITH GROUND NO.2, TO BE DECIDED AS FOLLOWS:- 4. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.153-A R.W.S 153C AND U/S.143(3), DATED 2 8.12.2007 WERE THAT THE ASSESSEE IS MAINLY IN THE BUSINESS OF SHARE TRA DING ACTIVITY. IT WAS IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 3 - NOTED BY THE AO THAT A SEARCH U/S. 132 WAS CARRIED IN THE GROUP CASES OF HIMANSHU J. SHAH ON 22.09.2005. ON THE BASIS OF CER TAIN DOCUMENTS RELATED TO THE ASSESSEE, THE PROCEEDINGS U/S. 153C WERE INITIATED. IN RESPONSE, THE ASSESSEE HAS FILED A RETURN OF INCOME AT RS.91,09,790/-. FROM THE P & L A/C, IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD CLAIMED A LOSS UNDER THE HEAD COMMODITY FUTURE TRA DING ACCOUNT AMOUNTING TO RS.2,16,59,338/-. TO ASCERTAIN THE NAT URE OF TRANSACTION, THE AO HAD MADE AN INQUIRY WITH MULTI COMMODITY EXCHANG E (MCX), AHMEDABAD. THE AO HAS INQUIRED ABOUT THE TRADE TIME AND THE PERSON WITH WHOM PURCHASES AND SALES WERE EXECUTED BY THE ASSESSEE THROUGH THE SAID EXCHANGE. T HE INFORMATION/DETAILS OBTAINED FROM MCX, THE AO NOTED THAT THE ASSESSEE HAD CARRIED OUT TRANSACTION S BETWEEN 3 RD MARCH, 2005 TO 30 TH MARCH, 2005, THROUGH ITS BROKER M/S. KRONE COMMODI TY (EARLIER KNOWN AS SIDDHISURI COMMODITIES PVT. LTD.) MAINLY WITH ONE M/S. TIRUPATI ENTERPRISES/ ONE MS NEENA MARDIA, ALS O LOCATED IN THE SAME PREMISES AND ALSO CLIENTS OF M/S. KRONE COMMOD ITY. THE AO NOTED THAT SALES OF COMMODITY WERE MADE AT A LOWER RATE, FOLLOWED IMMEDIATELY (I.E. WITHIN A FEW SECONDS) BY PURCHASE S AT A HIGHER RATE, SUGGESTIVE OF COLLUSION TO CONTRIVE LOSSES ARTIFICI ALLY. THE AO HAS DETAILED SUCH TRANSACTIONS CARRIED OUT ON 3/3/2005 WHICH SHOWS THAT THE SALES WERE EFFECTED BY 7 ORDERS EXECUTED BETWEEN THE TRA DE TIME 6:34:36 TO 6:36:29. THESE ARE FOLLOWED BY 6 ORDERS OF PURCHASE BETWEEN TRADE TIME 6:36:50 TO 6:39:22. ANOTHER SALE ORDER WAS EXECUTED AT TRADE TIME 6:41:28 FOLLOWED BY PURCHASE ORDER AT TRADE TIME 6:41:39. THE TRADE PRICE IN THE SALE ORDER(S) WAS RS.3618 WHEREAS THE PURCHASE PRICE IN THE RELATED ORDERS WAS BETWEE N 3840 TO 3842/- IN THE LAST SALE ORDER EXECUTED AT 6:41:28, THE TRADE PRICE WAS 3570 WHILE IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 4 - THE PURCHASES WERE MADE AT TRADE TIME 6:41:39 AT TH E TRADE PRICE OF RS.3780/-. THE AO HAS DEALT WITH EXPLANATION OF THE ASSESSEE, AT LENGTH. THE AO POINTED OUT THE MUTUAL CONNECTION BE TWEEN HIMANSHU J. SHAH, THE GROUP CONCERN M/S. MONARCH PROJECTS & FIN MARKETS LTD. (MPFL), THE ASSESSEE (VUSPI), THE BROKER AND ONE M/ S. CLIO INFOTECH (CLI). THE AO REFERRED TO THE SEIZED BOOKS OF ACCOU NT/CDS./HARDDISKS SEIZED AS PER ANNEXURE A/18 AND B/19, IN PARTICULAR TO POINT OUT THAT M/S. MPFL AND M/S. VUSPL HAD CREATED A 'FAMILY' FOR ENABLING THE BROKER AND A GROUP OF CLIENTS TO ACT IN CONCERT, IN THE SOFTWARE 'TRADE PLUS', EMPLOYED BY THEM. THE CLIENTS IN THE FAMILY NAMED, HJS' IN THE DATA ON M/S. MPFL AND THE CLIENTS IN T HE FAMILY NAMED HJS' IN THE DATABASE OF M/S. VUSPL WERE COMMON. IN OTHER WORDS, THE FAMILY HJS' (REFERRING TO HIMANSHU J. SHAH) IN CLUDED THE ASSESSEE COMPANY. THE AO POINTED OUT THAT NIRAV SHAH AND KIR AN TRIVEDI, DIRECTORS OF THE ASSESSEE COMPANY AS WELL AS SHRI H IMANSHU J. SHAH, IN THEIR RECORDED STATEMENTS ALSO ADMITTED TO THIS ASS OCIATION. THE AO WAS, THEREFORE, OF THE OPINION THAT THE SAID TRANSA CTION WAS A MANIPULATED TRANSACTION. IT WAS ALSO NOTED BY THE A O THAT THE COMMODITY WAS SEASAMSEED AND THERE WAS NO OTHER BUY ER/SELLER ACCEPT THE APPELLANT AND THE TWO INTERESTED PARTIES. IT WA S CONCLUDED BY THE AO THAT THE SET OF LOSS IN FUTURE COMMODITY TRADING WAS NOT A GENUINE LOSS AND THE SAME WAS DISALLOWED BY THE AO. AGAINST THE SAID DISALLOWANCE, THE MATTER WAS CARRIED BEFORE THE FIR ST APPELLATE AUTHORITY. 5. THE EXPLANATION OF THE ASSESSEE BEFORE LEARNED C IT(A) WAS THAT THE YEAR UNDER CONSIDERATION WAS THE FIRST YEAR IN WHIC H THE ASSESSEE HAD IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 5 - VENTURED IN COMMODITY DERIVATIVE TRANSACTIONS. HE W AS NOT EXPERIENCED IN THIS TRADE. THE TRANSACTION WAS CARRIED OUT THRO UGH CRONE COMMODITY BROKERS PVT. LIMITED. IT WAS CARRIED OUT ON THE FLO OR OF MCX THROUGH THE SAID BROKER. THE TRANSACTION WAS BONA FIDE WHICH WAS MADE WITH TIRUPATI ENTERPRISES AND NEENA R. MARADIA. IT WAS ALSO PLEAD ED THAT TIRUPATI ENTERPRISES/RAPPORT TRADING LIMITED AND NEENA R. MA RADIA ARE NOT RELATED PARTIES. THE TRANSACTION WAS CARRIED OUT AT THE PREVAILING MARKET RATE AS IT WAS AVAILABLE IN THE SAID COMMODITY EXCH ANGE. THE ASSESSEE HAS PLACED RELIANCE ON RAMKRISHNA BAJAJ (HUF), 292 ITR 393 (BOM.) . IT WAS VEHEMENTLY STATED THAT HIMANSHU J. SHAH, DIRECT OR OF TIRUPATI ENTERPRISES IS A DIFFERENT PERSON. IT WAS INFORMED THAT THE NAME OF THE SAID PERSON IS HIMANSHU JASHWANTLAL SHAH, WHEREAS T HE CONNECTED GROUP PERSONS NAME IS HIMANSHU JAYANTILAL SHAH. IT WAS FU RTHER INFORMED THAT BOTH THE PERSONS ARE HAVING DIFFERENT PAN NOS. AND ADDRESSES. IT WAS ALSO ARGUED THAT IN RESPECT OF SEARCH NO INCRIMINAT ING DOCUMENT WAS FOUND. HOWEVER, LEARNED CIT(A) WAS NOT CONVINCED AN D DECIDED THE ISSUE AGAINST THE ASSESSEE IN FOLLOWING MANNER: THE CONTENTIONS/DETAILS ON RECORD WERE CAREFULLY C ONSIDERED. IT IS SEEN THAT IN ITS REBUTTAL THE APPELLANT HAS NOT BEEN ABLE TO REFUTE CONVINCINGLY AND/OR WITH FACTS AND DETAILS, THE CONTENTIONS OF THE AO. THE APPELLANT HAS NOT GIVEN ANY DETAILS OF THE STATED FACTS AND CIRCUMSTANCES PECULIAR TO THE ASSESSEES CASE WHICH WOULD HAVE ANSWERED THE QUERIES OF THE AO. THE SEQUENCE OF EVENTS, RELATING TO SALE/PURCHASE, AS BROUGHT ON RE CORD BY THE AO SUGGESTS MANIPULATION AND NOT COINCIDENCE. THE STATISTICAL P OSSIBILITY FOR SUCH A 'COINCIDENCE' IS ALMOST NON-EXISTENT PARTICULARLY W HEN THE MOTIVE FOR DOING SO ALSO TRANSPIRED FROM THE DETAILS NARRATED BY THE AO . IT GOES WITHOUT SAYING THAT THE SUBSTANCE OF TRANSACTION HAS TO PREVAIL OV ER THE FORM IN WHICH IT IS SHOWN TO HAVE BEEN MADE. THE HON'BLE SUPREME COURT IN ITS DECISION REPORTED IN AIR 1974, 859 HELD THAT 'REVENUE NOT RE QUIRED TO PROVE ITS CASE WITH MATHEMATICAL, DEMONSTRABLE DEGREE FOR ALL. IN HUMAN AFFAIRS, ABSOLUTE CERTAINTY IS A MYTH AND PROOF OF EXACTNESS A FORCE. THE LAW ACCEPTS PROBABILITY AS A SUBSTITUTE IN THIS WORK-A DAY WORLD. THE LAW DOES NOT REQUIRE THE DEPARTMENT TO PROVE THE IMPOSSIBLE.'' ............. .. IN THE FACTS AND CIRCUMSTANCES AND THE INFORMATION, AS GLEANED FROM THE DETAILS OBTAINED BY THE AO, NO INFIRMITY IS SEEN IN THE ACTION OF THE AO IN IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 6 - MAKING THE DISALLOWANCE OF THE CLAIMED LOSS OF RS.2 ,16,59,338/- THE DISALLOWANCE IS THEREFORE CONFIRMED AND THE RELATED GROUND OF APPEAL IS REJECTED. 6. FROM THE SIDE OF THE APPELLANT, LEARNED AR MR. S .N. SOPARKAR AND MR. P.M. MEHTA, APPEARED AND DRAWN OUR ATTENTION ON CERTAIN DOCUMENTS AND FACTS WHICH WERE PLACED IN THE COMPILATION. IN SUPPORT OF THE CONTENTION, HE HAS PLACED RELIANCE UPON THE DECISIO N OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAMKRISHNA BAJAJ (HUF) AS REPORTED IN (2007) 292 ITR 393 (BOM) AND ALSO PLACED RELIANCE UPON THE DECISION OF HONB LE APEX COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX, CALCUTTA VS. KARAM CHAND THAPPAR AND BROS. P. LTD . AS REPORTED IN (1989) 176 ITR 535 . 7. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R. MR . P.L. KUREEL APPEARED AND SUPPORTED THE ACTION OF THE AO. HE HAS PLEADED THAT THE LOSS WAS MANIPULATED BY THE ASSESSEE. THE MANIPULAT ION WAS DONE AT THE FAG END OF THE FINANCIAL YEAR, ENDED ON 31 ST OF MARCH, 2005. ON CLOSE SCRUTINY OF TRADE TIME IT WAS NOTED BY THE AO THA T THE ASSESSEE HAD SOLD THE GOODS AT THE SAME MOMENT. THOSE TWO PARTIES HAV E PURCHASED THE GOODS THROUGH THE COUNTER OF M/S. CRONE COMMODITY P VT. LIMITED. THE MOMENT, THE ASSESSEE HAD OPTED TO PUNCH FOR SALE, T HE VERY MOMENT THOSE PARTIES HAVE PUNCHED FOR THE PURCHASE OF THE COMMOD ITY. IMMEDIATELY THEREAFTER, WITHIN FEW SECONDS THE TRANSACTIONS WER E REVERSED BY MAKING PURCHASES BY THE ASSESSEE AND BECAUSE OF THAT ATTEM PT ASSESSEE SUFFERED LOSS WHICH WAS NOTHING BUT A MANIPULATING TRANSACTI ON. THE TRANSACTION WAS IN COLLUSION WITH THOSE PARTIES AS WELL AS WITH THE BROKER. IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 7 - 8. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED TH E MATERIAL PLACED BEFORE US. THE EXPLANATION OF THE ASSESSEE W AS THAT THE TRANSACTION WAS CARRIED OUT THROUGH A RECOGNIZED PLATFORM, VIZ. , MCX. THE MCX EXCHANGE WORKS AS A PLATFORM TO BRING TWO PARTIES T OGETHER, WILLING TO UNDERTAKE A TRANSACTION. WE HAVE BEEN INFORMED THAT IT IS NOT POSSIBLE TO DEAL WITH ONE PARTICULAR PERSON UNDER THIS SYSTEM. THE SYSTEM AUTOMATICALLY MATCHES THE BEST COURSE FROM THE VARI OUS COURSE ALREADY PUNCHED BY VARIOUS PERSONS. IT WAS EXPLAINED THAT T HE BROKER HAD CARRIED OUT THE TRANSACTION IN A VERY SYSTEMATIC MANNER. TH E MANAGEMENT OF THE SAID BROKER WAS DIFFERENT. IT IS VEHEMENTLY DENIED THAT HIMANSHU J. SHAH IS THE SAME PERSON. IN SUPPORT, THEIR PAN CARDS ARE PLACED ON RECORD TO ESTABLISH THEIR SEPARATE IDENTITIES. AN IMPORTANT Q UESTION IS THAT WHETHER AFTER THE SEARCH OPERATION, IT WAS FOUND BY THE SEA RCH PARTY THAT THE ENTIRE TRANSACTION WAS UNDER COLLUSION WITH THOSE PARTIES BY THE ASSESSEE. IF THERE WAS NO SUCH EVIDENCE IN POSSESSION OF THE REV ENUE DEPARTMENT THEN IT IS NOT JUSTIFIABLE TO PRESUME THAT THE TRAN SACTION WAS MANIPULATED BY THE ASSESSEE. IN THE LIGHT OF THE FACTUAL BACKGR OUND AS STATED ABOVE WE HAVE EXAMINED THE DECISION OF HONBLE BOMBAY HIGH C OURT PRONOUNCED IN THE CASE OF RAMKRISHNA BAJAJ (HUF), 292 ITR 393 (BOM.) , WHEREIN THE REVENUE HAS RAISED A QUESTION THAT THE ASSESSEE HAD SOUGHT TO USE THE TRANSACTION ON AN ADVISE AND THE LOSS CLAIMED WERE ARTIFICIAL LOSS WITH A VIEW TO REDUCE THE TAX LIABILITY. THE HONBLE COURT HAS CITED KARAMCHAND THAPPAR, 176 ITR 535 (SC) AND HELD THAT THE SHARES WERE SOLD THROUGH STOCK EXCHANGE; HENCE, AFFIRMED THE FI NDINGS OF THE TRIBUNAL THAT THE TRANSACTION OF SHARES WAS GENUINE . NOW BEFORE US, APART FROM THE ABOVE TWO JUDGMENTS, THE ASSESSEE HAS ALSO PLACED RELIANCE UPON IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 8 - A DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SPECIAL PRINTS LIMITED, (2013) 33 TAXMANN. COM 463 (GUJ) , WHEREIN THE QUESTION WAS WHETHER THE SHARES WERE SOLD AT A CORR ECT PRICE OR AT THE PRICE WHICH WAS ARTIFICIALLY ARRIVED AT TO INFLATE THE LOSS. IT WAS HELD THAT IN THE JUDGMENT OF AZADI BACHAO ANDOLAN, (2003) 236 ITR 706 , IT WAS HELD THAT AN ACT, WHICH IS OTHERWISE VALID IN LAW, CANNOT BE TREATED AS DISHONEST MERELY ON THE BASIS OF SOME UNDERLYING MO TIVE PURPORTEDLY RESULTING IN SOME ECONOMIC DETRIMENT AS PER THE PER CEPTION OF THE REVENUE. ACCORDING TO HONBLE COURT ONCE THE TRANSA CTION IS AS PER THE PREVAILING MARKET PRICE THEN MERELY ON SOME PRESUMP TION SUCH A TRANSACTION IS NOT TO BE DOUBTED. 9. THUS, UNDER THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE AND PLACING RELIANCE ON THE JUDGMENTS CITED HEREINA BOVE, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND H ELD THAT THE LOSS WAS SUFFERED IN THE SAID TRANSACTION. NOW, THE QUESTION WAS RAISED THAT WHETHER THIS TRANSACTION IS A SPECULATIVE TRANSACTI ON OR A BUSINESS LOSS TO BE ADJUSTED AGAINST THE OTHER BUSINESS LOSS OR NOT. AS FAR AS THE AO WAS CONCERNED, AT THE TIME OF ASSESSMENT HE WAS OF THE VIEW THAT THE TRANSACTION WAS NOT GENUINE; THEREFORE, HE HAS DISA LLOWED THE SAME. HOWEVER, NOW THE POSITION IS THAT THE TRANSACTION I S HEREBY HELD BY US IS A GENUINE TRANSACTION, THEREFORE, THE CONNECTED QUEST ION IS THAT HOW THIS LOSS IS TO BE ADJUSTED AND DECIDED. FOR THIS LIMITE D PURPOSE, WE HEREBY REVERT THIS ISSUE BACK TO THE STAGE OF THE ASSESSME NT TO BE DECIDED BY THE AO THAT IF IT IS SPECULATIVE LOSS THEN HOW IT IS TO BE ADJUSTED AGAINST ANY INCOME OF THE ASSESSEE. THE AO IS, THEREFORE, AT LI BERTY TO FIRST DETERMINE WHETHER IT WAS A SPECULATION LOSS OR BUSINESS LO SS. AFTER DECIDING THIS IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 9 - POINT, THE AO CAN EASILY COMPUTE THE CORRECT INCOME OF THE ASSESSEE. IN THE RESULT, THE GROUND IS ALLOWED AS PER THE TERMS SUPRA. 10. APPEAL IS PARTLY ALLOWED PROTANTO . B. IT(SS)A NO.464/AHD/2010(FOR A.Y.2006-07)(ASSESSE ES APPEAL) 11. IN THIS YEAR AS WELL GROUND NO.2 ARGUED BEFORE US R EADS AS FOLLOWS: WITHOUT PREJUDICE TO THE FOREGOING GROUND, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD. CIT( A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF THE LOSS OF RS.29,06, 409/- IN COMMODITY FUTURES TRADING INCURRED BY THE APPELLANT IN THE COURSE OF ITS BUSINESS, FOR THE SAME REASONS AS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2005-06. 12. ON THE SAME LINES, WHILE PASSING THE ORDER U/S. 143(3), DATED 31.12.2007 THE AO HAS ADDED THE LOSS IN FUTURE COMM ODITY OF RS.29,06,409/-. THE ACTION OF THE AO WAS CONFIRMED BY LEARNED CIT(A). FACTS OF THE CASE OF THIS YEAR BEING IDENTICAL AS D ISCUSSED HEREINABOVE, THEREFORE, ON THE SAME LINES THIS GROUND IS ALLOWED , HOWEVER, SUBJECT TO THE DIRECTION MADE SUPRA. THE GROUND IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. C. IT(SS)A NO.469/AHD/2010 (FOR A.Y.2006-07) (REVEN UES APPEAL) 14. THE REVENUE HAS RAISED THE FOLLOWING GROUND: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS AND C IRCUMSTANCES OF THE CASE IN RESTRICTING THE ADDITION OF RS.43,09,851/- ON AC COUNT OF DISALLOWANCE OF LOSS IN FUTURE COMMODITY AND LOSS IN F&O TRADING TO THE EXTENT OF RS.29,06,409/- 15. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED THE FOLLOWING TWO AMOUNTS. IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 10 - LOSS IN COMMODITY FUTURE TRADING RS.29,06,409/- LOSS ON TRADING F & O RS.14,03,442/- TOTAL RS.43,09,851/-. 16. ON CAREFUL READING OF THE IMPUGNED ASSESSMENT O RDER, WE HAVE NOTED THAT THE ENTIRE DISCUSSION WAS CONFINED TO TH E LOSS CLAIMED IN RESPECT OF COMMODITY FUTURE TRADING OF RS.29,06,4 09/-. HOWEVER, AT THE END, THE AO HAS SAID THAT F&O IS ALSO TO BE DIS ALLOWED. THEREFORE, THE ADMITTED FACTUAL POSITION IS THAT THE REASON FO R DISALLOWANCE OF LOSS IN F&O WAS NOT GIVEN IN THE ASSESSMENT ORDER. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A) IT WAS HELD AS UNDER: HOWEVER, IN RESPECT OF THE F&O TRANSACTIONS IN SEC URITIES/SHARES, THE APPELLANT HAD, AS PER HIS LETTER TO THE AO, FILED C OPY OF ACCOUNTS RELATING TO THESE TRANSACTIONS THROUGH NOTIFIED STOCK EXCHANGE. IN HIS ORDER, THE AO HAS NOT GIVEN ANY REASONS FOR REJECTION OF THE CLAIM OF LOSS IN F&O TRANSACTIONS WAS NOT JUSTIFIED AND ITS DISALLOWANCE IS DELETED. THE RELATED GROUNDS OF APPEAL ARE SO ADJUDICATED. 17. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIE W THAT LEARNED CIT(A) WAS JUSTIFIED IN REVERSING THE IMPUGNED DISA LLOWANCE. WE FIND NO FORCE IN THIS GROUND OF THE REVENUE. HENCE DISMISS. 18. THE FINAL RESULT IS THAT THE ASSESSEES APPEALS ARE PARTLY ALLOWED IN TERMS OF THE DIRECTION MADE SUPRA, HOWEVER, THE APP EAL OF THE REVENUE IS DISMISSED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 29/11/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. IT(SS)A NO.331, 464 & 469/ AHD/2010 V & U CAPLEASE PVT. LTD. AHMEDABAD VS. ACIT/DCIT A HMEDABAD. FOR A.YS. 2005-06 & 2006-07 - 11 - 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD