AMU SHARES & SECURITIES LTD, V. DCIT CIR 4(1),

MA 1/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1909 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./MA NO. 01/MUM/2014 (ARISING OUT OF ITA NO.1824/MUM/2008) ( / ASSESSMENT YEAR: 2004-05) AMU SHARES & SECURITIES LIMITED CRESCENT CHAMBERS, GROUND FLOOR, HOMI MODI CROSS STREET, FORT, MUMBAI - 400 001 / VS. DY. CIT 4(1), AAYKAR BHAVAN, MUMBAI ./ ./PAN/GIR NO. AAACA 3778 L APPLICANT : RESPONDENT APPLICANT BY : SHRI DEEPAK TRALSHAWALA RESPONDENT BY : SHRI PITAMBAR DAS ! ' # $ / DATE OF HEARING : 14.03.2014 %&' ' # $ / DATE OF PRONOUNCEMENT : 04.04.2014 ( / O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS PETITION BY THE ASSESSEE U/ S.254(2) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) IN RESPECT OF AN ORDER U/S.254(1) OF THE ACT BY THE TRIBUNAL DATED 11.10.2013 IN ITS CASE IN THE CAPTIO NED APPEAL. 2.1 THE APPLICATION RAISES, IN EFFECT, TWO GROUNDS, WHICH WE SHALL TAKE UP IN SERIATIM. THE ASSESSEES FIRST GRIEVANCE IS QUA THE DISPOSAL BY THE TRIBUNAL OF THE ASSESSEES GROU ND NOS. 3 & 4, WHICH READ AS UNDER: 2 MA NO. 01/MUM/2014 (A.Y. 2004-05) AMU SHARES & SECURITIES LTD. VS. DY. CIT 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN TR EATING JOBBING LOSS OF RS.67,51,469/- AS BEING SPECULATION INCOME IN TERMS OF THE SECTION 43(5) OF THE INCOME TAX ACT, 1961 WITHOUT TAKING INTO ACCOUN T THAT THE APPELLANT WAS COVERED BY THE PROVISO (C) TO SEC 43(5), WHICH EXEMPTS THE APPELLANT FROM THE PROVISIONS OF SEC 43(5) BY STATING THAT TH E JOBBING ACTIVITY CARRIED OUT BY THE APPELLANT IS NOT AN ORDINARY & NORMAL AC TIVITY CARRIED OUT BY THE STOCK BROKER IN THE ORDINARY COURSE OF HIS BUSINESS AS A STOCK BROKER AND THAT THE PROVISO (C) TO SEC 43(5) WAS APPLICABLE ON LY IF THE JOBBING ACTIVITY IS CARRIED OUT BY THE BROKER ON BEHALF OF HIS CLIEN TS AND NOT ON HIS ACCOUNT WITHOUT APPRECIATING THE FACT THAT THE JOBBING ACTI VITY WAS A NORMAL ACTIVITY CARRIED OUT BY THE STOCK BROKER IN THE ORDINARY COU RSE OF HIS BUSINESS AND ALSO WITHOUT APPRECIATING THE FACT THAT SUCH JOBBIN G ACTIVITY CAN NEVER BE CARRIED BY THE BROKER FOR HIS CLIENTS AND THAT NO S UCH LOSS INCURRED BY THE CLIENT WOULD APPEAR IN HIS BOOKS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN TR EATING 50% OF THE EXPENSES INCURRED DURING THE YEAR AMOUNTING TO RS.1 ,82,05,259/- THE YEAR AS BEING EXPENSES INCURRED TOWARDS SPECULATION INCO ME AND DISALLOWING THE SAME. THE SAME STANDS DEALT WITH BY THE TRIBUNAL VIDE PAR AS 3 TO 5 (AT PGS. 2 TO 7) OF ITS ORDER, SUMMING UP ITS CONCLUSION PER THE LAST PARA (NO. 5), READING AS UNDER: 5. IN VIEW OF THE FOREGOING, WE ONLY CONSIDER IT FIT AND PROPER THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. TO ENABLE THE ASSESSEE AN OPPORTUNITY TO PRESENT ITS CASE OF THE JOBBING TRAN SACTIONS, ON WHICH THE IMPUGNED LOSS STANDS SUSTAINED BY IT, AS NON SPECUL ATIVE IN TERMS OF SEC. 43(5)(C), AND DECIDE THE SAME AS PER LAW BY ISSUING DEFINITE FINDINGS OF FACT, HAVING REGARD TO THE OBSERVATIONS MADE IN THIS ORDE R. THE QUESTION OF THE EXPENSES ALLOCABLE TO THE JOBBING ACTIVITY, WHICH W OULD ARISE ONLY WHERE AND TO THE EXTENT THE SAME IS LIABLE TO BE REGARDED AS A SEPARATE BUSINESS, BEING CONSEQUENTIAL AND INEXTRICABLY RELATED, WOULD ALSO STAND TO BE REMITTED LIKEWISE. AN AD HOC APPROACH IN THE MATTER IS THOUGH DISCOUNTENANCED, AND THE ALLOCATION IS TO BE BASED ON SOME MEASURABLE, OBJECTIVE CRITERION, AND TOWARD WHICH THE ASSESSE I S TO MAKE OUT A CASE IN CONSONANCE WITH THE FACTS OF ITS CASE. WE DECIDE AC CORDINGLY. 2.2 THE ASSESSEES OBJECTION IS WITH REGARD TO THE NON-CONSIDERATION OF THE THREE DECISIONS, AS UNDER, WHICH WERE SUBMITTED BY WAY OF A COMPILATION: A) PRAKASH CHAND JAIN VS. DY. CIT [2013] 33 TAXMANN.COM 53 (JAIPUR-TRIB.); 3 MA NO. 01/MUM/2014 (A.Y. 2004-05) AMU SHARES & SECURITIES LTD. VS. DY. CIT B) KOMAL EXPORTS VS. ASST. CIT [2008] 19 SOT 602 (DEL); AND C) CIT VS. DARSHAN SECURITIES (P.) LTD. [2012] 18 TAXMANN.COM 142 (BOM.) THE SAID NON-CONSIDERATION BY THE TRIBUNAL IS A MIS TAKE APPARENT FROM THE RECORD AND, THEREFORE, THE IMPUGNED ORDER NEEDS TO BE RECALLED FOR BEING DECIDED AFRESH AFTER CONSIDERING THE SAID DECISIONS. IT IS ALSO CLAIMED THAT THE DECISION BY THE TRIBUNA L GOES AGAINST THE GRAIN OF THE SAID JUDGMENTS, SO THAT ONCE THE ASSESSEE CARRIES OUT A JOBBING TRANSACTION, I.E., IN THE REGULAR COURSE OF ITS BUSINESS, THE SAME MUST NECESSARILY B E CONSIDERED AS FALLING UNDER CLAUSE (C) OF SUB-SECTION (5) OF SECTION 43 OF THE ACT. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE LOG BOOKS AS MAINTAINED BY BOTH THE MEMBERS CONSTITUTING THE BENCH WHICH HEARD THE CAPTIONED APPEAL, WHO ARE THE SAME AS HEA RING THE INSTANT PETITION, WERE CALLED FOR IN THE COURT ROOM AND EXAMINED FOR THE RELEVANT DATE, I.E., 04.09.2013. IN BOTH, EVEN AS CLARIFIED IN THE OPEN COURT, THERE IS NO MENTION OF ANY OF THE THREE DECISIONS BEING NOW ADVERTED TO BY THE ASSESSEE OR OF ANY REFERENCE THE RETO DURING HEARING. IN FACT, EVEN THE ASSESSEES APPLICATION DOES NOT STATE THAT ANY REFE RENCE WAS MADE DURING HEARING TO ANY OF THESE DECISIONS, NOR ANY CONTENTION TO THE EFFECT T HAT THE ARGUMENTS IN RESPECT OF THE SAID GROUNDS MADE BY THE LD. AUTHORIZED REPRESENTATIVE ( AR) DURING THE HEARING OF THE APPEAL, AS STATED AT PARA 3.1 (PGS. 2-3) OF THE IMP UGNED ORDER, DO NOT CORRECTLY REPRESENT THE ARGUMENTS AS MADE. ON THE CONTRARY, IT IS CONTENDED THAT THE LD. DEPA RTMENTAL REPRESENTATIVE (DR) DID NOT DISTINGUISH NOR COMMENTED ADVERSELY ON THE SAID DECISIONS. THIS IS SURPRISING INDEED. WHEN THE DECISIONS THEMSELVES WERE NOT REFERRED TO NOR RELIED UPON DURING HEARING, OF WHICH EVEN THE BENCH WAS NOT COGNIZANT OF, HOW COUL D THE LD. DR BE HELD RESPONSIBLE FOR NOT CONTROVERTING THE SAME. FURTHER, NO DOUBT THE S AID DECISIONS ARE PLACED IN A COMPILATION WHICH IS PLACED IN THE RELEVANT APPEAL FOLDER. REFERENCE IN THIS REGARD MAY BE MADE TO RULE 18 OF THE APPELLATE TRIBUNAL RULES, 19 63, WHICH CONCERNS THE PREPARATION 4 MA NO. 01/MUM/2014 (A.Y. 2004-05) AMU SHARES & SECURITIES LTD. VS. DY. CIT AND FURNISHING OF THE PAPER-BOOKS, ETC. BEFORE THE TRIBUNAL, WHICH IS CLARIFICATORY OF THIS ASPECT OF THE MATTER. THE MATTER IS THUS WELL REGUL ATED, WITH CLAUSE (VI) OF THE RULE MAKING IT ABUNDANTLY CLEAR THAT ONLY THE DOCUMENTS REFERRED TO AND RELIED UPON BY THE PARTIES DURING THE COURSE OF ARGUMENT/S SHALL ALONE BE TREATED AS A PART OF THE RECORD OF THE TRIBUNAL . AS SUCH, THE SAID DECISIONS BEING NOT REFERRED TO NOR RELIED UPON CANNOT BE CONSIDERED AS A PART OF THE TRIBUNALS RECORD, DESP ITE THE SAID DECISIONS BEING PLACED IN FILE AND, ACCORDINGLY, THERE IS NO JUSTIFIABLE REASON FO R ALLUDING TO THE SAME IN THE PRESENT PROCEEDINGS IN-AS-MUCH AS THERE HAS BEEN NO MISTAKE BY THE TRIBUNAL IN NOT REFERRING THERETO OR MEETING THE SAME. 3.2 AS REGARDS THE ASSESSEES CONTENTION WITH REGAR D TO THE TRIBUNALS DECISION GOING AGAINST THE GRAIN OF THE SAID DECISIONS, THE SAME A GAIN IS RENDERED OF NO MOMENT IN VIEW OF THE SAID DECISIONS NOT FORMING PART OF THE TRIBU NALS RECORD, SO THAT, AS CLARIFIED, NO INFIRMITY IN NOT TAKING JUDICIAL NOTICE THEREOF BY IT CAN BE INFERRED OR CONTENDED. IN FACT, THE SAID CONTENTION CHALLENGES THE IMPUGNED ORDER O N ITS MERITS, AND WHICH IS EVEN OTHERWISE OUTSIDE THE SCOPE OF THE RECTIFICATION PR OCEEDINGS U/S.254(2), SO THAT THE SAME WOULD STAND OUSTED ON THAT GROUND AS WELL. FURTHER, WE FIND THAT ONE OF THE THREE DECISIONS RE FERRED TO IS BY THE HONBLE JURISDICTIONAL HIGH COURT, SO THAT THE SAME BEING B INDING ON THE TRIBUNAL WOULD HAVE NECESSARILY TO BE TAKEN REGARD OF EVEN IF THE SAME WAS NOT REFERRED TO DURING HEARING OR OTHERWISE COMES TO THE NOTICE OF THE TRIBUNAL, ALBE IT SUBSEQUENTLY. HOWEVER, A MERE BROWSE OF THE SAID DECISION REVEALS THAT THE SAME I S WITH REFERENCE TO SECTION 73 OF THE ACT AND EXPLANATION THERETO. HOWEVER, THE DECISION UNDER REFERENCE RES TS ON, AS ITS READING WOULD BEAR OUT, THE INTERPRETATION OF SECTI ON 43(5)(C). AS SUCH, THE SAID DECISION IS NOT APPLICABLE IN DECIDING THE ISSUE UNDER REFER ENCE. IN FACT, TOWARD THIS, WE MAY ALSO CLARIFY THAT THE MATTER HAVING BEEN RESTORED BY THE TRIBUNAL BACK TO THE FILE OF THE A.O., THE SAID DECISION, IF AND TO THE EXTENT RELEVANT, WOULD BECOME BINDING IN-AS-MUCH AS THERE IS NO ESTOPPEL AGAINST LAW. THE ONUS TO SHOW THAT THE SAME IS APPLICABLE THOUGH WOULD ONLY BE ON THE ASSESSEE. 5 MA NO. 01/MUM/2014 (A.Y. 2004-05) AMU SHARES & SECURITIES LTD. VS. DY. CIT 3.3 IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY ME RIT IN THE ASSESSEES OBJECTION/S QUA THE SAID GROUNDS AS RAISED PER ITS INSTANT APPLICA TION. THE SAME IS ACCORDINGLY REJECTED. WE DECIDE ACCORDINGLY. 4. THE SECOND OBJECTION, PROJECTED PER PARA 11 OF I TS APPLICATION BY THE ASSESSE, IS WITH REGARD TO NON-DISPOSAL BY THE TRIBUNAL OF ITS FIFTH GROUND OF APPEAL . THE SAME CONCERNS NON-GRANT OF DEPRECIATION TO THE APPELLANT ON THE MUMBAI STOCK EXCHANGE CARD HELD BY IT. ON A CONSULTATION BY THE MEMBERS OF THE IR RESPECTIVE LOG BOOKS DURING THE HEARING ITSELF, IT WAS FOUND THAT THE ASSESSEES CO NTENTION IS CORRECT, AND THE SAID GROUND WAS PLEADED BY THE LD. AR WITH REFERENCE TO THE DEC ISION BY THE APEX COURT IN THE CASE OF TECHNO SHARES AND STOCKS LTD. VS. CIT [2010] 327 ITR 323 (SC). THERE IS IN FACT ALSO NO MENTION OF NOT PRESSING THE SAID GROUND IN THE IM PUGNED ORDER, WHICH IS GENERALLY THE CASE, AS IS ALSO SO WITH REGARD TO GROUNDS 1 AND 2 AND THE ADDITIONAL GROUND (REFER PARA 2 OF THE IMPUGNED ORDER). WE, ACCORDINGLY, HAVE NO HE SITATION IN RECALLING THE ASSESSEES APPEAL FOR BEING HEARD IN RESPECT OF THE SAID GROUN D, I.E., THE ASSESSEES GROUND OF APPEAL NUMBER 5, BY THE TRIBUNAL AND ADJUDICATION BY IT. W E DECIDE ACCORDINGLY. 5. NO OTHER GROUND WAS RAISED OR CONTENTION RAISED BY THE LD. AR DURING THE HEARING OF THE INSTANT PETITION. 6. IN THE RESULT, THE ASSESSEES MISCELLANEOUS APPL ICATION IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 04, 201 4 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ! MUMBAI; ) DATED : 04.04.2014 . . ./ROSHANI , SR. PS 6 MA NO. 01/MUM/2014 (A.Y. 2004-05) AMU SHARES & SECURITIES LTD. VS. DY. CIT !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. * / THE APPLICANT 2. +,* / THE RESPONDENT 3. -# ( ) / THE CIT(A) 4. -# / CIT CONCERNED 5. . / + # 0 , $ 0 ' , ! / DR, ITAT, MUMBAI 6. / 12 3 ! / GUARD FILE & / BY ORDER, ' / &( ) (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI