SUNDARJI LALALJI CHEDA (HUF), V. ASST CIT CIR 2(1),

MA 282/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9491 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMARD EEP
• Keywords: Business income; Principle of natural justice; Transactions in derivatives; Speculation loss; Futures and options; Speculative transactions

Judgement Text

MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER MA NO.282/MUM/2012 (ARISING OUT OF ITA NO.2900/MUM/2010) (AY: 2006-07) SUNDERJI LALJI BHEDA-HUF, 202 KAPADIA APARTMENTS, 39, SV ROAD, VILE PARLE (W) MUMBAI 400056 PAN: AALHS 6516 C VS. ACIT, CIRCLE 21(1), 508 5 TH FLOOR, C-10 BANDRA KURLA COMPLEX, BANDRA, MUMBAI 400051 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PRADIP KAPASI DEPARTMENT BY: MR. AMARDEEP, DR DATE OF HEARING: 28/09/2012 DATE OF PRONOUNCEMENT: 31/10/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS MISCELLANEOUS APPLICATION WAS PREFERRED BY AS SESSEE AGAINST THE ORDER PASSED BY THE ITAT J BENCH IN I TA NO.2900/MUM/2010 DATED 29.02.2012 ON AN APPEAL BY R EVENUE. ASSESSEE VIDE THIS M.A. IN PARA 10 LISTED THE FOLLO WING AS MISTAKES: 10 THE ORDER OF THE HON'BLE ITAT DT. 29.02.2012 (ANNEXURE IB) SUFFERS FROM THE FOLLOWING MISTAKES APPARENT FROM RECORD WHICH REQUIRES RECTIFICATION U /S. 254(2). I) THE MISTAKE WAS COMMITTED VIDE PARA 11 OF THE SAID ORDER BY STATING THAT THE APPLICANT HAD NOT CHALLENGED THE FINDINGS OF THE LD. CIT (A) THAT THE INCOME FROM DERIVATIVE TRANSACTIONS FOR THE YEAR WAS TO BE TREATED AS THE BUSINESS INCOME AND NOT SPECULATIVE INCOME AND AS A RESULT OF SUCH FINDING THE BROUGHT FORWARD UNABSORBED LOSSES PERTAINING TO THE DERIVATIVE TRANSACTIONS FOR A.Y. 2005-06 AND EARLIER YEARS WERE MADE NOT ELIGIBLE FOR SET-OFF AGAINST THE PROFITS FROM SUCH DERIVATIVE TRANSACTIONS FOR A.Y. 2006-07 I.E. THE YEAR UNDER CONSIDERATION CONFIRMING THE MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 2 OF 18 VIEW OF THE LD. A.O. THAT THE UNABSORBED BROUGHT FORWARD LOSSES FOR THE YEARS PRIOR TO A. Y. 2006-07 COULD NOT BE SET-OFF AGAINST THE PROFITS FOR A.Y. 2006-07 (PLEASE SEE PARA 8 TO 100 OF MA). II) THE MISTAKE WAS COMMITTED AGAIN BY FAILING TO ADJUDICATE THE IMPORTANT ISSUE ARISING OUT OF THE ORDER OF THE LD. CIT(A) OF THE APPLICANT'S ELIGIBILITY TO SET OFF THE UNABSORBED BROUGHT FORWARD SPECULATION LOSSES OF A.Y. 2005-06 AND EARLIER YEARS AGAINST THE PROFITS OF A.Y. 2006-07 PERTAINING TO DERIVATIVE TRANSACTIONS (PLEASE SEE PARA 11 OF MA). III) THE MISTAKE WAS ONCE AGAIN COMMITTED WHERE IN IT WAS STATED THAT THE ISSUE OF SET-OFF OF LOSSES WAS NOT BEING CONTESTED IN APPEAL BY THE INCOME TAX DEPARTMENT (PLEASE SEE PARA 12 OF MA). IV) THE MISTAKE WAS FURTHER COMMITTED WHEN THE HEARING WAS BROUGHT TO AN ABRUPT END BY DECIDING TO REFER THE APPEAL AND THE ISSUES THEREIN FOR CONSIDERATION OF THE SPECIAL BENCH AND WITH THIS, ALL THE POSSIBILITIES OF THE APPLICANT'S SEVERAL CONTENTIONS WERE PRE- EMPTED AND FRUSTRATED (PLEASE SEE PARAS 14, 15 AND 17 OF MA) V. THE MISTAKE WAS ALSO COMMITTED IN PASSING THE ORDER WITHOUT HEARING THE APPLICANT OR IN THE ALTERNATIVE WITHOUT AFFORDING ADEQUATE OPPORTUNITY TO THE APPLICANT FOR PRESENTING HIS CASE (PLEASE SEE PARA 16 & 17 OF MA). VI THE MISTAKE WAS COMMITTED WHEN THE TENETS OF NATURAL JUSTICE, EQUITY AND FAIRNESS WERE VIOLATED BY DENIAL OF ADEQUATE OPPORTUNITY OF HEARING TO THE APPLICANT AND IN PASSING AN ORDER BASED ON MISTAKEN FINDINGS AND ASSUMPTIONS (PLEASE SEE PARAS 8,9 AND 17 OF MA) VII. THE MISTAKE WAS COMMITTED IN NOT ADJUDICATING UPON ONE OF THE IMPORTANT CONTENTION OF THE APPLICANT THAT CL. (B) OF EXPLANATION (I) OF S.43(5)(D) OF THE ACT WAS NOT SATISFIED BY THE DERIVATIVE CONTRACTING NOTES (PLEASE SEE PARA 21 OF MA). VIII) THE MISTAKE WAS COMMITTED WHEN A DECISION NO T CITED BY ANY OF THE PARTIES TO THE APPEAL WAS MAINLY RELIED UPON TO ADJUDICATE THE APPEAL (PLEASE SEE PARA 18 OF MA) . MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 3 OF 18 2. IN ITS 19 PAGE APPLICATION ASSESSEE SUBMITS THAT TH E FINDINGS OF THE ITAT CONCERNING NON OBJECTION BY THE APPLICA NT ARE GROSSLY MISTAKEN AND INJURIOUS IN ALL COUNTS AND THEREFORE REQUIRED TO BE EXPUNGED AND THE ORDER PASSED SOLELY AS A RESULT OF SUCH MISTAKEN FINDINGS REQUIRED TO BE RECTIFIED UNDER SECTION 254 (2) AND CALLED BACK BY RESTORING THE APPEAL (B) NON ADJUDICATION O F AN ISSUE SPECIFICALLY RAISED BEFORE THE HON'BLE ITAT HAS ALS O RESULTED IN A MISTAKE THAT REQUIRES RECTIFICATION AND (C) PASSING AN ORDER WITHOUT CONCLUDING THE HEARING BY ADJOURNING THE MATTER BY THE BENCH FOR A REFERENCE TO THE SPECIAL BENCH IS IN GROSS VIOLATIO N OF THE DENIAL OF THE NATURAL JUSTICE AND THE HON'BLE ITAT IN DOING S O HAS COMMITTED A MISTAKE WHICH REQUIRE A RECTIFICATION UNDER SECTI ON 254(2) AND A RECALL AND FRESH ADJUDICATION. 3. BEFORE ADVERTING TO THE CONTENTIONS OF THE ASSESSEE , THE FACTS RELATING TO THE REVENUE APPEAL ARE THAT THE ASSESSE E IS A HUF WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN FUTU RES AND OPTIONS (F & 0) BESIDES TRADING IN SHARES, SECURITIES AND O THER DERIVATIVES. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y . 2006-07 DECLARING TOTAL INCOME OF ` 98,84,448/-. IT WAS NOTICED BY THE A.O. THAT IN THE COMPUTATION STATEMENT THE ASSESSEE HAS SHOWN THE BUSINESS INCOME OF ` 1,10,02,961/-. THE SAID INCOME/PROFIT DERIVED FROM FUTURES AND OPTIONS WAS PARTLY SET OFF WITH BR OUGHT FORWARD LOSS OF ` 14,14,835/-OF EARLIER YEAR. THE A.O. HAD RESERVATIO N IN ALLOWING THE SET OFF OF THE LOSS OF ` 14,14,835/- ON THE REASON THAT THE SAID LOSS WAS ARISING FROM TRANSACTIONS IN THE F&OS WHICH WAS SPECULATION LOSS AND SO FAR AS AY 2006-07 IS CONC ERNED THERE WAS NO SPECULATION PROFIT. THE ASSESSEE STATED BEFORE THE A.O. THAT IN THE AY 2006-07 THE ASSESSEE HAS MADE PROFIT IN F&OS TRANSACTIONS, THE PATTERN OF WHICH WAS THE SAME AS THAT OF THE LA ST YEAR. THERE WAS CARRY FORWARD LOSS IN F&OS TRANSACTIONS PERTAIN ING TO THE A.Y. 2005-06 AND AS THE NATURE OF THE TRANSACTIONS WAS T HE SAME, ASSESSEE WAS ENTITLED TO SET OFF OF THE BROUGHT FOR WARD LOSS OF THE MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 4 OF 18 PRECEDING YEAR I.E. A.Y. 2005-06 ARISING FROM THE T RANSACTIONS IN THE F&OS AGAINST THE PROFIT IN THE A.Y. 2006-07 EAR NED FROM THE TRANSACTIONS IN THE F&OS. IN SUM AND SUBSTANCE, THE ASSESSEE CONTENDED THAT: (I) THERE WAS NO CHANGE IN THE NATU RE OF THE BUSINESS OF THE ASSESSEE; (II) THE BUSINESS LOSS OF EARLIER YEAR WAS ARISING OUT OF TRANSACTIONS IN F&O AND FOR THE A.Y. 2006-07 ALSO THE INCOME WAS ARISING OUT OF THE TRANSACTIONS OF F &O AS IN THE A.Y. 2005-06; AND (III) THE PATTERN OF THE TRADING WAS THE SAME. 4. IN THE OPINION OF THE A.O. CONSIDERING THE AMENDMEN T MADE TO SEC.43(5) BY INSERTION OF CLAUSE (D) W.E.F. A. Y .2006-07, THE PROFIT EARNED FROM THE TRANSACTIONS OR TRADING IN THE DERI VATIVES CARRIED OUT IN THE RECOGNIZED STOCK EXCHANGE WOULD NOT BE D EEMED TO BE SPECULATIVE TRANSACTION. AS PER THE A.O. W.E.F. A. Y. 2006-07, ANY TRANSACTION ENTERED INTO BY THE ASSESSEE IN THE DER IVATIVE (INCLUDING TRADING IN F&OS) WAS NO MORE A SPECULATIVE TRANSACT ION AND HENCE, EVEN IF THE LOSSES INCURRED IN THE DERIVATIVE TRANS ACTIONS (INCLUDING TRADING IN THE FUTURES & OPTIONS) PRIOR TO A. Y. 20 06-07, NO SET OFF CAN BE GIVEN AGAINST THE PROFIT EARNED IN THE A.Y. 2006-07 FROM THE DERIVATIVE TRANSACTIONS EVEN IF THE NATURE OF THE T RANSACTION REMAINS THE SAME, AS DUE TO THE AMENDMENT TO SEC.43 (5) BY INSERTION OF CLAUSE (D) THE INCOME/PROFIT EARNED FR OM THE DERIVATIVES NO MORE REMAINED TO BE SPECULATIVE. THE A.O., THERE FORE, DECLINED TO GIVE THE BENEFIT OF THE SET OFF TO THE EXTENT OF ` 14,14,835/- IN RESPECT OF THE BROUGHT FORWARD LOSSES FROM THE F&OS TRADING PERTAINING TO THE AY 2005-06. 5. ASSESSEE CHALLENGED THE ACTION OF AO BEFORE THE LEA RNED CIT (A). THE LEARNED CIT (A) UPHELD THE ACTION OF AO BU T AT THE SAME TIME HE WAS OF THE OPINION THAT THE NOTIFICATION FO R RECOGNIZING THE STOCK EXCHANGE WAS EFFECTIVE FROM 25.1.2006 SO BENE FIT OF SET OFF OF THE LOSS OF THE PRECEDING YEAR ARISING FROM THE TRA DING OF F&OS CAN BE ALLOWED AGAINST PROFIT FOR THE PERIOD FROM 1.4.2 005 TO 24.1.2006. HE DIRECTED THE A.O. TO ACCORDINGLY WORK OUT THE PR OFITS OF THE DERIVATIVES INCLUDING FUTURES AND OPTIONS FOR TWO P ERIODS IN AY MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 5 OF 18 2006-07 TREATING THE FIRST PERIOD AS A SPECULATIVE PROFIT OR LOSS AND SECOND PERIOD IS TO BE TREATED AS BUSINESS PROFIT O R LOSS. BEING AGGRIEVED, THE REVENUE HAS FILED THE IMPUGNED APPEA L. 6. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING NET INCOM E FROM F&O SEGMENT & DERIVATIVE TRADING UPTO 25.01.2006 TO BE TREATED AS SPECULATION INCOME AND NOT BUSINESS INCO ME, ALTHOUGH THE AMENDMENT TO SECTION 43(5)(D) IN THIS REGARD WAS INTRODUCED W.E.F. 01.04.2006 AND APPLICABLE FOR AY 2006-07 AND ACCORDINGLY ALLOWED SET OFF OF CARRY FO RWARD SPECULATION LOSS AGAINST THIS SPECULATION INCOME. 2. THE LEARNED CIT (A) HAS NOT CONSIDERED THE DECIS ION OF THE SPECIAL BENCH OF THE ITAT (KOLKATA) IN THE CASE OF M/S SHREE CAPITAL SERVICES LTD., REPORTED IN TAXMAN 185 PAGE 440. 7. THUS AS CAN BE SEEN FROM THE ORDER OF THE CIT (A) A ND THE GROUNDS RAISED BY THE REVENUE THE ISSUE BEFORE THE HON'BLE ITAT WAS WITH REFERENCE TO TREATING THE INCOME EARNED BY ASSESSEE ON F&O SEGMENT AND DERIVATIVE TRADING UPTO 25.01.2006 AS SPECULATIVE INCOME AND NOT BUSINESS INCOME. THIS IS SUE WAS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF SHREE CAPITAL SERVICES LTD RELIED UPON BY THE RE VENUE THAT THE AMENDED PROVISIONS OF SECTION 43(5)(D) INTRODUCED W .E.F. 01.04.2006 WAS APPLICABLE FROM THE BEGINNING OF THE YEAR AND N OT FROM THE DATE OF NOTIFICATION ON 25.01.2006 AS CONSIDERED BY THE CIT (A). 8. ASSESSEE NEITHER PREFERRED AN APPEAL ON THE FINDING S OF THE CIT (A) THAT THE INCOME EARNED ON THESE TRANSACTION S IN AY 2006-07 HAS TO BE CONSIDERED AS BUSINESS INCOME AND THERE I S NO CHALLENGE TO THE FINDINGS THAT THE SPECULATION LOSSES EARNED IN EARLIER YEARS CANNOT BE SET OFF TO THE INCOME ARISING IN AY 2006- 07 ON THESE DERIVATIVE TRANSACTIONS. WHAT THE CIT (A) HAS ALLOW ED ASSESSEE IS THE BENEFIT OF TREATING THE INCOME EARNED UPTO 25.0 1.2006 AS SPECULATION PROFIT AND AO WAS DIRECTED TO TREAT THE PROFIT ON TRADING IN DERIVATIVES UPTO 24.01.2006 TO BE SPECULATIVE BU SINESS AND FROM MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 6 OF 18 25.01.2006 TO BE THE BUSINESS INCOME. THE COMPLETE ORDER OF THE CIT (A) IS AS UNDER: 4.2 IN MY CONSIDERED OPINION THE LEARNED AOS CONTENTION IS CORRECT TO THE EXTENT THAT THE TRADIN G IN DERIVATIVES HAVE TO BE TREATED AS BUSINESS INCOME I F THE SAME IS CARRIED OUT IN RECOGNIZED STOCK EXCHANGE. HOWEVER, IT IS SEEN THAT THE NOTIFICATION RECOGNIZI NG THE STOCK EXCHANGE HAS BEEN EFFECTIVE FROM 25.01.2006. THEREFORE, AOS ACTION CAN BE UPHELD ONLY WITH REGA RD TO THE TRANSACTION CARRIED ON AFTER THIS DATE. THIS IS THE VIEW WHICH HAS BEEN TAKEN BY MOST OF AOS ALSO AND ONLY BECAUSE IN A PARTICULAR CASE THIS VIEW BENEFI TS ASSESSEE AS HE IS HAVING SPECULATION LOSSES BROUGHT FORWARD, A DIFFERENT VIEW CANNOT BE TAKEN. AO IS ACCORDINGLY DIRECTED TO TREAT THE PROFIT ON TRADING IN DERIVATIVES UPTO 24.01.2006 TO BE SPECULATIVE BUSIN ESS AND FROM 25.01.2006 TO BE BUSINESS INCOME. THE BUSINESS PROFIT, SPECULATIVE PROFIT AND ANY LOSSES TO BE CARRIED FORWARD WILL BE WORKED OUT ACCORDINGLY. 9. IN THE COURSE OF ARGUMENTS THE DR RELIED ON THE SPE CIAL BENCH DECISION (SUPRA) WHICH WAS RECORDED IN PARA 5 OF THE ORDER OF THE ITAT. 10. IN REPLY THE LEARNED COUNSEL REFERRED TO THE DECISI ON OF THE GAJENDRA KUMAR T. AGARWAL, 11 ITR (TRIB.)640(MUM) T HAT ASSESSEE IS ENTITLED TO SET OFF OF THE LOSS INCURRED IN THE ASSESSMENT PRIOR TO AY 2005-06 AGAINST THE PROFITS EARNED IN THE SAME B USINESS IN AY 2006-07. AS THERE WAS A CONTRARY DECISION IN THE CA SE OF RAKESH R. AGARWAL IN ITA NO.5843/MUM/2009 DATED 7.1.11 ON THE SAME ISSUE THE SAME WAS PUT UP TO ASSESSEE AND FURTHER A RGUMENT WAS SOUGHT FOR. THE BENCH HAS CLEARLY EXPRESSED ITS RES ERVATION AND SOUGHT THE OPINION OF THE COUNSELS TO REFER THE MAT TER TO SPECIAL BENCH. ASSESSEE PLACED ITS SUBMISSIONS IN WRITING S PECIFICALLY STATING THAT THE APPEAL MAY NOT BE FIT FOR REFERENC E TO THE SPECIAL BENCH AS MATERIAL FACTS ARE DIFFERENT FROM THE FACT S IN THE CASES OF GAJENDRA KUMAR T. AGARWAL (SUPRA) AND RAKESH R. AGA RWAL(SUPRA) AND LISTED OUT THE MATERIAL FACTS DIFFERENT. THIS S UBMISSION WAS CONSIDERED BY THE BENCH WHEN THE CASE WAS TAKEN UP ON 9.12.2011 AND THE HEARING WAS CONCLUDED ON THAT DAY. THEREAFT ER THE ORDER WAS PASSED ON 29.02.2012. MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 7 OF 18 11. IN THE ORDER THE SUBMISSIONS OF ASSESSEE WERE CLEAR LY STATED IN PARA 11 AND THE FINDINGS WERE GIVEN AS UNDER: 11. INITIALLY, WE WERE OF THE VIEW THAT AS THERE AR E TWO CONTRARY DECISIONS DISCUSSED ABOVE ON THE ISSUE OF CLAUSE (D) TO SEC.43(5), MORE PARTICULARLY, IN THE CONTEXT OF TREATMENT OF THE LOSSES FROM THE DERIVATIVES INC LUDING THE F&OS PRIOR TO AY 2006-07 AND ACCORDINGLY, WE ASKED BOTH THE PARTIES AS TO WHY THE REFERENCE SHOU LD NOT BE MADE TO THE SPECIAL BENCH AS TWO CONTRARY DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL WERE NOTICED. BOTH THE PARTIES WERE GIVEN AN OPPORTUNITY TO ADVANCE THEIR ARGUMENT ON THE ISSUE OF MAKING REFERENCE, BUT SUBSEQUENTLY, AFTER CONSIDERI NG THE ORDER OF THE LD. CIT (A), IN OUR VIEW, BOTH THE ABOVE DECISIONS RELIED ON BY THE PARTIES WOULD NOT HAVE A NY BEARING WHILE DECIDING THE APPEAL FILED BY THE REVE NUE. IN THE PRESENT CASE, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR THE SET OFF OF THE LOSS I N THE F&OS PERTAINING TO THE A.Y. 2005-06 TO BE SET OFF AGAINST THE PROFIT IN THE A.Y. 2006-07.WE FIND THAT THE LD. CIT (A) HAS CONFIRMED THE VIEW TAKEN BY THE A.O . THAT THE LOSSES FROM THE DERIVATIVES INCLUDING F&OS PRIOR TO A.Y. 2006-07 CANNOT BE SET OFF AGAINST THE INCOME FROM THE NON-SPECULATIVE BUSINESS. AS PRIOR TO INSERTION TO CLAUSE (D) TO SEC.43(5) THE LOSSES OR PROFIT FROM THE DERIVATIVES WAS TREATED AS A SPECULATIVE LOSSES OR SPECULATIVE LOSS. AS PRIOR TO INSERTION O F CLAUSE (D) TO SEC.43(5), THE DERIVATIVE TRANSACTIONS WERE TREATED AS SPECULATIVE TRANSACTIONS. THE ASSESSEE HAS NOT CHALLENGED THE FINDINGS OF THE LD. CIT (A) CONFIRMI NG THE VIEW TAKEN BY THE A.O. WHAT WE FIND THAT LD. CIT(A) HELD THAT FROM 1.4.2005 TO 24.1.2006 THE F&OS ARE T O BE TREATED AS SPECULATIVE TRANSACTIONS AND FROM 25.1.2006 TO 31.03.2006; IN VIEW OF THE NOTIFICATIO N OF THE STOCK-EXCHANGE, FOR THAT PERIOD THE SAID TRANSACTIONS ARE TO BE TREATED AS A NON-SPECULATIVE . HE, ACCORDINGLY, DIRECTED THE A.O. TO GIVE BENEFIT OF T HE SET OFF OF THE LOSSES FROM THE F&OS INCURRED IN THE A.Y . 2005-06 AGAINST THE PROFITS IN THE A.Y.2006-07 FOR THE PERIOD 1.4.2005 TO 24.1.2006. THOUGH THE LD. COUNSE L HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF GAJENDRA KUMAR T. AGARWAL (SUPRA), IN OUR HUMBLE OPINION, THE SAID DECISION IS NOT HELPFUL AS THE AS SESSEE HAS NOT CHALLENGED THE FINDING OF THE LD. CIT (A) CONFIRMING THE VIEW OF THE A.O. THAT LOSSES INCURRE D IN THE F&OS PRIOR TO A.Y. 2006-07 CANNOT BE SET OFF AGAINST THE PROFITS OF THE F&OS IN THE A.Y. 2006-07 . SO FAR AS APPLICABILITY OF CLAUSE (D) TO SEC.43(5) IS CONCERNED, THE HONBLE SPECIAL BENCH OF THE ITAT MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 8 OF 18 KOLKATA IN THE CASE OF SHREE CAPITAL SERVICES LTD. (SUPRA) HAS HELD THAT CL. (D) INSERTED BY THE FINAN CE ACT, 2005 IS APPLICABLE FROM THE A.Y. 2006-07. WE, THEREFORE, ALLOW THE GROUND TAKEN BY THE REVENUE AN D REVERSE THE ORDER OF THE LD. CIT (A). WE ARE OF THE OPINION THAT EVEN IF THERE ARE CONTRARY DECISIONS O N THE INTERPRETATION OF FATE OF LOSSES FROM THE F&OS PRIO R TO THE A.Y. 2006-07, BUT AS BOTH THE DECISIONS HAVING NO BEARING ON THE ISSUE ARISING IN THE REVENUES APPEA L HENCE, NO REFERENCE TO THE SPECIAL BENCH IS REQUIRE D. MOREOVER, AS PER THE SUBMISSIONS MADE BY THE LD. COUNSEL, THERE IS NO NECESSITY TO MAKE THE REFERENC E AS FACTS IN THE CASE OF GAJENDRA KUMAR T. AGARWAL (SUP RA) ARE SIGNIFICANTLY DIFFERENT THAN THE FACTS IN THE P RESENT APPEAL 12. NOW THAT ASSESSEE WANTS THE ORDER TO BE RECALLED SU BMITTING THAT THERE WAS A MISTAKE COMMITTED BY THE BENCH THA T ASSESSEE HAS NOT CHALLENGED THE FINDINGS OF THE CIT (A). 13. AS DISCUSSED IN THE ORDER AS WELL AS IN THE INITIAL PARAS OF THIS ORDER, THE ISSUE BEFORE THE ITAT IS ONLY WITH REFER ENCE TO TREATING THE INCOME EARNED UPTO 24.01.2006 AS SPECULATIVE PR OFIT AS DIRECTED BY THE CIT (A) WHO UPHELD THAT THE INCOME EARNED FROM DERIVATIVE TRANSACTIONS HAS TO BE TREATED AS BUSINE SS INCOME. SINCE ASSESSEE HAS NOT COME UP IN APPEAL ON THAT FINDING THAT THE CARRY FORWARD SPECULATION LOSSES CANNOT BE SET OFF TO THE BUSINESS INCOME EARNED IN AY 2006-07 THAT THE FINDING OF THE CIT (A ) HAS REMAINED UNCHALLENGED BY ASSESSEE. WHAT THE REVENUE HAS CHAL LENGED IS TREATING PART OF THE BUSINESS INCOME EARNED DURING AY 2006-07 AS SPECULATION PROFIT ON THE REASON THAT THE SAID NOTI FICATION WAS ISSUED ON 25.01.2006 THEREFORE, THE AMENDED PROVISI ON IS APPLICABLE FROM THAT DAY. THIS IS CONTRARY TO THE P ROVISIONS OF LAW AS ANALYZED BY THE SPECIAL BENCH OF ITAT IN THE CAS E OF SHREE CAPITAL SERVICES LTD., REPORTED IN TAXMAN 185 PAGE 440 (KOLKATA- SB). THEREFORE, THE ITAT COULD NOT GO BEYOND THE IS SUE TO BE CONSIDERED BEFORE IT AND CONSIDER ASSESSEES ARGUME NT FOR TREATING THE ENTIRE BUSINESS INCOME EARNED DURING THE YEAR A S SPECULATIVE INCOME FOR SET OFF TO THE CARRY FORWARD SPECULATIVE LOSSES. MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 9 OF 18 14. ASSESSEE IN THE M.A. FROM PARA 22 ONWARDS REFERS TO THE RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 WHICH READS AS UNDER: THE RESPONDENT THOUGH, HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY GROUNDS DECIDED AGAINST HIM. SAID RULE GIVES A RIGHT TO THE RESPONDENT TO SUPPOR T THE ORDER APPEALED AGAINST ON ANY GROUNDS DECIDED AGAINST HIM . IN HIS ORDER THE CIT (A) HELD AGAINST ASSESSEE THE BENEFIT OF SE T OFF CARRY FORWARD SPECULATION LOSSES OF AY 2005-06 OR EARLIER YEARS T O THE BUSINESS INCOMES OF AY 2006-07. ASSESSEE CAN AT BEST SUPPORT THIS FINDING OF THE CIT (A) ON ANY REASON BUT CANNOT CONTEST THA T IN THE ABSENCE OF ANY APPEAL OR CROSS OBJECTION. ASSESSEE RELIED O N VARIOUS CASE LAW OF OTHER HIGH COURTS TO SUPPORT THE CONTENTIONS IN MA, WHICH WE DO NOT INTEND TO EXTRACT IN THIS ORDER, AS ASSES SEE WAS SPECIFICALLY ASKED TO EXTEND THE ARGUMENTS ON THE D ECISIONS OF JURISDICTIONAL HIGH COURT ORDERS WHEN THE CASE WAS TAKEN UP ON 14.09.2012 AND ADJOURNED TO 28.09.2012. 15. THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF B.R. BAMASI VS. COMMISSIONER OF INCOME-TAX, 83 ITR 223 H AS CONSIDERED THE RIGHT OF RESPONDENT WITH REFERENCE T O RULE 27 AND HELD AS UNDER: THAT THE ASSESSEE WOULD BE ENTITLED TO RAISE A NE W GROUND, PROVIDED IT IS A GROUND OF LAW AND DOES NOT NECESSITATE ANY OTHER EVIDENCE TO BE RECORDED, THE NATURE OF WHICH WOULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF, BUT MAY ALSO AFFECT THE VALIDITY OF THE ENTIRE ASSESSMENT PROCEEDINGS. IF THE GROUND SUCCEEDS, THE ONLY RESULT WOULD BE THAT THE APPEAL WOULD FAIL. TH E ACCEPTANCE OF THE GROUND WOULD SHOW THAT THE ENTIRE ASSESSMENT PROCEEDINGS WERE INVALID, BUT YET THE TRIBUNAL WHICH HEARS THE APPEAL WOULD HAVE NO POWER TO DISTURB OR TO SET ASIDE THE ORDER IN FAVOUR OF THE APPELLANT. THAT ORDER WOULD STAND AND WOULD HAVE FU LL EFFECT IN SO FAR AS IT IS AGAINST THE RESPONDENT. T HE GROUND WOULD SERVE ONLY AS A WEAPON OF DEFENCE AGAINST THE APPEAL. HENCE, THE REFUSAL OF THE TRIBU NAL TO ALLOW THE ASSESSEE TO CHALLENGE FOR THE FIRST TIME BEFORE IT THE VALIDITY OF THE NOTICE AND ASSESSMENT UNDER SEC TION MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 10 OF 18 34 WHILE CONSIDERING THE APPEAL FILED BY THE DEPART MENT AGAINST THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER WAS NOT IN ACCORDANCE WITH LAW. 16. THE DETAILED DISCUSSION IN THE ABOVE CAS E OF B.R. BAMSI (SUPRA) IS AS UNDER: IN THE SECOND REFERENCE THE TRIBUNAL HAS DECIDED O NE ADDITIONAL POINT. IT IS A POINT OF LAW. AS STATED E ARLIER, THE ASSESSEE FILED A VOLUNTARY RETURN ON THE 28TH M ARCH, 1952. NONETHELESS, THE INCOME-TAX OFFICER ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 34(1)(A) ON 9T H OF JULY, 1952, AND THEN PROCEEDED TO ASSESS THE ASSESS EE UNDER THAT SECTION. THE ASSESSEE RAISED BEFORE THE TRIBUNAL A CONTENTION THAT THE NOTICE UNDER SECTION 34(1)(A) HAVING BEEN ISSUED IN SPITE OF THE ASSESSE E HAVING FILED A RETURN IN PROPER TIME, IT WAS INVALI D AND THAT THE APPEAL FILED BY THE DEPARTMENT BEFORE THE TRIBUNAL SHOULD BE DISMISSED. IN SUPPORT OF HIS CONTENTION THAT THE NOTICE WAS INVALID IN LAW THE ASSESSEE RELIED UPON THE DECISION OF THE SUPREME CO URT IN COMMISSIONER OF INCOME-TAX V. RANCHHODDAS KARSONDAS (36 ITR 56). THE TRIBUNAL, HOWEVER, DID N OT ALLOW THE ASSESSEE TO RAISE THAT CONTENTION ON THE GROUND THAT IT HAD BEEN RAISED ONLY AT THE TIME OF THE ARG UMENTS IN THE APPEAL BEFORE THE TRIBUNAL AS A FRESH GROUND AND THAT IF THE GROUND WAS ALLOWED TO BE URGED AND IT SUCCEEDED, THE RESULT WOULD BE THAT THE ENTIRE ASSESSMENT PROCEEDINGS WOULD HAVE TO BE HELD INVALI D AND EVEN THE ASSESSMENT ON THE UNDISPUTED AMOUNT OF THE INCOME AGAINST WHICH THE ASSESSEE HAD NOT APPEALED WOULD THEREUPON GO BY THE BOARD. THE ASSESSEE HAD CONTENDED BEFORE THE TRIBUNAL THAT HE WANTED TO URGE THAT GROUND ONLY FOR HAVING THE APPE AL OF THE DEPARTMENT DISMISSED AND STATED THAT HE DID NOT WANT TO DISTURB THE ASSESSMENT AS ALREADY MADE BY T HE APPELLATE ASSISTANT COMMISSIONER. THE TRIBUNAL, HOWEVER, HELD THAT IT COULD NOT PERMIT A LEGAL AND AN ILLEGAL ORDER TO STAND SIDE BY SIDE BECAUSE ONCE TH E PLEA WAS ALLOWED TO BE RAISED AND IT WAS ACCEPTED THE EN TIRE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER WOULD STAND VITIATED. THE TRIBUNAL REFUSED TO ALLOW THE ASSESSEE TO RAISE AND ARGUE THAT GROUND BECAUSE OF SUCH DIFFICULTY WHICH THE TRIBUNAL FELT WOULD ARISE. NOW THERE IS NO DOUBT THAT, AS THE ASSESSEE HAD ALR EADY FILED A VOLUNTARY RETURN, THE NOTICE UNDER SECTION 34(1)(A) WAS WRONGLY ISSUED AND THE PROCEEDINGS OF ASSESSMEN T WHICH TOOK PLACE IN PURSUANCE OF THAT NOTICE ARE IN VALID. THIS IS THE RATIO LAID DOWN BY THE SUPREME COURT IN ITS MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 11 OF 18 SAID JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME -TAX V. RANCHHODDAS KARSONDAS (36 ITR 56). MR. JOSHI HAS NOT DISPUTED THIS POSITION. THE ONLY QUESTION IS WH ETHER THE TRIBUNAL WAS ENTITLED IN LAW TO REFUSE TO ALLOW THE ASSESSEE TO URGE THAT GROUND IN THE APPEAL BEFORE I T. NOW A DIVISION BENCH OF THIS HIGH COURT IN COMMISSIONER OF INCOME-TAX V. HAZARIMAL NAGJI & CO. (46 ITR 1168 BOM) AFTER CONSIDERING THE RELEVANT SECTIONS OF THE INCOME-TAX ACT AND THE RELEVANT RUL ES MADE THEREUNDER, HELD THAT THE POWERS OF THE APPELL ATE TRIBUNAL ARE SIMILAR TO THE POWERS OF AN APPELLATE COURT UNDER THE CIVIL PROCEDURE CODE. IT HAS FURTHER HELD THAT THE RESPONDENT IN AN APPEAL IS UNDOUBTEDLY ENTITLED TO SUPPORT THE DECREE WHICH IS IN HIS FAVOUR ON ANY GR OUNDS WHICH ARE AVAILABLE TO HIM, EVEN THOUGH THE DECISIO N OF THE LOWER COURT IN HIS FAVOUR MAY NOT HAVE BEEN BAS ED ON THOSE GROUNDS. IT HAS FURTHER HELD THAT IF THE A PPELLANT IN HIS CHALLENGE TO THE DECREE OF THE LOWER COURT I S ENTITLED TO TAKE A NEW GROUND NOT AGITATED IN THE C OURT BELOW BY LEAVE OF THE COURT, THERE APPEARS TO BE NO REASON WHY A RESPONDENT IN SUPPORT OF THE DECREE IN HIS FAVOUR PASSED BY THE LOWER COURT SHOULD NOT BE ENTI TLED TO AGITATE A NEW GROUND AND SUBJECT TO THE SAME LIMITATION. A DIVISION BENCH OF THE ALLAHABAD HIGH COURT HAS TAKEN A SIMILAR VIEW IN KANPUR INDUSTRIAL WORKS V. COMMISSIONER OF INCOME-TAX ((59 ITR 407). THAT JUDGMENT HAS CONSIDERED THE POSITION OF AN APPEAL U NDER SECTION 33 OF THE INCOME-TAX ACT ALONG WITH THE REL EVANT RULES AND THAT OF AN APPEAL UNDER THE CODE OF CIVIL PROCEDURE AND THE PROVISIONS OF ORDER XLI, RULE 22. THE JUDGMENT HOLDS THAT WHEN THE DEPARTMENT FILES AN APPEAL FOR AN INCREASE IN THE ASSESSED INCOME, THE SUBJECT-MATTER OF THE APPEAL IS THE INCREASE CLAIME D BY THE DEPARTMENT AND THE ASSESSEE CAN URGE ANY GROUND OF DEFENCE EVEN THOUGH IT MIGHT HAVE BEEN REJECTED BY THE APPELLATE ASSISTANT COMMISSIONER FOR SHOWING TH AT THERE SHOULD BE NO INCREASE. IT HAS FURTHER HELD TH AT THAT THE ASSESSEE IS NOT LIABLE TO BE ASSESSED AT ALL IS A GROUND FOR SHOWING THAT THERE SHOULD BE NO FURTHER ASSESSMENT AND THE DEPARTMENT'S APPEAL CAN THEREFOR E BE RESISTED ON THAT GROUND AND THAT THERE IS NO INCONGRUITY IN MAINTAINING THE ASSESSMENT ORDER PAS SED AGAINST THE ASSESSEE AND YET REFUSING TO INCREASE I T ON THE GROUND THAT HE WAS NOT LIABLE TO BE ASSESSED AT ALL. THE JUDGMENT POINTS OUT HOWEVER THAT IF THE TRIBUNA L ACCEPTS THE GROUND OF DEFENCE THAT THE ASSESSEE WAS NOT LIABLE TO BE ASSESSED, IT CAN ONLY REFUSE TO INCREA SE THE ASSESSED INCOME AS ONLY SUCH AN ORDER WOULD BE WITH IN THE SCOPE OF THE APPEAL FILED BY THE DEPARTMENT AND ANY OTHER ORDER SUCH AS ANNULLING THE ASSESSMENT WOULD BE MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 12 OF 18 OUTSIDE THE SCOPE OF THE APPEAL. THAT JUDGMENT HOLD S THAT THE POSITION OF AN APPEAL UNDER SECTION 33 OF THE INCOME-TAX ACT AND AN APPEAL UNDER THE CODE OF CIVI L PROCEDURE IS IDENTICAL. A FULL BENCH OF THE MADRAS HIGH COURT HAS IN VENKATA RAO V. SATYANARAYANAMURTHY (IL R 1944 MAD 147) HELD THAT IT WAS OPEN TO A RESPONDENT IN APPEAL WHO HAD NOT FILED CROSS-OBJECTION WITH REGAR D TO THE PORTION OF THE DECREE WHICH HAD GONE AGAINST HI M TO URGE IN OPPOSITION TO THE APPEAL OF THE PLAINTIFF A CONTENTION WHICH IF ACCEPTED BY THE TRIAL COURT WOU LD HAVE NECESSITATED THE TOTAL DISMISSAL OF THE SUIT, BUT THE DECREE IN SO FAR AS IT WAS AGAINST HIM WOULD STAND. THE JUDGMENT OF THE TRIBUNAL IN OUR CASE CLEARLY SHOWS THAT, ALTHOUGH THE ASSESSEE WANTED TO RAISE A NEW POINT A S A GROUND OF DEFENCE IN THE APPEAL, HE SPECIFICALLY ST ATED THAT HE WANTED TO RELY UPON IT ONLY FOR THE PURPOSE OF HAVING THE APPEAL BY THE DEPARTMENT FOR ENHANCEMENT IN INCOME-TAX DISMISSED. BUT EVEN IF THE ASSESSEE HAD NOT MADE SUCH A STATEMENT, THE ABOVE JUDGMENT SHOWS THA T THE ASSESSEE WOULD BE ENTITLED TO RAISE A NEW GROUN D, PROVIDED IT IS A GROUND OF LAW AND DOES NOT NECESSI TATE ANY OTHER EVIDENCE TO BE RECORDED, THE NATURE OF WH ICH WOULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF, B UT MAY ALSO AFFECT THE VALIDITY OF THE ENTIRE ASSESSMENT PROCEEDINGS. IF THE GROUND SUCCEEDS, THE ONLY RESUL T WOULD BE THAT THE APPEAL WOULD FAIL. THE ACCEPTANCE OF THE GROUND WOULD SHOW THAT THE ENTIRE ASSESSMENT PROCEEDINGS WERE INVALID, BUT YET THE TRIBUNAL WHIC H HEARS THAT APPEAL WOULD HAVE NO POWER TO DISTURB OR TO SET ASIDE THE ORDER IN FAVOUR OF THE APPELLANT AGAI NST WHICH THE APPEAL HAS BEEN FILED. THE GROUND WOULD SERVE ONLY AS A WEAPON OF DEFENCE AGAINST THE APPEA L. IF THE RESPONDENT HAS NOT HIMSELF TAKEN ANY PROCEEDING S TO CHALLENGE THE ORDER IN APPEAL, THE TRIBUNAL CANNOT SET ASIDE THE ORDER APPEALED AGAINST. THAT ORDER WOULD STAND AND WOULD HAVE FULL EFFECT IN SO FAR AS IT IS AGAINST THE RESPONDENT. THE TRIBUNAL REFUSED TO ALLOW THE ASSESSEE TO TAKE UP THIS GROUND UNDER AN INCORRECT IMPRESSION OF LAW THAT IF THE POINT WAS ALLOWED TO BE URGED AND SUCCEEDED, THE TRIBUNAL WOULD HAVE NOT ON LY TO DISMISS THE APPEAL, BUT ALSO TO SET ASIDE THE EN TIRE ASSESSMENT. THE POINT WOULD HAVE SERVED AS A WEAPON OF DEFENCE AGAINST THE APPEAL, BUT IT COULD NOT BE MADE INTO A WEAPON OF ATTACK AGAINST THE ORDER IN SO FAR AS IT WAS AGAINST ASSESSEE. 17. THE HON'BLE BOMBAY HIGH COURT IN COMMISSIONER OF IN COME- TAX VS. HAZARIMAL NAGJI & CO. (46 ITR 1168 BOM), AF TER CONSIDERING THE RELEVANT SECTIONS 0F THE INCOME-TAX ACT AND THE RELEVANT RULES MADE THEREUNDER, HELD THAT: MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 13 OF 18 THE POWERS OF THE APPELLATE TRIBUNAL ARE SIMILAR TO THE POWERS OF THE APPELLATE COURT UNDER THE CIVIL PROCE DURE CODE. IN SO FAR AS A RESPONDENT ONLY WANTS TO MAINT AIN THE DECREE OF THE LOWER COURT WHICH IS IN HIS FAVOU R, HE IS ENTITLED TO SUPPORT IT ON FRESH GROUNDS IF HE CAN D O SO, AND THE APPELLATE COURT ALSO WILL HAVE JURISDICTION TO PERMIT HIM TO DO SO, PROVIDED THAT THE FRESH GROUND S WHICH HE WANTS TO URGE DO NOT REQUIRE A FURTHER INVESTIGATION INTO FACTS WHICH ARE NOT ALREADY ON R ECORD AND ARE NOT BASED ON FACTS WHICH WERE NEITHER ALLEG ED NOR ADMITTED NOR PROVED AND WHICH THE OTHER SIDE WA S NEVER CALLED UPON TO MEET IN THE LOWER COURT. 18. THE HON'BLE HIGH COURT FURTHER CONSIDERED AS UNDER: IN MOTOR UNION INSURANCE CO. LTD. VS. COMMISSIONER OF INCOME TAX (13 ITR 272) IT WAS HELD: THE WORD THE REON USED IN SECTION 33(4) ONLY MEANS 'ON THE APPEAL', W HICH MUST MEAN ON THE GROUNDS RAISED IN THE APPEAL. THE SUB-SECTION ONLY GIVES POWER TO THE APPELLATE TRIBU NAL TO GIVE ITS DECISION AND PASS ORDERS IN RESPECT OF ALL GROUNDS URGED (WHICH MUST BE ON BEHALF OF THE APPELLANT) IN RESPECT OF THE DECISION APPEALED AGAI NST. IN DECIDING THOSE GROUNDS IT CAN PASS APPROPRIATE ORDE RS. BUT, IT IS NOT OPEN TO THE TRIBUNAL ITSELF TO RAISE A GROUND OR PERMIT THE PARTY, WHO HAS NOT APPEALED, TO RAISE A GROUND, WHICH WILL WORK ADVERSELY TO THE APPELLANT. THE WORDS OF THE SECTION ARE NOT WIDE ENOUGH TO INCLUDE A POWER OF ENHANCEMENT, WITHOUT AN APPEAL BY THE COMMISSIONER. 'IN THAT CASE, THE INCOME-TAX AUTHORITIES HAD HELD THAT THE ASSESSEE COMPANY, WHICH WAS A NON-RESIDENT COMPANY, HAD INVESTED INDIAN MONEY IN THE UNITED KINGDOM, AND IT WAS, THEREFORE, LIABLE TO BE TAXED UNDER SECTION 42(1) O F THE INDIAN INCOME-TAX ACT. THE INCOME-TAX OFFICER COMPUTED THE AMOUNT OF INTEREST WHICH WAS HELD TO HAVE BEEN EARNED BY THE COMPANY OUT OF INDIAN PRIMA BY THE APPLICATION OF RULE 6 OF THE SCHEDULE. FROM THE ORDER PASSED BY THE INCOME-TAX OFFICER, THE ASSESSEE COMPANY HAD APPEALED TO THE APPELLATE ASSISTANT COMMISSIONER, AND, ON THE DISMISSAL OF THE APPEAL BY THE APPELLATE ASSISTANT COMMISSIONER, HAD TAKEN A SECOND APPEAL TO THE TRIBUNAL. IN THIS APPEAL, THE TRIBUNAL TOOK THE VIE W THAT IN ARRIVING AT THE INCOME IN THE SHAPE OF THE INTEREST, THE INCOME-TAX OFFICER OUGHT NOT TO HAVE PROCEEDED UNDER RULE 6 OF THE SCHEDULE, AND THAT RULE 8 WAS THE PROPER RULE TO BE APPLIED. THE RESULT OF THE VIEW TAKEN BY THE TRIBUNAL WAS THAT THE INTEREST ITEM WAS INCREASED TO A LARGER AMOUNT THAN THE AMOUNT AT WHICH IT WAS DETERMINED BY THE MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 14 OF 18 INCOME-TAX AUTHORITIES. NOW, IT MUST BE REMEMBERED THAT THE DEPARTMENT HAD NOT APPEALED FROM THE DECISION, NOR HAD IT FILED ANY CROSS- OBJECTIONS ASKING FOR COMPUTATION UNDER RULE 8. THE EFFECT OF APPLICATION OF RULE 8 WAS TO MODIFY THE DECISION OF THE INCOME-TAX AUTHORITIES NOT IN FAVOU R OF THE APPELLANT WHO HAD GONE TO THE TRIBUNAL, BUT IN FAVOUR OF THE RESPONDENT WHO HAD NEITHER APPEALED NOR CROSS-OBJECTED. IT WAS, THEREFORE, A CLEAR CASE WHERE THE FRESH POINT ENTERTAINED BY THE TRIBUNAL WAS ONE WHICH AFFECTED THE APPELLANT ADVERSELY. MR. JOSHI ARGUES THAT EVEN IN THE PRESENT CASE THE APPELLANT IS BEING AFFECTED ADVERSELY INASMUCH AS THE ITEM IS DEDUCTED FROM ASSESSMENT ON A GROUND NOT TAKEN BY THE ASSESSEE. IF THE ASSESSEE WERE TO BE CONFINED ONLY TO SUCH GROUNDS AS IT HAD TAKEN BEFORE THE INCOME-TAX AUTHORITIES, THE TAX COULD NOT HAVE BEEN AVOIDED. I T IS ONLY BECAUSE OF THE NEW GROUND URGED THAT THE TAX IS BEING AVOIDED AND, THEREFORE, THE APPELLANT IS BEING AFFECTED ADVERSELY. IN OUR OPINION, THE SUBMISSION MADE BY MR. JOSHI IS NOT A CORRECT ONE. THE DISPUTE BEFORE THE INCOME-TAX OFFICER WAS WHETHER THE AMOUNT OF RS. 90, 000 WAS SUBJECT TO TAX. THE INCOME-TAX OFFICER HAD HELD THAT IT WAS SUBJECT TO TAX AND HAD ADDED IT TO THE INCOME. THE APPELLATE ASSISTANT COMMISSIONER HAD DELETED IT. THE DISPUTE BEFORE THE TRIBUNAL WAS WHETHER IT SHOULD BE TAXED OR NOT AND THE RESPONDENT- ASSESSEE WAS SUPPORTING THE DECISION OF THE APPELLATE ASSISTANT COMMISSIONER THAT IT WAS NOT SUBJECT TO TAX. WHETHER THE GROUND THAT IT WAS URGING IN SUPPORT OF THE DECISION OF THE APPELLATE ASSISTANT COMMISSIONER WAS THE ONE ON WHICH THE APPELLATE ASSISTANT COMMISSIONER HAD RELIED OR SOME OTHER GROUND DID NOT MAKE ANY DIFFERENCE. THE APPELLANT WAS NOT BEING AFFECTED ADVERSELY IN THE SENSE THAT THE PERMITTING OF THE GROUND TO BE RAISED BY THE RESPONDENT WAS TO AFFECT THE DECISION OF THE LOWER AUTHORITIES WHICH WAS AGAINST THE APPELLANT TO A FURTHER DETRIMENT OF THE APPELLANT AS IN THE CASE REFERRED TO BY MR. JOSHI. IN OUR OPINION, WHAT IS MEANT BY THE OBSERVATION THAT THE RESPONDENT WILL NOT BE PERMITTED TO RAISE A GROUND WHICH WILL WORK ADVERSELY TO THE APPELLANT IS THAT THE RESPONDENT WILL NOT BE ENTITLED TO RAISE A GROUND WHICH HAVE CAN ONLY RAISE PROVIDED HE HAS CROSS-APPEALED OR CROSS-OBJECTED. WE MAY REFER, IN THIS CONNECTION, THE FOLLOWING OBSERVATIONS WHICH APPEAR IN THE DECISION, AT PAGE 282 OF THE REPORT MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 15 OF 18 ''APART FROM STATUTE, IT IS ELEMENTARY THAT IF A PARTY APPEALS, HE IS THE PARTY WHO COMES BEFORE THE APPELLATE TRIBUNAL TO REDRESS A GRIEVANCE ALLEGED BY HIM. IF THE OTHER SIDE HAS ANY GRIEVANCE, HE HAS A RIGHT TO FILE A CROSS-APPEAL OR CROSS-OBJECTIONS. BUT IF NO SUCH THING IS DONE, THE OTHER PARTY, IN LAW, IS DEEMED TO BE SATISFIED WITH THE DECISION. HE IS, OF COURSE, ENTITLED TO SUPPORT THE JUDGMENT OF THE FIR ST OFFICER ON ANY GROUND OPEN TO HIM, BUT HE IS NOT ENTITLED TO RAISE A GROUND SO AS TO WORK ADVERSELY TO THE APPELLANT AND IN HIS FAVOUR. 19. THE PRINCIPLES THAT EMERGE OUT OF THE ABOVE JUDGMEN TS CAN BE SUMMARISED AS UNDER: A) THE POWERS OF THE APPELLATE TRIBUNAL ARE SIMILAR TO THE POWERS OF AN APPELLATE COURT UNDER THE CIVIL PROCED URE CODE. B) THE PROVISIONS OF RULES 27 OF THE INCOME-TAX (APPEL LATE TRIBUNAL) RULES, 1963 RECOGNIZES THE RIGHT OF THE RESPONDENT, NOTWITHSTANDING THAT HE MAY NOT HAVE APPEALED AGAINST SUCH ORDER OR ANY PART THEREOF TO AGITATE AND TO BE HEARD IN THE MATTER. C) THE RESPONDENT IN AN APPEAL IS UNDOUBTEDLY ENTITLED TO SUPPORT THE ORDER WHICH IS IN HIS FAVOUR ON ANY GRO UNDS WHICH ARE AVAILABLE TO HIM, EVEN THOUGH THE DECISIO N OF THE LOWER AUTHORITY IN HIS FAVOUR MAY NOT HAVE BEEN BASED ON THOSE GROUNDS. D) IT WAS OPEN TO A RESPONDENT IN APPEAL WHO HAD NOT F ILED CROSS OBJECTION WITH REGARD TO THE PORTION OF THE O RDER WHICH HAD GONE AGAINST HIM TO URGE IN OPPOSITION TO THE APPEAL A CONTENTION WHICH IF ACCEPTED BY THE COURT WOULD HAVE NECESSITATED THE TOTAL DISMISSAL OF THE APPEAL , BUT THE ORDER IN SO FAR AS IT WAS AGAINST HIM WOULD STA ND. THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY GROUND DE CIDED AGAINST HIM- MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 16 OF 18 (I) THE RESPONDENT WOULD BE ENTITLED TO RAISE A NEW GROUND, PROVIDED IT IS A GROUND OF LAW AND DOES NOT NECESSITATE ANY OTHER EVIDENCE TO BE RECORDED, THE NATURE OF WHICH WOULD NOT ONLY BE A DEFENCE TO THE APPEAL ITSELF, BUT MAY ALSO AFFECT THE VALIDITY OF THE ENTIRE ASSESSMENT PROCEEDINGS. IF THE GROUND SUCCEEDS, THE ONLY RESULT WOULD BE THAT THE APPEAL WOULD FAIL. II) THE RESPONDENT IN A CASE CAN SUPPORT THE ORD ER APPEALED AGAINST BY TAKING ANY PLEA INCLUDING THE PLEA THAT THE ORDER IS BAD IN LAW. IF SUCH A PLEA SUCCEEDS, IT WILL NOT RENDER THE ORDER APPEALED AGAINST AS NUGATORY, BUT THE EFFECT WILL BE THAT THE ORDER SHALL STAND AS IT IS. IN OTHER WORDS, A DEFENSIVE PLEA CAN BE TAKEN BUT SUCH A PLEA CANNOT BE TAKEN TO OFFEND THE ORDER APPEALED AGAINST. III) THE ACCEPTANCE OF THE GROUND WOULD SHOW THA T THE ENTIRE ASSESSMENT PROCEEDINGS WERE INVALID, BUT YET THE TRIBUNAL WHICH HEARS THE APPEAL WOULD HAVE NO POWER TO DISTURB OR TO SET ASIDE THE ORDER IN FAVOUR OF THE APPELLANT. THAT ORDER WOULD STAND AND WOULD HAVE FULL EFFECT IN SO FAR AS IT IS AGAINST THE RESPONDENT. V) THE DEPARTMENT FILES AN APPEAL FOR AN INCREASE IN THE ASSESSED INCOME, THE SUBJECT-MATTER OF THE APPEAL IS THE INCREASE CLAIMED BY THE DEPARTMENT AND THE RESPONDENT CAN URGE ANY GROUND OF DEFENCE EVEN THOUGH IT MIGHT HAVE BEEN REJECTED BY THE APPELLATE COMMISSIONER FOR SHOWING THAT THERE SHOULD BE NO INCREASE. VI) THE RESPONDENT IS NOT LIABLE TO BE ASSESSED AT MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 17 OF 18 ALL IS A GROUND FOR SHOWING THAT THERE SHOULD BE NO FURTHER ASSESSMENT AND THE DEPARTMENTS APPEAL CAN THEREFORE BE RESISTED ON THAT GROUND AND THAT THERE IS NO INCONGRUITY IN MAINTAINING THE ASSESSMENT ORDER PASSED AGAINST ASSESSEE AND YET REFUSING TO INCREASE IT ON THE GROUND THAT HE WAS NOT LIABLE TO BE ASSESSED AT ALL. VII) IF THE TRIBUNAL ACCEPTS THE GROUND OF DEFENCE THAT ASSESSEE WAS NOT LIABLE TO BE ASSESSED, IT CAN ONLY REFUSE TO INCREASE THE ASSESSED INCOME AS ONLY SUCH AN ORDER WOULD BE WITHIN THE SCOPE OF THE APPEAL FILED BY THE DEPARTMENT AND ANY OTHER ORDER SUCH AS ANNULLING THE ASSESSMENT WOULD BE OUTSIDE THE SCOPE OF THE APPEAL. THE GROUND WOULD SERVE ONLY AS A WEAPON OF DEFENCE AGAINST THE APPEAL. IF THE RESPONDENT HAS NOT HIMSELF TAKEN ANY PROCEEDINGS TO CHALLENGE THE ORDER IN APPEAL, THE TRIBUNAL CANNOT SET ASIDE THE ORDER APPEALED AGAINST. THAT ORDER WOULD STAND AND WOULD HAVE FULL EFFECT IN SO FAR AS IT IS AGAINST THE RESPONDENT. 20. APPLYING THE ABOVE STATED PRINCIPLES, THE PLEA OF T HE RESPONDENT AGAINST THAT PORTION OF THE ORDER WHICH WAS HELD AGAINST HIM AND WHICH WAS NOT CHALLENGED EITHER BY WAY OF APPEAL OR CROSS OBJECTION CANNOT BE DISTURBED BY THE GROUN D, RAISED UNDER RULE 27. THEREFORE, EVEN THOUGH ASSESSEE CONTESTED THE CIT (A)S ORDER BEFORE US BY RELYING ON THE DECISION OF THE C OORDINATE BENCH IN FAVOUR OF IT, SINCE THERE IS NO PRIMARY CHALLENG E TO THE FINDINGS OF THE CIT (A) THAT THE SPECULATION LOSS OF EARLIER YE ARS CANNOT BE SET OFF TO THE BUSINESS INCOME OF AY 2006-07, THE TRIBU NAL COULD NOT TRAVERSE BEYOND ITS JURISDICTION TO ALLOW ASSESSEE S CONTENTIONS. CONSIDERING THIS LIMITATION, THE BENCH THOUGHT IT F IT NOT TO REFER TO THE SPECIAL BENCH AND THAT WAS THE SAME PLEA MADE B Y ASSESSEE IN WRITING WHEN THE APPEAL WAS BEING HEARD SPECIFICALL Y ON THE ISSUE. MA NO.282 OF 2012 SUNDERJI LALJI BHEDA HUF MUMBAI. PAGE 18 OF 18 THEREFORE, WE DO NOT SEE ANY REASON TO RECALL THE O RDER AS PRAYED AS THE CONTENTIONS WERE DULY RECORDED, THE FACTS WERE DULY PLACED ON RECORD AND DECISION SO ARRIVED WAS BASED ON THE STA TEMENTS AND SUBMISSIONS MADE AND WITHIN LIMITATION OF JURISDICT ION BY THE ITAT IN DECIDING THE ISSUE. MOREOVER HAVING PASSED AN OR DER AFTER ELABORATELY DISCUSSING THE ISSUE, THE ORDER CANNOT BE REVIEWED OR RECALLED IN THE M.A. FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CO MMISSIONER OF INCOME-TAX VS. RAMESH ELECTRIC AND TRADING CO. (BO M) 203 ITR 497, AS THE TRIBUNAL DOES NOT HAVE ANY POWER TO REV IEW AND THEREFORE, THE CONTENTIONS RAISED BY ASSESSEE IN MA ARE TO BE REJECTED. 21. IN THE RESULT M.A. FILED BY ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/- SD/- (AMIT SHUKLA (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST OCTOBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI