URJA INVESTMENT P. LTD, MUMBAI V. DCIT 4(2)(1), MUMBAI

MA 49/MUM/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9616 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-01-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 30-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 201; 254(2); 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , F BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, VP & SHRI M.BALAGANESH, AM MA NO.49/MUM/2020 (ARISING OUT OF ITA NO. 3286 /MUM/ 20 17 ( ASSESSMENT YEAR : 201 2 - 13 ) M/S. URJA INVESTMENTS PVT. LTD., GROUND FLOOR, KHATAU BUILDING 8/10, ALKESH DINESH MODY MARG, FORT, MUMBAI 400 001 VS. THE DY. COMMISSIONER OF INCOME TAX CIRCLE - 4(2)(1), AAYKAR BHAVAN M.K.ROAD, MUMBAI - 400020 PAN/GIR NO. AAACU0637N (APPELLANT ) .. (RESPONDENT ) ASSESSEE B Y SHRI KETAN VAJANI REVENUE BY SHRI SUSHILKUMAR MISHRA DATE OF HEARING 04 / 12/ 2020 DATE OF PRONOUNCEMENT 05 / 01 /202 1 / O R D E R PER M. BALAGANESH (A.M) : BY VIRTUE OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE SEEKS TO RE CALL THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.3286/MUM/2017 DATED 26/07/2019 FOR A.Y.2012 - 13 ON THE FOLLOWING GROUNDS POINTING OUT THE FOLLOWING MISTAKES: - IN PARAGRAPH 3.6.4 OF THE ORDER, THE HON. BENCH HAS DIRECTED THE LEARNED ASSESSING OFFICER FOR ALLOCATION OF COMPOSITE EXPENSES TOWARDS THE SPECULATION ACTIVITIES OF THE APPELLANT. HOWEVER, THE HON. BENCH HAS INADVERTENTLY MISSED M A NO . 49/MUM/2020 M/S. URJA INVESTMENTS PVT. LTD., 2 OUT A CONTENTION MADE DURING THE HEARING THAT UNDER THE STATUTE THERE IS NO PROVISION TO SUCH EFFECT. THE AUTHORIZED REPR ESENTATIVE HAD ALSO REFERRED TO THE RATIO OF THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF RAJASTHAN STATE WAREHOUSING CORPORATION VS. CIT (2000) 242 ITR 450 (SC) IN THIS CONTEXT. THE HON. BENCH HAS ALSO MISSED OUT ONE MORE CONTENTION OF THE AUTHO RIZED REPRESENTATIVE THAT THE SCOPE OF EXPLANATION TO SECTION 73 IS CONFINED TO THE BUSINESS CONSISTING OF ONLY PURCHASE AND SALE OF SHARES OF OTHER COMPANIES AND NOT BEYOND ACTIVITIES OF PURCHASE AND SALE OF SHARES. ACCORDINGLY, THE EXPENSES CANNOT BE SUB JECT MATTER OF EXPLANATION TO SECTION 73 OF THE ACT. 3. WITHOUT PREJUDICE TO ANY OF THE ABOVE CONTENTIONS, THE HON. BENCH HAS ERRED IN NOT APPRECIATING THE FACT THAT THE AMOUNT OF 1,71,39,837/ - CONSISTS OF DEPRECIATION OF RS. 30,51,937/ - , WHICH IS AN ALLO WANCE AND NOT EXPENSE AND HENCE THE SAME CANNOT BE SUBJECT MATTER OF APPORTIONMENT IN ANY CASE. 2. AT THE OUTSET, WE FIND THAT THIS TRIBUNAL HAD ACCEPTED THE FACT THAT THE ASSESSEE HAD CARRIED ON COMPOSITE BUSINESS OF DERIVATIVE TRADING AND SHARE TRADIN G. THE EXPENSES HAVE BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR ALL THE BUSINESS PUT TOGETHER BUT IT IS A FACT THAT ASSESSEE HAD CARRIED OUT BOTH SPECULATION ACTIVITY AS WELL AS NON - SPECULATION ACTIVITY, THE PROFITABILITY OF BOTH AND T AXABILITY THEREOF ARE GOVERNED BY DISTINCT PROVISIONS UNDER THE ACT. HENCE, IT IS REQUIRED TO DETERMINE THE PROFITABILITY OF SPECULATION ACTIVITY SEPARATELY AND NON - SPECULATION ACTIVITY SEPARATELY. ADMITTEDLY, THIS WAS NOT DONE BY THE ASSESSEE AT ALL WHILE FILING THE RETURN OF INCOME. THIS WAS SOUGHT TO BE DONE BY THE ASSESSING OFFICER IN A DIFFERENT FASHION WHICH ADMITTEDLY RESULT ED IN ABSURDITY, AND THE SAME WAS RECTIFIED BY THIS TRIBUNAL BY MAKING A RATIONAL APPORTIONMENT OF EXPENDITURE BETWEEN SPECULATI ON AND NON - SPECULATION ACTIVITY . M ERELY BECAUSE THE ASSESSEE HAS MAINTAINED A CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR ALL THE ACTIVIT IES PUT TOGETHER THEREBY MAKING THE ASSESSING OFFICER NOT TO DEDUCE THE PROFITABILITY OF SPECULATION ACTIVITY AND NON - SPEC ULATION ACTIVITY INDEPENDENTLY, THE SAME WOULD NOT BECOME SACROSANCT. HENCE, THE DECISION RELIED UPON BY THE LD. M A NO . 49/MUM/2020 M/S. URJA INVESTMENTS PVT. LTD., 3 AR AT THE TIME OF HEARING BEFORE US ON HONBLE APEX COURT IN THE CASE OF RAJASTHAN STATE WAREHOUSING CORPORATION REPORTED IN 242 ITR 450 CANNOT BE MADE APPLICABLE AT ALL IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. HENCE, THE GROUND N O .1 RAISED IN MISCELLANEOUS APPLICATION DESERVES TO BE DISMISSED. 3. WE FIND THAT THE BUSINESS CARRIED OUT BY THE ASSESSEE COMPRISE OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES WAS CONSIDERED AS A SPECULATIVE TRANSACTION AND THE SAME FALL S WITHIN THE EX CEPTION PROVIDED IN EXPLANATION TO SECTION 73 ONLY WITH EFFECT FROM 01/04/2015 WHICH HAS BEEN HELD TO BE PROSPECTIVE IN OPERATION BY THE HONBLE SUPREME C OURT IN THE CASE OF SNOWTEX INVESTMENT LTD., VS. PCIT REPORTED IN 265 TAXMAN 3. HENCE, UPTO A.Y.2015 - 16, THE ACTIVITY CARRIED OUT BY THE ASSESSEE ON PURCHASE AND SALE OF SHARES COMPRISING OF BOTH SPECULATIVE AND NON - SPECULATIVE NATURE WOULD HAVE TO BE DETE RMINED INDEPENDENTLY AND HENCE, THE PROFITABILITY OF EACH CLAIM NEEDS TO BE SEPARATELY WORKED OUT WHICH HAS BEEN DONE BY THIS TRIBUNAL IN FAIR AND RATIONAL MANNER. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION DESERVE S TO BE DISMISSED. 4. WE FIND THAT THE LD. AR HAD MADE AN ALTERNATIVE PLEA ON WITHOUT PREJUDICE BASIS THAT EVEN IF APPORTIONMENT OF EXPENDITURE NEED TO BE CARRIED OUT, DEPRECIATION OF RS.30,51,937/ - SHALL NOT FORM PART OF SAID APPORTIONMENT AS SAME IS NOT AN EXPENDITURE BUT ONLY AN ALLOWANCE. IN THIS REGARD, WE FIND THAT DEPRECIATION IS GRANTED TO THE ASSESSEE FOR USAGE OF THE ASSETS BY THE ASSESSEE FOR ITS BUSINESS PURPOSES. THERE IS NO EVIDENCE FURNISHED BY THE ASSESSEE AS TO WHAT PART OF THE ASSETS ON W HICH DEPRECIATION WAS CLAIMED WERE USED FOR SPECULATION ACTIVITY AND NON - SPECULATION ACTIVITY. ULTIMATELY, THIS TRIBUNAL HAD ONLY TAKEN THE TOTAL M A NO . 49/MUM/2020 M/S. URJA INVESTMENTS PVT. LTD., 4 EXPENDITURE DE BITED IN THE P & L ACCOUNT INCLUDING THE DEPRECIATION FOR THE PURPOSE OF APPORTIONMENT OF EXPENS ES ATTRIBUTABLE TO SPECULATION AND NON - SPECULATION ACTIVITY. IT IS NOT THE CASE OF THE ASSESSEE THAT THE DEPRECIATION CLAIMED ON ASSETS WERE NEVER USED FOR SPECULATION ACTIVITY CARRIED OUT BY THE ASSESSEE. ACCORDINGLY, THE ARGUMENT THAT DEPRECIATION IS ONL Y AN ALLOWANCE AND NOT AN EXPENDITURE HOLDS NO WATER AND DESERVES TO BE DISMISSED IN THE FACTS OF THE INSTANT CASE. HENCE, ALTERNATIVE GROUND NO.3 RAISED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION DESERVES TO BE DISMISSED. 5. IN ANY EVENT , THE MIST AKE S POINTED OUT BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION DOES NOT FALL UNDER THE AMBIT OF MISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF SECTION 254(2) OF THE ACT. ALL THE ISSUES POINTED OUT THEREIN ARE DEBATABLE ISSUE S AND WOULD ONLY AMOUNT T O REVIEW OF THE DECISION ALREADY TAKEN BY THIS TRIBUNAL, WHICH IS NOT PERMISSIBLE UNDER PROCEEDINGS U/S.254(2) OF THE ACT. 6. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 05 / 01 /202 1 BY WAY OF PROPER ME NTIONING IN THE NOTICE BOARD. SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 05 / 01 / 202 1 KARUNA , SR.PS M A NO . 49/MUM/2020 M/S. URJA INVESTMENTS PVT. LTD., 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//