Adani Agro Pvt. Ltd.,, Ahmedabad v. The CIT., Ahmedabad-1,, Ahmedabad

ITA 1141/AHD/2011 | 2006-2007
Pronouncement Date: 21-11-2011 | Result: Allowed

Appeal Details

RSA Number 114120514 RSA 2011
Assessee PAN AABCA3183G
Bench Ahmedabad
Appeal Number ITA 1141/AHD/2011
Duration Of Justice 7 month(s) 2 day(s)
Appellant Adani Agro Pvt. Ltd.,, Ahmedabad
Respondent The CIT., Ahmedabad-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 21-11-2011
Date Of Final Hearing 20-09-2011
Next Hearing Date 20-09-2011
Assessment Year 2006-2007
Appeal Filed On 18-04-2011
Judgment Text
. .. . . .. . ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI J.M. & HONBLE SHRI A.MOHAN ALANKAMONY A.M.) ! ! ! !. ITA NO. 1141/AHD./2011 : # &'- 2006-2007 ADANI AGRO PVT. LTD. AHMEDABAD VS- DCIT CIRCLE-1 AHMEDABAD (PAN : AABCA 3183G) (*+ /APPELLANT) ( *+ /RESPONDENT ) *+ - . / APPELLANT BY : SHRI S.N.SOPARKAR *+ - . / RESPONDENT BY : SHRI S.K.GUPTA CIT D.R. /#0 - 1$ / DATE OF HEARING : 20/09/2011 2'& - 1$ / DATE OF PRONOUNCEMENT : 21/11/2011 3 3 3 3 / ORDER PER SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX AHMEDABAD-I IN APPEAL N O.CIT/ABD-1/263/13/2010- 11 DATED 28.03.2011 FOR THE ASSESSMENT YEAR 2006-20 07 PASSED UNDER SECTION 263 R.W.S. 143(3) OF THE I.T. ACT 1961. 2. THE ASSESSEE COMPANY IN THE GROUNDS OF APPEAL HAD OBJECTED TO THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263 OF TH E ACT IN AN ILLUSTRATIVE AND NARRATIVE MANNER. IN THIS CONNECTION THE ASSESSEES SPECIFIC ATTENTION IS INVITED TO THE RULE 8 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES 1963 WHE REIN IT HAS BEEN PRESCRIBED UNDER THE CAPTION CONTENTS OF MEMORANDUM OF APPEAL THAT 8. EVERY MEMORANDUM OF APPEAL SHALL BE WRITTEN IN ENGLISH AND SHALL SET FO RTH CONCISELY AND UNDER DISTINCT HEADS THE GROUNDS OF APPEAL WITHOUT ANY ARGUMENT O R NARRATIVE; AND SUCH GROUNDS SHALL BE NUMBERED CONSECUTIVELY. ITA NO. 1141-AHD-11 2 2.1 TURNING TO THE ISSUE ON HAND THE GRIEVANCE OF THE ASSESSEE TO BE PRECISE IS THAT THE IMPUGNED ORDER OF THE LD. CIT PASSED UNDE R SECTION 263 OF THE ACT IS VOID AND DESERVES TO BE ANNULLED. 3. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF TRADING IN AGRO PRODUCTS DEALING IN SHARES DEBENTURES SECURITIES COMMODITIES ETC. DURING THE YEAR UNDER CONSIDERATION FURNISHED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.NIL WHICH WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT . SUBSEQUENTLY THE ASSESSMENT WAS CONCLUDED U/S 143(3) OF THE ACT BY MAKING DISALLOW ANCE U/S 14A OF THE ACT. 3.1. ON SUO MOTU ACTION UNDER SECTION 263 OF THE ACT THE LD. CIT ON VERIFICATION OF RECORDS OF THE ASSESSEE OBSERVED T HAT THOUGH THE ASSESSEE HAD EARNED A PROFIT OF RS.9 54 15 842/- FROM SPECULATION BUSINES S FOR THE ASSESSMENT YEAR UNDER DISPUTE WHICH WAS WRONGLY ADJUSTED TOWARDS THE BROU GHT FORWARD SPECULATION LOSS OF RS.89 70 10 352/- PERTAINING TO THE ASSESSMENT YEA R 2001-02 AND THE BALANCE LOSS WAS CARRIED FORWARD. HOWEVER IN VIEW OF THE AMENDED P ROVISIONS OF SECTION 73(4) OF THE ACT NO LOSS OF SPECULATION BUSINESS SHALL BE CARRI ED FORWARD UNDER SECTION 73 OF THE ACT FOR MORE THAN FOUR ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR IN WHICH THE LOSS WAS FIRST COMPUTED. IN CASE OF T HE ASSESSEE THE LOSS WAS INCURRED IN THE ASSESSMENT YEAR 2001-02 AND THE PERIOD OF FOUR YEARS HAD ALREADY BEEN EXPIRED IN THE YEAR 2005-06. THEREFORE THE LOSS OF RS.89.70 CRORES FOR THE ASSESSMENT YEAR 2001- 02 WAS INELIGIBLE TO BE SET OFF AGAINST THE SPECULA TION PROFIT FOR THE ASSESSMENT YEAR 2006-07. IN VIEW OF THE ABOVE THE SET OFF OF LOSS ALLOWED FOR THE ASSESSMENT YEAR 2006-07 AMOUNTING TO RS.9.54 CRORES WAS WRONG AND L ED TO UNDER-ASSESSMENT OF INCOME OF THE SAME AMOUNT FOR THE ASSESSMENT YEAR U NDER CONSIDERATION. SINCE THE ELIGIBILITY PERIOD OF CARRY FORWARD OF SPECULATION LOSS INCURRED IN THE ASSESSMENT YEAR 2001-02 HAD ALREADY BEEN EXPIRED IN THE ASSESSMENT YEAR 2005-06 WRONG ALLOWING OF CARRY FORWARD OF BALANCE SPECULATION LOSS OF RS.80 15 94 510/- AS CLAIMED BY THE ASSESSEE BEYOND THE ASSESSMENT YEAR 2005-06 SHALL H AVE IMPACT ON FUTURE REVENUE LEADING TO SHORT LEVY OF TAX ETC. AND THAT THE AO HAD NEITHER CALLED FOR ANY DETAILS NOR EXAMINED THE ISSUE OF ELIGIBILITY OF SET OFF OF CAR RY FORWARD SPECULATION LOSS AS PER THE AMENDED PROVISIONS OF SECTION 73(4) OF THE ACT THE LD. CIT WAS OF THE VIEW THAT THE ITA NO. 1141-AHD-11 3 ASSESSMENT ORDER CONCLUDED U/S 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY THE ASSESSEE WAS REQUIRE D TO SHOW-CAUSE AS TO WHY AN APPROPRIATE ORDER U/S 263(1) OF THE ACT SHOULD NOT BE PASSED. 3.2. AFTER DUE CONSIDERATION OF THE ASSESSEES SUBM ISSIONS CITED WITH VARIOUS CASE LAWS AND ALSO FOR THE REASONS RECORDED IN HIS ORDER UNDER SECTION 263 OF THE ACT THE LD. CIT OBSERVED THE FOLLOWING: 5THE ASSESSEE WAS HAVING BROUGHT FORWARD SPECULAT ION LOSS PERTAINING TO AY 2001-02 WHICH THE AO HAS ALLOWED TO BE SET OF F TO THE EXTENT PROFIT AVAILABLE FOR THIS YEAR I.E. AY 2006-07. HOWEVER IN THE ASSESSEES CASE THE PERIOD OF FOUR YEARS AS PROVIDED IN THE AMENDED S.73(4) FOR SETTING OF THE BROUGHT FORWARD LOSS OF AY 2001-02 HAS ALREADY EXPIRED IN AY 2005- 06. LIKEWISE IN THE CASE OF SALE OF SHARES OF IND EPENDENT NEWS SERVICES PVT. LTD. AND ADANI WILMAR LTD. SINCE THESE COMPAN IES ARE NOT LISTED IN THE STOCK EXCHANGES THE HOLDING PERIOD FOR THEM TO QUA LIFY AS LONG TERM CAPITAL IS 3 YEARS. THEREFORE THE PROFIT EARNED OU T OF SALE OF THESE SHARES SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN AND NO T AS LTCG AS CLAIMED BY THE ASSESSEE. FROM THE ABOVE FACTS IT IS APPAR ENT THAT DURING THE ASSESSMENT PROCEEDINGS THE AO HAS NEITHER SOUGHT AS SESSEES EXPLANATION ON THESE ISSUES NOR HAS HE CALLED FOR ANY DETAILS T O VERIFY THE VERACITY OF ASSESSEES CLAIM. THE AO HAS ALLOWED THE CLAIM OF ASSESSEE WITHOUT PROPER INQUIRY AND VERIFICATION. IT IS SETTLED LEGAL ISSU E THAT IF THE AO HAS COMPLETED ANY ASSESSMENT WITHOUT MAKING PROPER INQU IRY/VERIFICATIONS THEN SUCH ORDER WILL ALWAYS BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. S.263 OF THE ACT EMPOWERS THE CIT TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THE I.T. ACT AND HE CONSIDERS THAT ANY ORDER PASSED BY THE ITO IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF REVENUE HE MAY AFTER COMPLYING WITH THE PRINCIPLES OF NATU RAL JUSTICE PASS SUCH ORDERS THEREON AS THE CIRCUMSTANCES OF THE CASE REQ UIRE INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 3.3 CITING VARIOUS CASE-LAWS AS RECORDED IN HIS ORDER THE LD. CIT HAD FURTHER OBSERVED: 7. IN VIEW OF THE ABOVE REFERRED FACTS AND LEGAL P OSITION IT IS HELD THAT THE ASSESSMENT ORDER U/S 143(3) DATED 31.12.2008 PASSED BY THE AO FOR THE AY 2006-07 IN THE CASE OF THE ASSESSEE IS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE INTEREST OF JUSTICE TH E ABOVE REFERRED ISSUE NEEDS TO BE SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDI CATION. ACCORDINGLY THE ABOVE REFERRED ASSESSMENT ORDER DT.31.12.2008 IS SE T ASIDE WITH DIRECTION THAT THE AO SHOULD VERIFY WHETHER THE ASSESSEE IS E LIGIBLE TO AVAIL SET OFF BROUGHT FORWARD SPECULATION LOSS PERTAINING TO THE AY 2001-02 FROM THE PROFIT EARNED THIS YEAR IN VIEW OF THE AMENDED PRO VISIONS OF SUB-SEC. (4) OF ITA NO. 1141-AHD-11 4 S.73 OF THE I.T. ACT 1961. FURTHER REGARDING THE ISSUE OF SALE OF SHARES AS PER PARA 5 TO BE TREATED AS STCG IS ALSO SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION AS THE DETAILS AND EXPLANATIONS SU BMITTED BY THE ASSESSEE DURING THE COURSE OF PROCEEDINGS U/S 263 OF THE ACT NOT ADJUDICATED BY THE AO. 4. AGGRIEVED THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING THE LD. A R HAD ARGUED THAT THE ASSESSMENT ORDER PASSED U/S 143(3) ON 31.12.08 WAS NOT ERRONEOUS FAR LESS PREJUDICIA L TO THE INTERESTS OF REVENUE IN AS MUCH AS IT ALLOWED SET OFF OF LOSS OF SPECULATION B USINESS PERTAINING TO AY 2001-02 TO THE EXTENT OF RS.9.54 CRORES THAT BEING THE CURREN T YEARS PROFIT FROM SPECULATION BUSINESS [SB] WHICH WAS THE ONLY ISSUE RAISED IN HI S NOTICE U/S 263. IT WAS FURTHER SUBMITTED THAT THE ASSESSMENT ORDER WAS NEITHER ERR ONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS ALLEGED IN AS MUCH AS IT ASSESSED THE ASSESSEES PROFIT FROM THE SALE OF SHARES OF THE TWO COMPANIES AS LTCG AFT ER CONSIDERATION OF INDEXATION OF COST INSTEAD OF AS STCG (WITHOUT INDEXATION OF COS T) AS THE OTHER ISSUE RAISED BY THE LD CIT. IT WAS ALSO ARGUED THAT THE RECORDINGS OF THE LD. CIT IN PARA 5 OF HIS IMPUGNED ORDER ITSELF CONCLUSIVELY SHOWS THAT EVEN AS THE RE LEVANT FACTS WERE ALREADY ON RECORD AND WERE ALSO UNDISPUTED AND FOR THAT REASON BOTH T HE ISSUES RAISED BY THE CIT REALLY RAISED PURE QUESTIONS OF LAW REQUIRING HIS OWN ADJU DICATION THAT HE HAD DECIDED TO SET ASIDE THE ASSESSMENT ORDER FOR RE-ADJUDICATION OF T HESE ISSUES BY THE AO WHICH CONCLUSIVELY SHOWED THAT EVEN AFTER CONDUCTING THE PROCEEDINGS U/S 263 DURING WHICH HE HAD CONSIDERED THOSE FACTS BUT FAILED TO ARRIV E AT THE CONCLUSION THAT THE ASSESSMENT ORDER WAS ERRONEOUS. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE CIT ASSUMED JURISDICTION U/S 263 OF THE ACT UNDER THE ERRONEOUS IMPRESSION THAT IT WAS A SETTLED LEGAL POSITION THAT IF THE AO HAD COMPLETED THE ASS ESSMENT WITHOUT MAKING PROPER ENQUIRY/VERIFICATION SUCH ORDER WILL ALWAYS BE ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE; THAT THE RULING OF THE SUPREM E COURT REPORTED IN 231 ITR 53 WAS NOT AN AUTHORITY ON ANY SUCH PROPOSITION AS HE HAD SUGGESTED AND FAR FROM IT IT ACTUALLY HELD TO THE EFFECT THAT THE CIT ACTING U/S 263 MAY PASS SUCH ORDERS AS THE CIRCUMSTANCES OF THE CASE REQUIRED INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTIN G A FRESH ASSESSMENT IF(BUT ONLY IF) HE CONSIDERED THAT THE ORDER IN QUESTION WAS ERRONE OUS AND PREJUDICIAL TO THE INTERESTS ITA NO. 1141-AHD-11 5 OF THE REVENUE; THAT THE CIT HAD FAILED TO ESTABLIS H THAT THE ASSESSMENT WAS MADE WITHOUT PROPER ENQUIRY/VERIFICATION OF THE ISSUES R AISED BY HIM; 4.1. THE LD. A R FURTHER ARGUED THAT THE CIT HAD GR OSSLY ERRED IN PROCEEDING ON THE BASIS OF ASSUMING JURISDICTION UNDER SECTION 263 TH AT THE AO HAD GRANTED SET OFF OF LOSS OF SPECULATION BUSINESS PERTAINING TO ASSESSMENT YE AR 2001-02 AGAINST THE CURRENT YEARS PROFIT OF RS.9.54 CRORES FROM SPECULATION BU SINESS WITHOUT MAKING PROPER VERIFICATION AND THAT THE CIT OUGHT TO HAVE APPRECI ATED THE FOLLOWING: (I) THAT IT WAS AN ADMITTED FACT BORNE OUT BY THE RECOR D WITH THE AO THAT THE APPELLANT HAD BEEN ASSESSED FOR A LOSS FROM SB THAT THIS LOSS HAD REMAINED UNABSORBED AND THEREFORE WAS AVAILABLE FOR SET OF AGAINST THE PROFIT OF SB OF EIGHT SUBSEQUENT AYS UP-TO THE AY 2009-10 HAVIN G BEEN FIRST DETERMINED IN AY 01-02; (II) THAT A PART OF THE AFORESAID LOSS FROM SB HAD BEEN ABSORBED DURING THE AYS 2002-03 TO 05-06 LEAVING UNABSORBED LOSS OF RS.89.7 CRORES AVAILABLE FOR BEING SET OFF IN THE PRESENT AY AND THUS THERE WA S NOTHING FOR THE AO TO CALL FOR OR FOR THE APPELLANT TO FURNISH SO THAT TH E CIT COULD HAVE ASSUMED JURISDICTION U/S 263 ON THE PREMISE THAT THE AO HAD NOT CALLED FOR ANY DETAILS WITH REGARD TO SB LOSS SO THAT IT COULD BE BRANDED TO HAVE BEEN GRANTED WITHOUT PROPER ENQUIRY; (III) THAT WITH REGARD TO THE REMAINED UNABSORBED SB LOSS OF RS.89.7 CRORES WHICH WAS AVAILABLE FOR SET OFF AGAINST THE PROFIT FROM T HE SB OF THE AY UNDER DISPUTE THE AO WAS TO DECIDE THE LEGAL ISSUE AS TO WHETHER THE SAID UNABSORBED LOSS COULD BE SET OFF IN THE PRESENT AY AFTER CONSIDERING THE SUB- SEC. (4) OF S.73 AS AMENDED W.E.F. 1.4.2006; RELIES ON CIT V. SHAH SADIQ AND SONS 166 ITR 10 2 (SC) (IV) WITH REGARD TO THE PROFIT FROM THE SALE OF SHARES O F THE TWO COMPANIES AS LTCG AFTER CONSIDERING INDEXATION OF COST IN STEAD OF ASSESSING IT AS STCG WITHOUT CONSIDERING INDEXATION OF COST THE CIT OUG HT TO HAVE APPRECIATED (A) THAT THE SHARES OF BOTH THE COMPANIES THOUGH NOT H ELD BY THE APPELLANT FOR MORE THAN 36 MONTHS (AS REQUIRED BY THE MAIN PR OVISION OF CLAUSE ITA NO. 1141-AHD-11 6 (42A) OF S.2) THE SAME WERE HELD BY THE APPELLANT FOR MORE THAN 12 MONTHS AS REQUIRED BY THE PROVISO TO THAT CLAUSE; A ND THUS IT WAS NOT OPEN TO THE CIT TO ASSUME JURISDICTION U/S 263 ON T HE GROUND THAT THE AO HAD NOT MADE PROPER ENQUIRY/VERIFICATION WHILE MAKI NG THE PRESENT ASSESSMENT ; (B) THAT THE PROVISO TO CLAUSE (42A) OF S.2 WAS AMENDED W.E.F. 1.4.1995 BY INSERTION THAT OR ANY OTHER SECURITY LISTED IN A R ECOGNIZED STOCK EXCHANGE IN INDIA OR A UNIT OF THE UNIT TRUST OF INDIA ESTAB LISHED UNDER THE UNIT TRUST OF INDIA ACT 1963 (52 OF 1963) OR A UNIT OF A MUTUAL FUND SPECIFIED UNDER CLAUSE (23D) OF SECTION 10 OR A ZER O COUPON BOND THE PROVISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF T HE WORDS THIRTY-SIX MONTHS THE WORDS TWELVE MONTHS HAD BEEN SUBSTITU TED. THAT IT WAS ONLY AXIOMATIC THAT AFTER THAT AMENDMEN T ANOTHER AMENDMENT WAS MADE W.E.F. 1.4.206 THE PROVISO CONT AINED THE FOLLOWING FIVE SEPARATE AND INDEPENDENT CATEGORIES OF CAPITAL ASSETS VIZ: (1) A SHARE HELD IN A COMPANY; (2) ANY OTHER SECURITY LISTED IN A RECOGNIZED STOCK EX CHANGE IN INDIA; (3) A UNIT OF UTI ESTABLISHED UNDER THE UTI ACT 1963; (4) A UNIT OF A MUTUAL FUND SPECIFIED UNDER CLAUSE (23D ) OF S.10; (5) A ZERO COUPON BOND THEREFORE IT WAS CLEAR THAT THE REQUIREMENT OF LIS TING IN A RECOGNIZED STOCK EXCHANGE IN INDIA APPLIED ONLY TO THE SECOND OF THE FIVE CATEGORIES REFERRED ABOVE AND NOT TO OTHER FOUR CATEGORIES INC LUDING THE FIRST CATEGORY VIZ. A SHARE HELD IN A COMPANY WHICH WA S THE CAPITAL ASSET SOLD BY THE APPELLANT THIS YEAR; (V) THAT IT CANNOT BE OPENED TO THE CIT TO CONCLUDE THAT THE AO EVEN AS HE HAD ACTED IN CONFORMITY WITH WHAT WAS ONLY AXIOMATIC H AD COMMITTED ANY ERROR IN ASSESSING CAPITAL GAINS ON THE SALE OF SHARES OF TW O COMPANIES AS LTCG AFTER CONSIDERING INDEXATION OF COST INSTEAD OF AS STCG W ITHOUT CONSIDERING INDEXATION OF COST ON THE GROUND THAT THE LISTING R EQUIREMENT IN RESPECT OF ONE OF ITA NO. 1141-AHD-11 7 THE FIVE CATEGORIES OF CAPITAL ASSETS INSERTED IN T HE PROVISO TO CLAUSE (42A) OF S.2 BY THE AMENDMENT W.E.F. 1.4.1995 ALSO APPLIED TO A SHARE HELD IN A COMPANY; THAT IN REALITY IT WAS THE CIT WHO WAS MAKING AN E RROR IN INTERPRETING THE PROVISION DIFFERENTLY AS SUITED HIS PURPOSE EVEN TH OUGH ONLY A BARE READING THEREOF CONCLUSIVELY PROVED THAT WHAT THE AO DONE W AS FULLY IN CONFORMITY WITH THE PROVISION. 4.2. THE LD. AR HAD ALSO PLACED RELIANCE ON THE FIN DING OF THE HONBLE ITAT MUMBAI F BENCH IN THE CASE OF MR. VIRENDRA KUMAR JAIN V. ACIT IN ITA NO.1009/MUM/2010 DATED 31.5.2010. 5. ON THE OTHER HAND THE LD. D R SUBMITTED HIS ARG UMENT TO COUNTER THE LD. A.RS SUBMISSION THAT NEITHER THE ASSESSEE SUBMITTED NOR THE AO CALLED FOR ANY DETAILS IN RESPECT OF SET-OFF OF SPECULATION LOSS TO FIND OUT WHETHER THE SAME WAS IN ACCORDANCE WITH THE AMENDED PROVISIONS OF SECTION 73(4). SECT ION 73(4) WAS AMENDED W.E.F. 1.4.2006 I.E. ASSESSMENT YEAR 2006-07 TO THE EFFEC T THAT NO LOSS SHALL BE CARRIED FORWARD UNDER THIS SECTION FOR MORE THAN 4 ASSESSME NT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE LOSS WAS FIRST CO MPUTED THAT THE ASSESSEE HAD BROUGHT FORWARD SPECULATION LOSS PERTAINING TO THE ASSESSMENT YEAR 2001-02 WHICH COULD BE CARRIED FORWARD ONLY UP-TO THE ASSESSMENT YEAR 2005-06 AND HENCE THE SAME WAS NOT AVAILABLE FOR THE ASSESSMENT YEAR 2006-07. IN THIS REGARD THE LD. D R RELIED ON THE DECISION OF KOMAF FINANCIAL SERVICES LTD V. IT O (2010) 132 TTJ 359. HE SUBMITTED THAT IN THE CASE OF SALE OF SHARES OF TWO COMPANIES THE HOLDING PERIOD WAS LESS THAN THREE YEARS AND THEREFORE THE INCOME WA S UNDER THE HEAD STCG AND NOT LTCG SINCE THE SAID COMPANIES WERE NOT LISTED AND T HAT SINCE THE AO HAD ALLOWED THE CLAIM WITHOUT GOING INTO THE DETAILS WHICH WERE LEG ALLY NOT ALLOWABLE THE IMPUGNED ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO TH E REVENUE. HE HAD FURTHER SUBMITTED THAT THE ACTION OF THE AO IN NOT MAKING PROPER VERIFICATION AND OBTAINING THE DETAILS AND THEREAFTER ALLOWING ADJUSTMENT OF I NCOME WITH THE CARRY FORWARD OF LOSS MAKE THE ASSESSMENT ORDER PASSED BY THE AO WAS AGAI NST THE LAW PREJUDICIAL TO THE INTEREST OF REVENUE AND ALSO ERRONEOUS. TO SUPPORT HIS VIEW THE LD. D R RELIED ON THE FOLLOWING CASE LAWS: ITA NO. 1141-AHD-11 8 (I) CIT V. HIMACHAL PRADESH FINANCIAL CORPORATION(2010) 186 TAXMAN 105 (HP) (II) CIT V. SUNIL GOYAL (2009) 176 TAXMAN 184 (UTTARAKHA ND); & (III) CIT V. BHAGWAN DAS (2005) 142 TAXMAN 1 (ALL) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE AND PER USED THE MATERIALS AVAILABLE FROM THE RECORDS AND ALSO THE PAPER BOOKS FURNISHED BY THE LD. A R DURING THE COURSE OF HEARING. THE CORE ISSUE FOR CONSIDERATION IS THA T ACCORDING TO THE LD. CIT UNDER SECTION 263 OF THE ACT THE LD. AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT HAD ALLOWED WRONG SET OFF OF SPE CULATION LOSS AGAINST THE PROFIT OF RS.9 54 5 842/- EARNED FROM SPECULATION BUSINESS BY THE ASSESSEE DURING THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2006-07. IT WAS THE STAND OF THE LD. CIT THAT IN VIEW OF AMENDED PROVISIONS OF SECTION 73(4) NO LOSS OF SPECULATION BUSINESS SHALL BE CARRIED FORWARD UNDER SECTION 73 FOR MORE THAN F OUR ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR IN WHICH THE LOSS WA S FIRST COMPUTED. IN THE CASE OF THE PRESENT ASSESSEE LOSS WAS INCURRED IN THE ASSE SSMENT YEAR 2001-02 AND THE PERIOD OF FOUR YEARS HAS ALREADY BEEN EXPIRED IN THE ASSES SMENT YEAR 2005-06 AND THEREFORE THE LOSS INCURRED IN THE ASSESSMENT YEAR 2001-02 WA S NOT ELIGIBLE TO BE SET OFF AGAINST THE SPECULATION PROFIT EARNED IN THE ASSESSMENT YEA R UNDER CONSIDERATION. ALSO SINCE THE ELIGIBILITY PERIOD OF CARRY FORWARD OF SPECULAT ION LOSS INCURRED IN THE YEAR 2001-02 HAS ALREADY EXPIRED IN THE ASSESSMENT YEAR 2005-06 THE LD. AO HAD WRONGLY ALLOWED THE ASSESSEE TO CARRY FORWARD OF THE BALANCE SPECUL ATION LOSS OF RS.80.15 CRORES AS CLAIMED BY THE ASSESSEE BEYOND 2005-06. ACCORDING TO THE LD. CIT SINCE THE LD. AO DID NOT CALL FOR THE DETAILS AND EXAMINED THE ISSUE OF ELIGIBILITY OF SET OFF OF CARRY FORWARD SPECULATION LOSS ETC. AND AFTER HEARING TH E ASSESSEE ON THE ISSUE THE ASSESSMENT ORDER OF THE LD. AO PASSED U/S 143(3) OF THE ACT WAS SET SIDE WITH A DIRECTION TO RE-DO THE ASSESSMENT AS PER THE DIRECT ION CONTAINED IN HIS ORDER U/S 263 OF THE ACT. 6.1 FROM THE ABOVE FACTS IT IS EVIDENT THAT THE AO HAS NOT APPLIED HIS MIND ON THE ISSUES. THE LD. AO HAS NOT MADE A CLEAR FINDING WHE THER THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE SPECULATION LOSSES BEYOND FOUR YE ARS BY VIRTUE OF THE AMENDMENTS ITA NO. 1141-AHD-11 9 BROUGHT IN THE ACT FOR THE RELEVANT ASSESSMENT YEAR . FURTHER THE LD.CIT HAS ALSO NOT ADJUDICATED THE ISSUE BUT ONLY REMITTED THE MATTER BACK TO THE FILE OF THE AO TO RE-DO THE ASSESSMENT AFTER DUE CONSIDERATION AND AS PER L AW. SINCE THE ISSUES ARE NOT CONSIDERED BY BOTH THE REVENUE AUTHORITIES WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT. WE THEREFORE CONFIRM THE O RDER OF THE LD.CIT. HOWEVER WE MAKE IT CLEAR THAT THE AO SHALL NOT DRAW ANY ADVERS E INFERENCE FROM THE ORDER OF THE LD.CIT BUT PASS APPROPRIATE ORDER AS PER LAW AND M ERIT AFTER CONSIDERING ALL THE SUBMISSIONS AND MATERIALS PRODUCED BY THE ASSESSEE AND ALSO AFTER TAKING INTO CONSIDERATION OF ALL THE RELEVANT CASE LAWS CITED. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4 3 - 2'& 5#!' 21 / 11 /2011 ' 6 - 0 7 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 21/11/2011 3 3 3 3 - -- - 18 18 18 18 98&1' 98&1' 98&1' 98&1'- -- - 1. *+ 2. *+ 3. !! 1 /= 4. /=- - 5. 8@ 1# 7 6. B4 3 C/ !E 7 TALUKDAR/ SR. P.S.