PHULCHAND SONS INVESTMENTS P. LTD, MUMBAI v. DCIT CIR 2(2), MUMBAI

ITA 1467/MUM/2010 | 2003-2004
Pronouncement Date: 11-03-2011 | Result: Dismissed

Appeal Details

RSA Number 146719914 RSA 2010
Bench Mumbai
Appeal Number ITA 1467/MUM/2010
Duration Of Justice 1 year(s) 17 day(s)
Appellant PHULCHAND SONS INVESTMENTS P. LTD, MUMBAI
Respondent DCIT CIR 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 11-03-2011
Date Of Final Hearing 07-03-2011
Next Hearing Date 07-03-2011
Assessment Year 2003-2004
Appeal Filed On 23-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI RAJENDRA SIN GH (A.M) ITA NO.1467/MUM/2010(A.Y. 2003-04) ITA NO.1468/MUM/2010(A.Y.2005-06) PHULCHAND SONS INVESTMENTS P. LTD. CABIN NO.4 C/O. K.M.REALTIES P. LTD. 4 TH FLOOR BHAGYODAYA BUILDING 79 N.M.ROAD FORT MUMBAI. PAN:AAACP 8901G (APPELLANT) VS. THE DCIT CIR.2(2) AAYKAR BHAVAN MK ROAD MUMBAI 20. (RESPONDENT) APPELLANT BY : SHRI RAJEEV KHANDELWAL RESPONDENT BY : SHRI P.N.DEVDASAN ORDER PER N.V.VASUDEVAN J.M ITA NO.1467/MUM/2010 IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 15/1/2010 OF CIT(A) V MUMBAI RELATING TO ASSESSMENT YEAR 2003-04. ITA NO.1468/M/2010 IS ALSO AN APPEAL BY T HE ASSESSEE AGAINST THE ORDER DATED 13/1/2010 OF CIT(A) V MUMBAI RELATI NG TO ASSESSMENT YEAR 05-06. ITA NO.1467/MUM/2010: 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS FOLL OWS: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS)-5 MUMB AI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UPHOLDING THE A CTION OF THE DY. COMMISSIONER OF INCOME-TAX 2(2) MUMBAI (HEREINAFTE R REFERRED TO AS THE ASSESSING OFFICER ) IN TREATING BUSINESS LOSS O F RS.8 32 90 366 AS SPECULATION LOSS BY INVOKING THE PROVISIONS OF EXPL ANATION TO SECTION 73 AND THEREBY NOT ALLOWING SET OFF OF THE LOSS A GAINST LONG TERM CAPITAL GAINS OF RS. 13 78 140/- AND INCOME FROM OT HER SOURCES RS. 30 374/-. ITA NO.1467/MUM/2010(A.Y. 2003-04) ITA NO.1468/MUM/2010(A.Y.2005-06) 2 THE APPELLANT CONTEND THAT ON THE FACTS AND CIRCUMS TANCES OF THE CASE AND IN LAW THE CIT(A) HAS FALLEN IN ERROR IN TREAT ING THE BUSINESS LOSS AS SPECULATION LOSS BY INVOKING THE PROVISIONS OF E XPLANATION TO SECTION 73. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES. THE ASSESSEE INCURRED A LOSS IN THE BUSINE SS OF TRADING IN SHARES. BY VIRTUE OF THE PROVISIONS OF EXPLANATION TO SECTI ON 73 OF THE INCOME TAX ACT 1961 SUCH LOSS IS DEEMED TO BE A LOSS SUSTAINE D IN A SPECULATION BUSINESS. IN VIEW OF THE PROVISIONS OF SECTION 72 OF THE ACT SUCH LOSS CAN BE SET OFF ONLY AGAINST INCOME OF A SPECULATION BUSINE SS. THE ASSESSEE DERIVED LTCG OF RS.13 78 140/- AND DIVIDEND INCOME OF RS.30 374/- WHICH WAS ASSESSED UNDER THE HEAD CAPITAL GAIN AND INCOME FRO M OTHER SOURCES RESPECTIVELY. THE ASSESSEE SOUGHT TO SET OFF THE I NCOME UNDER THE HEAD LTCG AND OTHER INCOME AGAINST THE LOSS INCURRED FROM THE BUSINESS OF TRADING IN SHARES WHICH BY VIRTUE OF EXPLANATION TO SECTION 73 OF THE ACT IS DEEMED TO BE A LOSS FROM A SPECULATION BUSINESS. THE AO DID NOT ALLOW THE CLAIM OF THE ASSESSEE AS IT WAS AGAINST THE PROVISIONS OF SECTIO N 72 OF THE ACT. 4. THE CIT(A) CONFIRMED THE ACTION OF THE AO HENC E GROUND NO.1 BY THE ASSESSEE BEFORE THE TRIBUNAL. 5. WE ARE OF THE VIEW THAT THE ASSESSEE BEING A COM PANY WHOSE PRINCIPLE BUSINESS CONSISTS IN THE PURCHASE AND SALE OF OTHER COMPANIES IS TO BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS BY VIRTUE OF EXPLANATION TO SECTION 73 OF THE ACT. SUCH SPECULATIVE LOSS CANNO T BE SET OFF AGAINST LTCG AND INCOME FROM OTHER SOURCES BECAUSE OF THE PROHIB ITION CONTAINED IN SECTION 72 OF THE ACT. WE THEREFORE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO.1. ITA NO.1467/MUM/2010(A.Y. 2003-04) ITA NO.1468/MUM/2010(A.Y.2005-06) 3 6. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FOLL OWS: THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AS SESSING OFFICER IN NOT ALLOWING CREDIT FOR TDS OF A SUM OF RS. 16 58 4 00/-. THE APPELLANTS CONTEND THAT THE ASSESSING OFFICER O UGHT TO HAVE ALLOWED CREDIT FOR TDS AND THIS BEING A MISTAKE APP ARENT FROM RECORD THE CIT(A) OUGHT TO HAVE GIVEN A SUITABLE DIRECTION TO THE ASSESSING OFFICER IN THIS BEHALF. 7. ADMITTEDLY THE ASSESSEE DID NOT FILE THE NECESSA RY TDS CERTIFICATES EITHER BEFORE THE AO OR CIT(A) OR BEFORE US. WE DO NOT FIND ANY MERIT IN GROUND NO.2 RAISED BY THE ASSESSEE AND THEREFORE T HE SAME IS DISMISSED. 8. GROUND NO.3 IS WITH REGARD TO CHARGING OF INTERE ST UNDER SECTION 234B OF THE ACT WHICH IS MANDATORY/CONSEQUENTIAL AND TH EREFORE THE SAID GROUND IS ALSO DISMISSED. 9. IN THE RESULT THE APPEAL BY THE ASSESSEE IS DIS MISSED. ITA NO.1468/M/2010:- 10. GROUND NO.1 RAISED BY THE ASSESSEE READS AS FOL LOWS: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS)-5 MUMB AI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UPHOLDING THE A CTION OF THE DY. COMMISSIONER OF INCOME-TAX 2(2) MUMBAI (HEREINAFTE R REFERRED TO AS THE ASSESSING OFFICER ) IN TREATING BUSINESS LOSS O F RS.48 94 270 AS SPECULATION LOSS BY INVOKING THE PROVISIONS OF EXPL ANATION TO SECTION 73 AND THEREBY NOT ALLOWING SET OFF OF THE SAME A GAINST CONSULTANCY INCOME OF RS. 5 26 580/-. THE APPELLANT FURTHER CONTEND THAT THE CIT(A) HAS N OT CORRECTLY APPLIED THE PROVISIONS OF SECTION 70 AND 73 TO DETERMINE TH E GROSS TOTAL INCOME. THE APPELLANT CONTEND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS FALLEN IN ERROR IN TREATING THE ITA NO.1467/MUM/2010(A.Y. 2003-04) ITA NO.1468/MUM/2010(A.Y.2005-06) 4 BUSINESS LOSS AS SPECULATION LOSS BY INVOKING THE P ROVISIONS OF EXPLANATION TO SECTION 73. 11. THIS GROUND OF APPEAL IS IDENTICAL TO GROUND NO .1 RAISED BY THE ASSESSEE IN ITA NO.1467/M/2010. IN THIS YEAR THE A SSESSEE SOUGHT TO SET OFF THE SPECULATIVE LOSS ARISING OUT OF SHARE TRADING A GAINST THE INCOME IN THE FORM OF CONSULTANCY FEE RECEIVED WHICH WAS ASSESSED AS BUSINESS INCOME. FOR THE REASONS GIVEN WHILE DECIDING GROUND NO.1 OF ITA NO.1467/M/2010 THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 12. GROUND NO.2 IS WITH REGARD TO CHARGING OF INTE REST UNDER SECTION 234B OF THE ACT WHICH IS MANDATORY/CONSEQUENTIAL AND TH EREFORE THIS GROUND OF APPEAL IS ALSO DISMISSED. 13. IN THE RESULT ITA NO.1468/M/2010 IS ALSO DISMI SSED. 14. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 11 TH DAY OF MARCH 2011. SD/- SD/- (RAJENDRA SINGH) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 11 TH MARCH.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RC BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. ITA NO.1467/MUM/2010(A.Y. 2003-04) ITA NO.1468/MUM/2010(A.Y.2005-06) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7/3/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 8/3/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER