JYOTSNA K. SHAH, MUMBAI v. CIT 32, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I MUMBAI BEFORE SHRI. D.K. AGARWAL (J.M.) AND SHRI T.R. SOOD (A.M.) ITA NO.2450/MUM/2010 ASSESSMENT YEAR : 2006-2007 JYOTSNA K. SHAH A-2 HIRA ANAND 17 SWASTIK SOCIETY RD. NO.2 JVPD SCHEME VILE PARLE (W) MUMBAI 400 056. PAN : AAOPS4442E VS. ACIT CIRCLE 21(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.P. KOTHARI RESPONDENT BY : SHRI A.K. NAYAK O R D E R PER D.K. AGARWAL J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 07.01.2010 PASSED BY THE LD CIT(A) FOR TH E ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS DOCTOR IN HOMEOPATHY BY PROFESSION HAS FILED RETURN OF INCOME DECL ARING THE TOTAL INCOME OF ` 11 87 780/- FROM PROFESSION RENT CAPITAL GAIN AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSE SSEE HAS CLAIMED SET OFF LOSS OF ` 2 35 257/- ON ACCOUNT OF F & O TRADING. VIDE NOTICE U/S.142(1) OF THE INCOME TAX ACT 1961 (THE ACT) IT WAS BROUGHT TO THE NOTICE TO THE ASSESSEE THAT THE LOSS IS SPECULATIVE IN NATURE AS PER BOARDS NOTIFICATION THE TRANSACTION ENTERED W.E. F. 25.01.2006 ONLY ITA NO.2450/MUM/2010 A.Y.: 2006-2007 2 CAN BE CONSIDERED AS TRADING LOSS. IN COMPLIANCE IT WAS S TATED BY THE ASSESSEE THAT THE LOSS PERTAINS TO THE PERIOD PRIOR TO 25. 01.2006. HOWEVER THE ASSESSING OFFICER IN VIEW OF THE BOARDS NOTI FICATION DISALLOWED THE LOSS OF ` 2 35 257/- AND ADDED TO THE INCOME OF THE ASSESSEE VIDE ORDER DATED 21.11.2008 PASSED U/S.143(3) O F THE ACT. 3. ON APPEAL THE LEARNED CIT(A) HELD THAT THE ASSESSIN G OFFICER WAS JUSTIFIED IN OPERATIONLISING THE PROVISIONS FROM TH E DATE WHEN STOCK EXCHANGES WERE NOTIFIED. HOWEVER HE DIRECTED TH E ASSESSING OFFICER TO ALLOW THE CARRY FORWARD OF BUSINESS LOSS OF ` 2 35 257/-. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A) THE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING SOLE GROUND OF APPEAL. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE F & O LOSS AS SPECULATIVE LOSS INSTEAD OF BUSINESS LOSS AS PER AMENDED PROVISION U/S.43(5)(D) OF THE INCOME TAX AC T 1961 W.E.F. 01.04.2006. 5. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGRE ED THAT THE ISSUE IS STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECI SION OF SPECIAL BENCH OF THE TRIBUNAL IN SHREE CAPITAL SERVICE S LTD. VS. ACIT (2009) 121 ITD 498 (KOL) (SB). THE LEARNED COUNSEL F OR THE ASSESSEE HAS ALSO RELIED ON THE DECISION IN PREM ASSOCIATES ADVERTI SING & MARKETING SPAN CENTRE VS. JCIT IN ITA NO.6547/MUM/09 FOR ASSESSMENT YEAR 2006-07 ORDER DATED 17.09.2010 G.K. AN AND BROS. BUIDWELL (P) LTD. VS. ITO (2009) 34 SOT 439 (DEL) A ND CIT VS. CLARIS LIFESCIENCES LTD. (2010) 326 ITR 251(GUJ). HE ALSO PLACE D ON RECORD THE COPY OF THE SAID DECISIONS. ITA NO.2450/MUM/2010 A.Y.: 2006-2007 3 6. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD WE FIND THAT THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE HAS INCURRED LOSS IN RESPECT OF FUTURE & OPTION TR ANSACTIONS INCURRED THROUGH STOCK EXCHANGE PERIOD PRIOR TO 25.01 .2006 AND CLAIMED TO BE NORMAL BUSINESS LOSS IN VIEW OF EXCEPTION P ROVIDED UNDER CLAUSE (D) OF SECTION 43(5) BROUGHT TO STATUE W.E.F. 01. 04.2006. 7. IN SHREE CAPITAL SERVICES LTD. (SUPRA) IT HAS BEEN H ELD THAT CLAUSE (D) OF SECTION 43(5) IS PROSPECTIVE IN NATURE AND WILL BE EFFECTIVE FROM THE DATE FROM WHICH THE LEGISLATURE MADE IT EFF ECTIVE I.E. 01.04.2006 AND WILL BE APPLICABLE TO THE ASSESSMENT YEAR 2006-07 ONWARDS. 8. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE DECISIONS OF SPECIAL BENCH OF THE TRIBUNAL AND OTHER THE DECISION OF COORDI NATE BENCH OF THE TRIBUNAL RELIED ON THE LEARNED COUNSEL FOR THE ASSESSEE H OLD THAT THE DERIVATE TRANSACTIONS ENTERED INTO BY THE ASSESSEE AT THE RECOGNIZED STOCK EXCHANGE EVEN PRIOR TO DATE OF NOTIFICATION IN TH E RELEVANT PREVIOUS YEAR ARE TO BE TREATED AS COVERED BY THE EXCLU SION CLAUSE SET OUT IN SECTION 43(5)(D) OF THE ACT AND ACCORDINGLY WE A CCEPT THE CLAIM OF THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS THERE FORE ALLOWED. ITA NO.2450/MUM/2010 A.Y.: 2006-2007 4 9. IN THE RESULT ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF FEBRUARY 2011. SD/- (T.R. SOOD) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI DATED 11 TH FEBRUARY 2011. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- MUM BAI 4. COMMISSIONER OF INCOME TAX CITY- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI