Sri Gopal Biyani, Hyderabad v. The DCIT, Circle-1(1), Vijayawada

ITA 265/VIZ/2005 | 2001-2002
Pronouncement Date: 02-12-2010 | Result: Allowed

Appeal Details

RSA Number 26525314 RSA 2005
Assessee PAN ABNPB7257J
Bench Visakhapatnam
Appeal Number ITA 265/VIZ/2005
Duration Of Justice 5 year(s) 6 month(s) 21 day(s)
Appellant Sri Gopal Biyani, Hyderabad
Respondent The DCIT, Circle-1(1), Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 02-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 02-12-2010
Date Of Final Hearing 26-10-2010
Next Hearing Date 26-10-2010
Assessment Year 2001-2002
Appeal Filed On 11-05-2005
Judgment Text
ITA 265/VIZ/05 GOPAL BIYANI VJA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 265 /VIZAG/ 20 05 ASSESSMENT YEAR : 2001 - 02 SRI GOPAL BIYANI V IJAYAWADA DCIT CIRCLE - 1(1) VIJAYAWADA (APPELLANT) VS. (RESPONDENT) PAN NO. ABNPB 7257J APPELLANT BY: SHRI C.V.S. MURTHY CA RESPONDENT BY: SHRI R.K. SINGH DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS IS AN APPEAL OF THE ASSESSEE PREFER RED AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) VIJAYAWADA IS CONTRARY TO LAW & FACTS OF THE CASE. 2. THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WITHOUT APPRECIATING TH E FACTS INVOLVED IN THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT. HENCE THE APPELLANT PRAYS FOR RELIEF. 3. THE ASSESSING OFFICER WAS NOT CORRECT IN STATING THAT THE BUSINESS LOSS OF RS.34 04 952/ - CLAIMED BY THE APPELLANT CAN BE CONSIDERED AS CAPITAL L OSS WHILE HE WAS ACCEPTING THE BUSINESS ACTIVITY OF THE APPELLANT AND THE SPECULATION LOSS CLAIMED BY THE APPELLANT. HENCE THE APPELLANT PRAYS THE HONBLE BENCH TO CONSIDER THE ENTIRE SHARE TRADING ACTIVITY OF THE APPELLANT IS BUSINESS AND ALLOW THE BUSI NESS LOSS CLAIMED BY THE APPELLANT ACCORDINGLY. 4. THE CASE LAW CITED BOTH BY THE ASSESSING OFFICER AND THE LD. CIT(A) ARE NOT APPLICABLE TO THE APPELLANTS CASE AS THE FACTS ARE DISTINGUISHABLE. FURTHER THE CASE LAW CITED BY THE APPELLANT ARE VERY MUCH RELE VANT TO THE FACTS OF THE CASE WHICH WERE NOT PROPERLY APPRECIATED BY THE AUTHORITIES BELOW. HENCE THE APPEAL FILED BY THE APPELLANT MAY KINDLY BE ALLOWED. 5. THE CIT(A) ALSO ERRED IN NOT GIVING ANY FINDING AS REGARDS THE CLAIM FOR CARRY FORWARD OF SPECULATI ON LOSS MADE BY THE APPELLANT. HENCE THE APPELLANT PRAYS THE HONBLE TRIBUNAL TO ALLOW THE CARRY FORWARD SPECULATION LOSS TO FUTURE YEARS FOR SET OFF. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS FOR RELIEF. ITA 265/VIZ/05 GOPAL BIYANI VJA 2 2. THOUGH THE ASSESSEE HAS RAISED NUMEROUS GROUNDS BUT THEY ALL RELATE TO THE COMPUTATION OF BUSINESS AND SPECULATION LOSS AND ALSO ITS CARRY FORWARD FOR SUBSEQUENT YEARS. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT ASSESSEE DERIVED INCOME AS A SH ARE BROKER AND DECLARED HIS INCOME AT RS.14 87 440/ - AND CLAIMED CARRY FORWARD FOR SPECULATION LOSS OF ( - ) RS.18 97 252/ - . IN THE IMMEDIATELY PREVIOUS ASSESSMENT YEAR THE APPELLANT RETURNED AN INCOME OF RS.68 07 300/ - . THEREFORE IT WAS CONSIDERED NECESSARY TO VERIFY THE REASONS FOR THE SUDDEN FALL IN INCOME FOR THE CURRENT ASSESSMENT YEAR. IT WAS ALSO SEEN THAT IN THE EARLIER ASSESSMENT YEARS THE APPELLANT H AS ADMITTED ONLY BROKERAGE COMMISSION BUT FOR THE CURRENT ASSESSMENT YEAR H E CLAIMED LOSS IN SHARE TRADING TO THE EXTENT OF RS.34 04 952/ - AND ALSO SPECULATION LOSS ON SALE OF SHARES AT ( - ) RS.17 07 450/ - . THE BUSINESS LOSS CLAIMED WAS SAID TO HAVE INCURRED IN PURCHASE AND SALE OF VARIOUS SHARES OF LI MITED COMPANIES. BEFORE THE A.O. IT WAS EXPLAINED THAT THE ASSESSEE IN THE PROPRIETORY CAPACITY CARRIED ON BUSINESS UNDER THE TRADE NAME `VIN I T INVESTMENT. HE ALSO ACTED AS A SUB BROKER TO M/S. BNR CAPITAL SERVICES PVT. LTD. HYDERABAD FO R DEALING IN M UMBAI STOCK EXCHANGE AND AS SUB - BROKER TO B.N. RATHI SECURITIES LIMITED HYDERABAD WHO WERE THE MAIN BROKERS IN NATIONAL STOCK EXCHANGE UNDER SEBI REGISTRATION. THE LOSS CLAIMED BY THE ASSESSEE IN EARLIER DEALINGS WAS EXAMINED BY THE A.O. IN THE LIGHT OF EVIDENCE PLACED BEFORE HIM. IN THE BODY OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS TRIED TO MAKE OUT A CASE THAT IN SALE AND PURCHASE OF SHARES THE DELIVERY WAS NOT EFFECTIVE THEREFORE THE LOSS CLAIMED BY THE ASSESSEE WAS NOT CONSIDERED TO BE G ENUINE AND HE HAS CONSIDERED THAT THIS LOSS AMOUNT TO BE A SPECULATION LOSS FOR WANT OF PROPER DELIVERY OF THE SCRIPS . BUT WHILE CONCLUDING THE ASSESSMENT THE ASSESSING OFFICER HAS HELD THAT AS THE SCRIPS WERE HELD FOR A LONG TIME DESPITE FALLING PRICES ON EVERY DAY IT CANNOT BE SAID THAT THE PURCHASE IN THESE SCRIPS WERE FOR THE PURPOSE OF DOING BUSINESS. HE ACCORDINGLY CONSIDERED THE LOSS CLAIMED AS A CAPITAL LOSS ONLY AND DISALLOWED THE CLAIM OF THE ASSESSEES. 3. THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. ITA 265/VIZ/05 GOPAL BIYANI VJA 3 4 . NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE US WITH THE SUBMISSION THAT THIS IS THE FIRST YEAR IN WHICH THE ASSESSEE HAS STARTED TRADING IN SHARES. IN SUPPORT OF HIS CONTENTION WITH RESPECT TO THE FREQUENT SALE AND PURCHASE OF THE SCRIPS THE STATEMENTS ARE FILED. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSING OFFICER HAS NOT TAKEN A CONSISTENT STAND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AT ONE POINT OF TIME HE TREAT ED THE PURCHASES WITHOUT DELIVERY AND CONSIDERED THE BUSINESS LOSS CLAIMED TO BE THE SPECULATION LOSS BUT AT THE END OF THE ORDER HE TREATED THE ENTIRE LOSS TO BE THE CAPITAL LOSS. IF IT IS A CAPITAL LOSS ACCORDING TO THE ASSESSING OFFICER THERE CANNOT B E A SPECULATIVE TRANSACTION AS HELD BY HIM IN THE FORMER PORTION OF THE ORDER. THEREFORE THE ASSESSMENT ORDER IS FULL OF CONTRADICTIONS AND DESERVES TO BE SET ASIDE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT FROM THE DETAILS AVAILABLE ON R ECORD THE FREQUENCY OF TRANSACTION IN SHARES/SCRIPS CAN VERY WELL BE UNDERSTOOD. IT IS NOT A CASE WHERE THE INVESTMENT WAS MADE IN ONE YEAR AND THE SCRIPS WERE SOLD IN SUBSEQUENT YEARS. WITHIN THE YEAR THE ASSESSEE HAS MADE LOT OF PURCHASES AND SALES IN THE SCRI P S. HE HAS ALSO INVITED OUR ATTENTION TO THE VARIOUS JUDGEMENTS OF THE APEX COURT AND HIGH COURT IN WHICH IT HAS BEEN HELD THAT A SINGLE TRANSACTION IS SUFFICIENT TO DECIDE THE NATURE OF TRANSACTIONS. SINCE THE ASSESSEE WAS ACTIVELY ENGAGED IN P URCHASE AND SALES OF THE SHARES DURING THE IMPUGNED ASSESSMENT YEAR WHATEVER LOSS IS SUFFERED BY THE ASSESSEE IT IS EITHER A BUSINESS LOSS OR SPECULATION LOSS WHERE DELIVERY WAS NOT EFFECTED. 5 . THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEAVY RELIANCE UPON THE ORDER OF THE LOWER AUTHORITIES. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDER OF LOWER AUTHORITIES AND DOCUMENTS PLACED ON RECORD. UNDISPUTEDLY THIS IS THE FIRST YEAR IN WHICH THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES . PR IOR TO THAT HE WAS ACTING AS A SUB - BROKER AND EARNING COMMISSION INCOME ONLY. THE ASSESSEE WAS ALSO HAVING DEMAT ACCOUNT AND THE VALID REGISTRATION NUMBER THROUGH WHICH THE TRADING IN SHARES WERE TRANSACTED. THE ASSESSEE HAS MADE PU RCHASES AND SALES WITHIN THE YEAR IN WHICH HE ITA 265/VIZ/05 GOPAL BIYANI VJA 4 SUFFERED A BUSINESS LOSS. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE A.O. AND WE FIND THAT IN THE BEGINNING THE ASSESSING OFFICER HAS PROCEEDED ON THE LINE THAT THE PURCHASE OF SHARES WERE MADE WITHOUT BEING DELIVERY EFFECTED AND HE TREATED T HESE TRANSACTIONS AS A SPECULATED TRANSACTIONS AND LOSS WAS CALCULATED AS SPECULATION LOSS. BUT IN THE LATER PART OF THE ORDER THE ASSESSING OFFICER HAS TREATED THE LOSS TO BE THE CAPITAL LOSS AND HAS DISALLOWED TH E CLAIM OF THE ASSESSEE FOR BUSINESS LOSS AND SPECULATION LOSS. ONCE THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE LOSS SUFFERED BY THE ASSESSEE TO BE A CAPITAL LOSS THE CLAIM OF THE ASSESSEE THAT HE HAS ENTERED INTO A GENUINE TRANSACTION IN SHARES IS D EEMED TO HAVE BEEN ACCEPTED. BY ADMITTING THE LOSS TO BE THE CAPITAL LOSS THE STAND OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS SUFFERED A SPECULATION LOSS DESERVES TO BE KNOCKED DOWN. NOW THE QUESTION ARISE BEFORE US WHETHER IT IS A BUSINESS LOSS OR A CAPITAL LOSS. IN THIS REGARD THE ASSESSEE HAS PLACED THE ENORMOUS EVIDENCE ON RECORD TO ESTABLISH THAT HE HAS ENTERED INTO SEVERAL TRANSACTIONS FOR PURCHASE AND SALE OF SHARES DURING THE YEAR IN WHICH HE HAS SUFFERED A LOSS. THIS IS THE FIRST YEAR IN WHICH THE ASSESSEE HAS ENGAGED IN THIS ACTIVITY THEREFORE THE DETAILS OF THE TRANSACTIONS ARE TO BE MINUTELY EXAMINED. ON EXAMINATION WE FIND THAT THESE TRANSACTIONS CLEARLY SPEAK THAT ASSESSEE WAS ACTIVELY ENGAGED IN TRADING IN SHARES. MOREOVER THE A SSESSEE HAS ALSO KEPT THESE SHARES AS A PART OF STOCK IN TRADE . THEREFORE THERE IS NO IOTA OF EVIDENCE ON THE BASIS OF WHICH IT CAN BE INFERRED THAT THE SHARES WAS HELD AS AN INVESTMENT AND WHATEVER LOSS SUFFERED ON ITS SALE IS A CAPITAL LOSS. THEREFORE WE DO NOT FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE CIT(A). ACCORDINGLY WE SET ASIDE HIS ORDER AND DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR BUSINESS LOSS AND SPECULATION LOSS AND ALSO ITS CARRY FORWARD FOR SUBSEQUENT YEARS AS PER LAW. 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 2.12 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 2 ND DECEMBER 20 10 ITA 265/VIZ/05 GOPAL BIYANI VJA 5 CO PY TO 1 SHRI C. VISWANATH M.COM FCA CHERUVU & ASSOCIATES 1 - 3 - 176/4/C/15 GANDHINAGAR HYDERABAD - 500 080 2 DCIT CIRCLE - 1(1) VIJAYAWADA 3 THE CI T VIJAYAWADA 4 THE CIT (A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM