ACIT-9(3)(2), MUMBAI v. GLOBAL JEWELLERY PYT LTD., MUMBAI

ITA 2657/MUM/2016 | 2012-2013
Pronouncement Date: 16-11-2017 | Result: Allowed

Appeal Details

RSA Number 265719914 RSA 2016
Assessee PAN AABCG5222E
Bench Mumbai
Appeal Number ITA 2657/MUM/2016
Duration Of Justice 1 year(s) 7 month(s) 4 day(s)
Appellant ACIT-9(3)(2), MUMBAI
Respondent GLOBAL JEWELLERY PYT LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-11-2017
Appeal Filed By Department
Tags No record found
Order Result Allowed
Bench Allotted H
Tribunal Order Date 16-11-2017
Date Of Final Hearing 04-07-2017
Next Hearing Date 04-07-2017
First Hearing Date 04-07-2017
Assessment Year 2012-2013
Appeal Filed On 11-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2657/MUM/2016 ASSESSMENT YEAR: 2012 - 13 DCIT - 9(3)(2) 418 4 TH FLOOR AAYAKAR BHAVAN MUMBAI - 400020. VS. M/S GLOBAL JEWELLERY PVT. LTD. G - 49 GEM & JEWELLERY COMPLEX SEEPZ ANDHERI (E) MUMBAI - 400096. PAN NO. AABCG5222E APPELLANT RESPONDENT REVENUE BY : SHIR RAM TIWARI DR ASSESSEE BY : NONE DATE OF HEARING : 29 /08/2017 DATE OF PRONOUNCEMENT : 16/11/2017 ORDER PER N.K. PRADHAN A.M. THIS IS AN APPEAL FILED BY THE REVENUE . THE REL EVANT ASSESSMENT YEAR IS 2012 - 13 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 1 6 MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). 2. WE FIND FROM THE RECORD THAT THERE WAS NO COMPLIANCE EITHER BY THE ASSESSEE OR ITS AUTHORIZED REPRESENTATIVE TO THE NOTICE ISSUED BY THE REGISTRY FIXING THE CASE FOR HEARING ON 29.11.2016 23.01.2017 14.03.2017 18.05.2017 24.05.2017 04.07.2017 AND 24.07.2017. 3. M/S GLOBAL JEWELLERY ITA NO. 2657/MUM / 2016 2 THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAI NST THE ORDER OF THE LD. CIT(A) HOLDING THAT GOLD IS A DERIVATIVE AND THE TRANSACTIONS ARE CARRIED OUT THROUGH RECOGNIZED STOCK EXCHANGE AND THE CASE OF THE ASSESSEE IS COVERED BY PROVISO ( D) TO SECTION 43(5) OF THE ACT. IT IS THE CONTENTION OF THE REVENUE THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS IN FACTS IN OVERLOOKING THE FACTUAL OBSERVATION BY THE AO IN THE ASSESSMENT ORDER THAT THE HEDGING COVER IN SEVERAL INDIVIDUAL DAYS EXCEED THE STOCK OF THE ASSESSEE BY NEARLY TEN TIMES AND THUS THE CONTENTION OF THE ASSESSEE THAT THIS TRADING HAS BEEN DONE ONLY TO HEDGE AGAINST PRICE FLUCTUATION RISK IS UNTENABLE SINCE THE HEDGING COVER SHOULD COMMENSURATE WITH THE STOCK - IN - TRADE OF THE ASSESSEE. ALSO IT IS STATED BY THE REVENUE THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS IN FACTS IN HOLDING THAT SAID TRANSACTIONS WERE ELIGI BLE TRANSACTIONS AS PER EXPLANATION 1 TO CLAUSE (D) OF 45(3); NO T APPRECIATING THAT RELEVANT TIME - STAMPED CONTRACT NOTES PERTAINING TO GOLD TRADING WERE NOT SU BMITTED BY THE ASSESSEE AND THAT A PREREQUISITE TO QUALIFY AS AN ELIGIBLE TRANSACTION AS PER SAID EXPLANATION IS THAT THE TRANSACTION MUST BE SUPPORTED BY A TIME - STAMPED CONTRACT NOTE ISSUED BY THAT BROKER/SUB - BROKER. 4 . BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY FILE D ITS RETURN OF INCOME FOR THE AY 2012 - 12 ON 30.09.2012 DECLARING TOTAL INCOME OF RS.1 51 980/ - . A REVISED RETURN OF INCOME WAS FILED ON 10.12.2012 DECLARING LOSS OF RS.72 28 935/ - . THE ASSESSING OFFICER (AO) MADE AN ASSESSMENT U/S 143(3) ON 28 .02.2015 ASSESSING THE INCOME AT RS.21 39 100/ - AFTER MAKING DISALLOWANCE OF SPECULATION LOSS OF RS.92 96 787/ - . M/S GLOBAL JEWELLERY ITA NO. 2657/MUM / 2016 3 5 . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER REFERRING TO SECTION 43(5)(D) HA S HELD THAT (I) GOLD IS CLASSIFIED AS DERIVATIVE ACCORDING TO CLAUSE (AC) OF SECTION 2 OF SECURITIES CONTRACT (REGULATION) ACT 1956 (II) AS LONG AS THE TRANSACTIONS IN DERIVATIVES ARE BONA FIDE ON SCREEN BASED SYSTEMS IN ACCORDANCE WITH THE RULES REGULA TIONS AND BYE LAWS OF THE RESPECTIVE GOVERNING BODIES AND CARRIED OUT THROUGH RECOGNIZED STOCK EXCHANGES THESE TRANSACTIONS COULD NOT BE HELD TO BE SPECULATIVE TRANSACTION. THE LD. CIT(A) THUS HELD THAT THE CASE OF THE ASSESSEE IS COVERED BY THE PROVIS O (D) TO SECTION 43(5) OF THE ACT. 6. BEFORE US THE LD. DR RELIES HEAVILY ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DLF COMMERCIAL DEVELOPERS LTD . (2013) 35 TAXMANN.COM 280 (DEL). HE SUPPORTS THE ORDER PASSED BY THE AO. 7. AS MENTIONED EARLIER THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE NOTICE ISSUED BY THE REGISTRY FIXING THE CASE FOR HEARING BEFORE THE TRIBUNAL. THEREFORE AFTER HEARING THE LD. DR AND PERUSING THE MATERIALS ON RECORD WE GIVE THE REASONS FOR OUR DECISIONS BELOW. IN THE CASE OF DLF COMMERCIAL DEVELOPERS LTD . (SUPRA) THE HONBLE DELHI HIGH COURT HAS HELD THAT IN CASE OF CERTAIN TYPES OR CLASSES OF COMPANIES LOSS IN TRADING OF DERIVATIVES IS SPECULATION LOSS INELIGIBLE TO BE CARRIED FORWARD. WE FIND THAT THE ASSESSEE FAILED TO FILE BEFORE THE AO THE RELEVANT TIME - STAMPED CONTRACT NOTES PERTAINING TO GOLD TRADING. THERE IS NO M/S GLOBAL JEWELLERY ITA NO. 2657/MUM / 2016 4 DENYING THE FACT THAT THE SAID TRANSACTION MUST BE SUPPORTED BY A TIME - STAMPED CONTRACT NOTE ISSUED BY THE BROKER/SUB - BROKER. IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE THE RELEVANT DOCUMEN TS/EVIDENCE LIKE CONTRACT NOTES BEFORE THE AO. 8. IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2017. SD/ - SD/ - ( D.T. GARASIA ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 16/11/2017 RAHUL SHARMA SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE . BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI