CORAL INDIA FINANCE AND HSG. LTD, MUMBAI v. ITO 3(1)-3, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NO.3418/MUM/2009 : ASST.YEAR 2005-2006 M/S.CORAL INDIA FINANCE AND HOUSING LTD 4 TH FLOOR DALAMAL HOUSE NARIMAN POINT MUMBAI 400 020. PA NO.AAACC4449C. VS. THE INCOME TAX OFFICER WARD 3(1)-3 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.G.GINDE RESPONDENT BY : SHRI GOLI SRINIVAS RAO O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 19.03.2009 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. GROUND NOS.1 AND 2 ARE AGAINST THE UPHOLDING OF DISALLOWANCE OF RS.10 66 975 MADE BY THE ASSESSING OFFICER U/S.14A OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE QUESTION OF MAKING DIS ALLOWANCE U/S 14A IS NO MORE RES INTEGRA IN VIEW OF THE RECENT JUDGMENT DATED 12.08.2010 OF THE HONBLE BOMBAY HIGH COURT IN GODREJ& BOYCE LIMITED VS. ACIT HOLDING THAT THE PROVISIONS OF SECTION 14A ARE APPLICABLE IN CIRCUMSTANCES AS ARE PREVAILING PRESENTLY AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE AO ON SOME `REASONABLE BASIS AND NOT RULE 8D. UNDER SUCH CIRCUMSTANCES WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE Q UANTUM OF DISALLOWANCE IF ANY AS PER THE AFORE NOTED JUDGMENT AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.3418/MUM/2009 M/S.CORAL INDIA FINANCE AND HOUSING LTD. 2 4. GROUND NO.3 IS AGAINST THE HOLDING THE LOSS OF R S.56 715 INCURRED BY THE ASSESSEE IN DERIVATIVES TRANSACTIONS AS SPECULATION LOSS U/S.43(5) OF THE ACT. 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RELEV ANT MATERIAL ON RECORD. THE LEARNED COUNSEL FAIRLY ACCEPTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE SPECIAL BENCH ORDER PASSED IN THE CASE OF SHREE CAPITAL SERVICES LTD. VS. ACIT [(2009) 124 TTJ 740 (KOL.) (SB) (TRIB.)]. IN THIS CASE IT HAS BEEN HELD THAT THE LOSS ON ACCOUNT OF TRANSACTION IN DERIVATIVES IS SPECULA TIVE UP TO ASSESSMENT YEAR 2005- 2006. IT HAS FURTHER BEEN HELD THAT THE INSERTION O F CLAUSE (D) TO PROVISO TO SECTION 43(5) IS PROSPECTIVE AND APPLICABLE TO ASSESSMENT Y EAR 2006-2007 ONLY. AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2005-2006 I N OUR CONSIDERED OPINION THE RATIO OF THE SPECIAL BENCH ORDER WOULD SQUARELY APPLY. WE THEREFORE DISMISS THIS GROUND. 6. IN THE RESULT THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 10 TH DAY OF DECEMBER 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 10 TH DECEMBER 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXVII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. ITA NO.3418/MUM/2009 M/S.CORAL INDIA FINANCE AND HOUSING LTD. 3 TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.