DARSHANA INTER-TRADE P. LTD, MUMBAI v. ITO 6(2)(2), MUMBAI

ITA 367/MUM/2009 | 2001-2002
Pronouncement Date: 19-04-2010 | Result: Dismissed

Appeal Details

RSA Number 36719914 RSA 2009
Assessee PAN AAACP2976R
Bench Mumbai
Appeal Number ITA 367/MUM/2009
Duration Of Justice 1 year(s) 3 month(s) 3 day(s)
Appellant DARSHANA INTER-TRADE P. LTD, MUMBAI
Respondent ITO 6(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 19-04-2010
Date Of Final Hearing 23-03-2010
Next Hearing Date 23-03-2010
Assessment Year 2001-2002
Appeal Filed On 16-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY & & SHRI R.S. PADVE KAR I.T.A.NO. 367 MUM/2009 (A.Y. 2001-02 ) DARSHANA INTER-TRADE P. LTD. 13 MANIK APT. B.S.ROAD DADAR (W) MUMBAI-400028. AAACP2976R VS. INCOME-TAX OFFICER-6(2)(2) AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY NON E. RESPONDENT BY SHRI T .T. JACOB. O R D E R PER J. SUDHAKAR REDDY AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF CIT(A)-VI MUMBAI DATED 04-12-2008 FOR THE ASST. Y EAR 2001-02 ON THE FOLLOWING GROUND : 1. YOUR APPELLANT SUBMITS THAT THE ASSESSING OFFIC ER IS NOT JUSTIFIED IN MAKING ADDITION OF RS.22 34 411/- ON ACCOUNT OF SPECULATION LOSS TO THE TOTAL INCOME OF YOUR APPELLANT. YOUR APPELLA NT IS A INVESTMENT COMPANY TRADING IN SHARES AND SECURITIES. YOUR APPE LLANT COMPANY HAS TAKEN AND GIVEN DELIVERY OF SHARES AND HENCE T HE SAME CANNOT BE HELD AS SPECULATIVE TRANSACTIONS. YOUR APPELLANT IS TRADING IN SHARES AND SECURITIES AND HAD SHOWN THE SAME IN PRO FIT AND LOSS ACCOUNT BY WAY OF OPENING STOCK PURCHASES SALES A ND CLOSING STOCK OF SHARES. THE SAID TRANSACTIONS IS PURELY TRADING IN NATURE AND NOT SPECULATIVE IN NATURE. THE NATURE OF BUSINESS OF YO UR APPELLANT IS DEALING IN SHARES AND SECURITIES HENCE THE DISALL OWANCE OF THE SAME ON ACCOUNT OF SPECULATIVE LOSS AS HAS BEEN CON SIDERED BY THE ASSESSING OFFICER IS NOT CORRECT. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THERE IS NEITHER A REQUEST FOR ADJOURNMENT. UNDER THESE C IRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THAT THIS IS NOT A FIT CASE FOR GRANT OF FURTHER ADJOURNMENT AS THE MATTER HAD COME UP BEFORE THE B ENCH ON 27-10-2009 AND 22-01-2010 WHEREIN ADJOURNMENT HAD BEEN SOUGHT BY T HE ASSESSEE AND WAS ITA 367/MUM/09 DARSHANA INTER-TRADE P.LTD. 2 GRANTED. THUS WE PROCEED TO DISPOSE OF THIS CASE E X PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LD. DEPARTMENTAL REPRESEN TATIVE. 2. HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. THE A SSESSEE IN THIS CASE IS AN INVESTMENT COMPANY CARRYING ON THE BUSINESS OF INVE STMENT TRADING IN SHARES & SECURITIES AND COMMISSION AGENCY BUSINESS. THE ISSU E IS WHETHER THE EXPLANATION TO SEC. 73 IS APPLICABLE TO THE ASSESSEE COMPANY. T HE ASSESSEES CASE IS THAT IT IS AN INVESTMENT COMPANY AND AS IT HAS TAKEN DELIVERY OF SHARES CONCERNED SECTION 43(5) IS NOT ATTRACTED AND THE LOSS INCURRED ON PUR CHASE & SALE OF SHARES CANNOT BE TERMED AS SPECULATIVE LOSS. THE A.O. REJECTED TH IS CONTENTION. IN PARA-3 OF THE ASSESSMENT ORDER HE HELD AS FOLLOWS : I HAVE CAREFULLY EXAMINED THE WRITTEN SUBMISSION M ADE BY THE ASSESSEES REPRESENTATIVE. THE CONTENTION THAT THE ASSESSEE COMPANY HAD TAKEN DELIVERY AND GIVEN DELIVERY OF SH ARES TRADED IN AND THEREFORE THE SAID TRANSACTION OF SHARES TRADIN G ARE NOT SPECULATIVE TRANSACTION WITHIN THE MEANING OF SECTI ON 43(5) OF I.T. ACT IS TOTALLY NOT ACCEPTABLE IN AS MUCH AS IN ASSE SSEES CASE PROVISIONS OF SECTION 43(5) OF THE I.T. ACT WILL IN NO WAY COME IN THE WAY OF PROVISION OF EXPLANATION TO SECTION 73 OF I. T. ACT SINCE GROSS TOTAL INCOME SHOWN BY ASSESSEE MAINLY COMPRISES OF PROFITS AND GAINS OF BUSINESS AND IS NOT APPARENTLY COVERED BY THE EXCEPTION OF BEING A COMPANY WHERE GROSS TOTAL INCOME CONSISTS M AINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES INCOME FROM HOUSE PROPERTY CAPITAL GAINS AND INCOM E FROM OTHER SOURCES OR A COMPANY PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF BANKING OR GRANTING OF LOANS AND ADVANCES AS PROVID ED IN EXPLANATION TO SECTION 73 OF THE INCOME-TAX ACT. ON APPEAL THE FIRST APPELLATE AUTHORITY CONFIRMED THE SAME. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE WE ARE OF THE CONSIDER ED OPINION THAT THE ISSUE IN QUESTION IS NOW COVERED IN FAVOUR OF THE REVENUE AN D AGAINST THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF PRASAD AGENTS (P) LTD. VS. ITO REPORTED IN (2009) 226 CTR (BOM) 13 WHERE A T PARA 10 THE HONBLE HIGH COURT HELD AS FOLLOWS : ITA 367/MUM/09 DARSHANA INTER-TRADE P.LTD. 3 10. IN OUR OPINION THERE CAN BE NO DIFFERENCE BET WEEN THE LOSSES SUFFERED IN THE COURSE OF TRADING BY DELIVERY AND L OSSES IN TERMS OF THE BOOK VALUE. AS LONG AS THE ASSESSEE IS CARRYING ON BUSINESS OF TRADING BY WAY OF PURCHASE AND SALE OF SHARES EVEN IF IN RESPECT OF ANY FINANCIAL YEAR THERE ARE NO TRANSACTIONS AND Y ET THE COMPANY HAS STOCK-IN-TRADE OF SHARES THE BOOK VALUE WILL H AVE TO BE CONSIDERED FOR THE PURPOSE OF CONSIDERING THE PROFI T AND LOSS IN CASE OF SPECULATIVE BUSINESS. THERE CAN BE NO DOUBT THAT THE EXPLANATION TO S. 73 CANNOT BE READ TO MEAN ONLY WHEN THERE IS A PURCHASE AND SALE OF SHARES IN THE COURSE OF THE FINANCIAL YEAR. THE EXPLANATION WILL COVER BOTH SHARES WHICH ARE STOCK-IN-TRADE AND SHARES WHICH ARE TRADED IN THE COURSE OF THE FINANCIAL YEAR FOR THE PURPOSE OF CONSIDERING THE LOSS AND PROFIT FOR THAT YEAR. THE TRIBUNAL IN OUR OPINION HAS CORRECTLY ANSWERED THE ISSUE BY HOLDIN G THAT THE LOSS OF PROFIT ON ACCOUNT OF VALUATION AMOUNTS TO REVENUE L OSSES OR REVENUE RECEIPT. THE SECOND QUESTION THEREFORE ALSO WILL HAVE TO BE ANSWERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. RESPECTFULLY APPLYING THE PROPOSITION LAID DOWN IN THE ABOVE JUDGEMENT TO THE FACTS OF THE CASE WE UPHOLD THE ORDER OF CIT(A) AN D DISMISS THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED ON THE 19TH DAY OF APRIL 2010. SD/- SD/- (R.S. PADVEKAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 19 TH APRIL 2010 NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-VI MUMBAI. 4 CIT CITY-6 MUMBAI. 5.DR D BENCH MUMBAI. 6.GUARD FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA 367/MUM/09 DARSHANA INTER-TRADE P.LTD. 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 6-4-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 8-4-10 SR.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/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER