Shivshakti Construction Co., Sangli v. ACIT, Sangli

ITA 379/PUN/2009 | 2004-2005
Pronouncement Date: 08-12-2010 | Result: Allowed

Appeal Details

RSA Number 37924514 RSA 2009
Assessee PAN AASPS5149Q
Bench Pune
Appeal Number ITA 379/PUN/2009
Duration Of Justice 1 year(s) 8 month(s) 8 day(s)
Appellant Shivshakti Construction Co., Sangli
Respondent ACIT, Sangli
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-12-2010
Assessment Year 2004-2005
Appeal Filed On 30-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 379/PN/09 (ASSTT. YEAR 2004-05) SHIVSHAKTI CONSTRUCTION CO. FLAT 17 SHANTIBAN COMPLEX NEMINATHNAGAR DHAMANI ROAD SANGLI PAN NO. AASPS5149Q .... APPELLANT VS. ACIT CIRCLE-1 SANGLI . RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)- KOLHAPUR DATED 20-01-2009 FOR A.Y 2004-05. 2. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE ME NTIONED THAT GROUND NO.2 AND 3 HAVE TO BE SET ASIDE TO THE FILES OF THE CIT( A) AS THEY WERE NOT ADJUDICATED BY HIM AS EVIDENT FROM THE IMPUGNED ORDER. IN THIS REGARD LD. COUNSEL REFERRED TO THE LETTER DATED 17-09-2007 WHEREIN AN APPLICATION WAS MA DE BY THE ASSESSEE TO THE CIT(A) KOLHAPUR FOR AMENDING THE GROUNDS OF APPEAL A ND FOR ADMISSION OF ADDITIONAL GROUNDS OF APPEAL. WE PERUSED THE SAID LETTER AND NOTICED TH E EXISTENCE OF SUCH ADDITIONAL GROUNDS IN THAT LETTER D T 17-09-2007 AND CHRONOLOGICALLY IT RELATES TO THE PERIOD PRIOR TO THE PASSING OF THE IMPUGNED ORDER BY THE FIRST APPELLATE AUTHORITY I.E. ON DATED 20-01-20 09. PER CONTRA LD. DR FOR THE REVENUE COULD NOT DEMONSTRATE ANYTHING CONTRARY TO THE SUBMISSIONS MADE BY THE ITA NOS. 379/PN/09 A.Y. 2004-05 PAGE 2 OF 3 LD. COUNSEL FOR ASSESSEE AND DID NOT RAISE ANY OBJECT IONS ABOUT THE GENUINENESS OF SAID LETTER. 3. CONSIDERING THE SAME WE ARE OF THE OPINION THAT T HE ASSESSEE HAS RIGHTLY RAISED THE ADDITIONAL GROUNDS AND UNFORTUNATELY THE C IT(A) DID NOT TAKE NOTICE OF THE SAID LETTER DATED 17-09-2007 WITH THE ADDITIONA L GROUNDS MENTIONED THEREIN. CONSEQUENTLY THE ADDITIONAL GROUNDS REMAIN UNADJUDIC ATED. TO THAT EXTENT THE ORDER PASSED BY THE CIT(A) IS INCOMPLETE. THEREFORE WE ARE OF THE OPINION BOTH THESE GROUNDS MUST BE SET ASIDE AS WANTED BY THE LD. COUNSEL. ACCORDINGLY GROUNDS 2 AND 3 ARE SET ASIDE FOR FRESH ADJUDICATION AFTER GIVING OPPORTUNITY TO TH E ASSESSEE OF BEING HEAD. 4. REGARDING GROUND NO. 1 THE LD. COUNSEL MENTIONED T HAT IT IS A CASE WHERE LOSS WAS EARNED ON SALE OF THE BONDS WHICH ASSESSEE HAD TO RECEIVE FROM MAHARASHTRA KRISHNA VALLEY DEVELOPMENT CORPORATION (MKV DC) AS A PART OF AN ARRANGEMENT FOR CLEARANCE OF THE ASSESSEES RECEIVABLE CONTRACT AMOUNTS FROM THE SAID MKVDC. THE REVENUE HELD THAT THE LOSS WHICH IS EARNED ON THE SALE OF THESE BONDS CONSTITUTES A CAPITAL LOSS. ON THE OTHER HAND THE ASSESSEE IS OF THE VIEW THAT THE SAID LOSS EARNED ON THE SALE OF THE BONDS RECEIVE D FROM MKVDC IS THE BUSINESS AND REVENUE LOSS SINCE THE EARNING OF THE BONDS IT IS PART OF THE BUSINESS TRANSACTIONS. IF THE BONDS ARE NOT ACCEPTED BY THE AS SESSEE WHOLE OF THE DEBT WOULD HAVE TO BE TREATED AS A ALLOWABLE BUSINESS BAD DEBT. FURTHER LD. COUNSEL RELIED ON THE DECISION OF MADRAS HIGH COURT IN THE CA SE OF INDIAN COMMERCE & INDUSTRIES CO. (P) LTD. VS. CIT 213 ITR 533 (MAD) TO ADVANCE ITS CASE. 5. WE HAVE PERUSED THE FACTS OF THE RELEVANT ORDERS OF THE REVENUE AS WELL AS THE HIGH COURT JUDGEMENT IN THIS REGARD. THE RATIO OF T HE DECISION OF THE MADRAS HIGH COURT READS AS FOLLOWS:- BUSINESS INCOME- BUSINESS LOSS- ASSESSEE ENGAGED IN STRUCTURAL ENGINEERING HAVING BUSINESS RELATIONS WITH ONE K. LTD.- ASSESSEE PURCHASING SHARES OF K. LTD. UNDER PRESSURE OF THAT COMPANY WITH A VIEW TO INCREASE ITS BUSINESS- BUSINESS IN FACT BOOSTED SALE OF SHARES RESULTING IN LOSS - SAME A BUSINESS LOSS - AAC AND TRIBUNAL HAVING COME TO THE CONCLUSION THAT SHARES WERE PURCHASED BY ASSESSEE UNDER PRESSU RE TO INCREASE ITS BUSINESS WERE NOT JUSTIFIED IN DISALLOWING LOSS AS BUSINESS LOSS ON THE GROUND THAT ASSESSEE ALLOWED THE SHARES TO REMAIN AS CAPIT AL ASSET AND DID NOT CONVERT THEM INTO STOCK-IN-TRADE. ITA NOS. 379/PN/09 A.Y. 2004-05 PAGE 3 OF 3 6. FURTHER WE HAVE ALSO PERUSED THE SUPREME COURT DECIS ION RELIED UPON BY THE LD. COUNSEL IN THE CASE OF PATNAIK & CO. LTD. VS. CIT 161 ITR 365 (SC) THE CONCLUSION PART READS AS FOLLOWS:- CONCLUSION LOSS ON SALE OF SECURITIES PURCHASED WITH A VIEW T O OBTAIN PREFERENTIAL TREATMENT FROM THE GOVERNMENT IS A BUSINESS LOSS. 6. THUS IT IS EVIDENT FROM THE RECORDS THAT THE BONDS ISSUED BY THE MAHARASHTRA KRISHNA VALLEY DEVELOPMENT CORPORATION HAVE TO BE ACQU IRED BY THE ASSESSEE AS A PART OF THE ARRANGEMENT FOR SQUIRING UP THE DEBT DUE FRO M THE SAID CORPORATION. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE WE ARE OF THE OPINION THAT THE LOSS IN QUESTION IS AN ALLOWABLE ONE IN VIEW OF THE ABOVE CITED JUDGMENTS. THUS THE GROUND NO. 1 IS COVERED IN FAVOUR OF THE ASSESSEE BY THE RATIO REPRODUCED ABOVE. ACCORDINGLY GROUND NO.1 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDERS PRONOUNCED IN THE OPEN COURT ON 08 TH DECEMBER 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH DECEMBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ACIT CIRCLE-1 SANGLI 3. CIT(A)-KOLHAPUR 4. CIT-I KOLHAPUR 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE