The ACIT, Circle-5,, Surat v. M/s. Anahita Associates, Surat

ITA 381/AHD/2010 | 2006-2007
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 38120514 RSA 2010
Assessee PAN AAHFA0067B
Bench Ahmedabad
Appeal Number ITA 381/AHD/2010
Duration Of Justice 2 year(s) 5 month(s) 19 day(s)
Appellant The ACIT, Circle-5,, Surat
Respondent M/s. Anahita Associates, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 27-07-2012
Date Of Final Hearing 26-07-2012
Next Hearing Date 26-07-2012
Assessment Year 2006-2007
Appeal Filed On 08-02-2010
Judgment Text
D IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH . .. . . .. . !' !' !' !' #$ #$ #$ #$ %& %& %& %& &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND TEJ RAM MEENA ACCOUNTANT MEMBER) ITA NO.381/AHD/2010 [ASSTT.YEAR : 2006-2007] ACIT CIR.5 SURAT. /VS. M/S.ANAHITA ASSOCIATES THE RETREAT B/H. VIGNESHWAR ESTATE NANPURA SURAT. PAN : AAHFA 0067 B ITA NO.738/AHD/2010 [ASSTT.YEAR : 2006-2007] M/S.ANAHITA ASSOCIATES THE RETREAT B/H. VIGNESHWAR ESTATE NANPURA SURAT. /VS. ACIT CIR.5 SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( ( -*+ -*+ -*+ -*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI T. SHANKAR 1% . / &/ ASSESSEE BY : SHRI J.P. SHAH 2 . %3'/ DATE OF HEARING : 26 TH JULY 2012 456 . %3'/ DATE OF PRONOUNCEMENT : 27-07-2012 &7 / O R D E R PER G.C. GUPTA VICE-PRESIDENT: THESE CROSS-APPEALS BY THE REVENUE AND THE ASSESSEE FOR THE ASSTT.YEAR 200 6-2007 ARE ITA NO.381 AND 738/AHD/2010 -2 DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV SURAT DATED 17.11.2009. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.738/AHD/2010 A.Y.2006:2007 (ASSESSEES APP EAL) 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE REJECTION OF THE CLAIM OF THE APPELL ANT TO THE TUNE OF RS.89 53 061/- FOR SET OFF OF LOSS IN DERIVATIVE S TRADING AGAINST THE OTHER BUSINESS PROFIT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE OF SET OFF OF LOSS IN DERIVATIVE TRADING AGAINST OTHER BUSINESS PROFIT IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE AHMEDABAD TRIBUNAL IN THE CASE OF ACIT VS. HIREN JASWANTRAI S HAH 141 TTJ (AHD) 851 AND ITAT KOLKATA SPECIAL BENCH DECISION IN THE CASE OF SHREE CAPITAL SERVICES LTD. VS. ACIT 121 ITD 498 ( KOL) (SB). THE LEARNED AR SUBMITTED THAT THE SPECIAL BENCH OF KOLK ATA TRIBUNAL IN SHREE CAPITAL SERVICES LTD. (SUPRA) IN PARA 6.4 OF THE DECISION HAS HELD THAT AMENDMENT BROUGHT INTO EXISTENCE DO NOT LEAD T O THE INFERENCE THAT IT WAS RETROSPECTIVE. THE LEARNED DR SUBMITTE D THAT THE AMENDMENT WAS BROUGHT ON 25-1-2006 AND THEREFORE THE CUT OFF DATE SHOULD BE 25-1-2006. HE RELIED ON THE ORDER OF THE AO AND THE CIT(A) AND ALSO THE DECISION OF SHREE CAPITAL SERVI CES LTD. (SUPRA). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE DECISION OF THE KOLKATA SPECIAL BENCH IN SHREE CAPITAL SERVICES LTD . (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE. IN PARA 7 OF ITS ORDER THE KOLKATTA SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT CLAUSE (D) OF S ECTION 43(5) IS ITA NO.381 AND 738/AHD/2010 -3 PROSPECTIVE IN NATURE AND SHALL BE EFFECTIVE FROM 1 -4-2006 AND WILL BE APPLICABLE TO THE ASSESSMENT YEAR 2006-2007 ONWARDS . THE CASE OF THE ASSESSEE BEFORE US RELATES TO THE ASSTT.YEAR 20 06-2007 AND SHALL APPLY TO THIS ASSESSMENT OF THE ASSESSEE. THE AHME DABAD TRIBUNAL IN ACIT VS. HIREN JASWANTRAI SHAH (SUPRA) HAS HELD THA T LOSS FROM DERIVATIVE TRANSACTIONS WOULD BE TREATED AS NON-SPE CULATIVE WITHIN THE MEANING OF CLAUSE (D) OF PROVISO TO SECTION 43(5) O F THE ACT. WE BEING IN AGREEMENT WITH THE DECISION OF THE CO-ORDI NATE BENCH OF THE TRIBUNAL CITED BY THE LEARNED COUNSEL OF THE ASSESS EE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE LOSS FR OM DERIVATIVE TRANSACTIONS OF SHARES ARE TO BE TREATED AS NON-SPE CULATIVE WITHIN THE MEANING OF CLAUSE (D) OF PROVISO TO SECTION 43(5) F OR THE RELEVANT ASSESSMENT YEAR 2006-2007 AND ACCORDINGLY GROUND N O. 1 OF THE ASSESSEES APPEAL IS ALLOWED. ITA NO.381/AHD/2010 A.Y.2006:2007 (REVENUES APPE AL) 5. THE GROUND NO.1 OF THE REVENUES APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS ERRED IN ALLOWING THE ADDITI ON OF RS.39 72 112/- MADE BY THE AO ON ACCOUNT OF WRONG A DJUSTMENT OF B/F SPECULATION LOSS PERTAINING TO A.Y.2004-05 & 2005-06 AGAINST THE NORMAL BUSINESS OF THE CURRENT YEAR. 6. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT(A). 7. WE FIND THAT THE AMENDMENT TO CLAUSE (D) OF PROV ISO TO SECTION 43(5) HAS COME INTO THE STATUTE BOOK W.E.F. 1-4-200 6 AND THEREFORE IT SHALL NOT APPLY TO THE LOSS FROM DERIVATIVE TRADING PERTAINING TO THE ASSTT.YEAR 2004-05 AND 2005-2006 AND ACCORDINGLY THE ISSUE HAS TO ITA NO.381 AND 738/AHD/2010 -4 BE DECIDED IN FAVOUR OF THE REVENUE. THE VARIOUS D ECISIONS OF THE TRIBUNAL CITED BY BOTH THE PARTIES BEFORE US WHILE DISPOSING OF GROUND NO.1 IN THE ASSESSEES APPEAL SUPPORTS THE ABOVE P ROPOSITION. ACCORDINGLY THE GROUND NO.1 OF THE REVENUE IS ALLO WED. 8. THE GROUND NO.2 OF THE REVENUES APPEAL READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED IN DIRECTING THE AO TO AL LOW DEDUCTION U/S.40(B) I.E. SALARY TO PARTNERS FROM TH E ENHANCED INCOME OF THE FIRM WHEREAS THE ASSESSEE HAS NOT DEB ITED ANY AMOUNT TOWARDS THE SALARY TO PARTNERS IN THE P&L AC COUNT AND OBVIOUSLY NOT SHOWN IN THE RETURN OF INCOME FILED B Y THE RESPECTIVE PARTNERS. 9. WE HAVE HEARD THE PARTIES. THE ISSUE IS RESTORE D TO THE FILE OF THE AO TO ALLOW DEDUCTION UNDER SECTION 40(B) OF TH E ACT ON ACCOUNT OF SALARY TO THE PARTNERS FROM THE ENHANCED INCOME OF THE FIRM AFTER VERIFICATION OF THE FACTS AND AFTER CONSIDERING THE RELEVANT TERMS AND CONDITIONS IN THE DEED OF PARTNERSHIP EXECUTED BETW EEN THE PARTIES. WE DIRECT ACCORDINGLY. 10. THE GROUND NO.3 OF THE REVENUES APPEAL READS A S UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED DIRECTING THE AO TO ALLOW DEDUCTION ALLOWABLE U/S.80EE OF THE IT ACT IN RESPECT OF SECU RITY TRANSACTION TAX PAID BY THE APPELLANT FIRM DUE TO V ARIOUS ADDITIONS. 11. THE LEARNED DR HAS RELIED ON THE ORDER OF THE A O AND THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE CIT(A) HAS DIRECTED THE AO TO ALLOW DEDUCTION ALLOW ABLE UNDER ITA NO.381 AND 738/AHD/2010 -5 SECTION 88E OF THE ACT IN RESPECT OF SECURITY TRANS ACTION TAX PAID BY THE ASSESSEE AFTER MAKING NECESSARY VERIFICATION. THERE BEING NO MERIT IN THIS GROUND OF THE REVENUE WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE GROUND OF THE REVENUE 13. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D AND THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD