DCIT 4(1), MUMBAI v. ALTINA SECURITIES P. LTD, MUMBAI

ITA 3825/MUM/2009 | 2005-2006
Pronouncement Date: 31-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 382519914 RSA 2009
Assessee PAN AAACA7105M
Bench Mumbai
Appeal Number ITA 3825/MUM/2009
Duration Of Justice 1 year(s) 7 month(s) 18 day(s)
Appellant DCIT 4(1), MUMBAI
Respondent ALTINA SECURITIES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 31-01-2011
Assessment Year 2005-2006
Appeal Filed On 12-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI R.S. SYAL (AM) & SMT. ASHA VIJAYARAGHAN (JM) I.T.A.NO.3825/MUM/2009 (A.Y. 2005-06 ) DCIT-4(1) 6 TH FLOOR ROOM NO.640 AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020. VS. M/S. ALTINA SECURITIES PVT. LTD. 303 ANAND HOUSE 13 TH ROAD OFF LINK RD. KHAR (W) MUMBAI-400 052. PAN: AAACA 7105 M APPELLANT RESPONDENT APPELLANT BY SHRI SHRAVAN KUMAR. RESPONDENT BY SHRI SA NJAY R. PARIKH. O R D E R PER R.S. SYAL AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 13-03-2009 IN RELATION TO THE ASSTT. YEAR 2005-0 6. 2. THE FIRST 4 GROUNDS ARE AGAINST THE DIRECTION GI VEN BY THE CIT(A) TO TREAT THE LOSS INCURRED ON ACCOUNT OF `DERIVATIVE TRANSAC TIONS AS NOT SPECULATIVE. 3. FILTERING OUT UNNECESSARY DETAILS WE FIND THAT THIS ISSUE NOW STANDS DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN KOL KATA IN SHREE CAPITAL LTD. VS. ACIT (2009) 28 DTR (CAL.) (SB) (TRIBUNAL) AGAINST T HE ASSESSEE. IT HAS BEEN HELD THAT LOSS ON ACCOUNT OF TRANSACTIONS IN DERIVATIVES IS SPECULATION UPTO THE ASSTT. YEAR 2005-06. AS THE ASSESSMENT YEAR INVOLVED IN TH E PRESENT APPEAL IS THE SAME RESPECTFULLY FOLLOWING THE PRECEDENT WE OVER TURN THE IMPUGNED ORDER ON ITA 3825/M/09 2 THIS ISSUE AND RESTORE THE ACTION OF THE AO IN TREA TING THIS LOSS AS SPECULATIVE. THE LD. A.R. ALSO CANDIDLY ACCEPTED THAT THIS ISSUE WAS COVERED BY THE SPECIAL BENCH DECISION AGAINST THE ASSESSEE. THESE GROUNDS ARE AL LOWED. 4. GOUND NOS. 5 TO 10 ARE AGAINST THE DELETION OF D ISALLOWANCE OF RS.4.98 LAKHS MADE BY THE AO IN RESPECT OF VSAT LEASELINE AND TRANSACTION CHARGES. HERE ALSO BOTH THE SIDES ARE IN AGREEMENT THAT THE TRIBUNAL HAS HELD IN SEVERAL CASES THAT THE PROVISIONS OF SEC.194J ARE NOT ATTRA CTED ON SUCH VSAT LEASELINE AND TRANSACTION CHARGES AND HENCE DISALLOWANCE IS N OT CALLED FOR U/S.40(A)(IA). A COPY OF THE ORDER PASSED IN ITO VS. LKP SHARES & SE CURITIES LTD. DATED 30-10- 2009 IN IA NO.6915/M/08 HAS BEEN PLACED ON RECORD. THE BENCH WHILE DECIDING THIS ISSUE IN ASSESSEES FAVOUR HAS RELIED ON ANOT HER ORDER PASSED BY THE MUMBAI BENCH IN THE CASE OF KOTAK SECURITIES LTD. VS. ACIT 24 DTR 214 (BOM.) . THE LD. D.R. WAS FAIR ENOUGH TO CONCEDE THAT THE FACTS OF T HESE GROUNDS ARE COVERED BY THE AFORENOTED ORDERS. RESPECTFULLY FOLLOWING THE S AME WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THESE GROUNDS ARE NOT ALLOWED. 5. THE LAST EFFECTIVE GROUND IS AGAINST THE ALLOWIN G OF CREDIT FOR TRADING PROFIT OF RS.3 63 677/- AGAINST THE SPECULATION LOSS. THE AO DID NOT ALLOW SPECULATION LOSS OF RS.9 17 835/- TO BE PARTLY ADJUSTED AGAINST TRADING PROFIT OF RS.3 63 677/-. THE LD. CIT(A) DIRECTED THAT THE SPE CULATION LOSS OF RS.9.17 LAKHS WAS TO BE CONSIDERED AS BUSINESS LOSS AND NOT SPECU LATIVE LOSS. 6. IN VIEW OF OUR DECISION ON GROUND NOS. 1 TO 4 OF THE ABOVE APPEAL HOLDING THAT THE LOSS FROM DERIVATIVES IS TO BE CONSIDERED AS SPECULATION LOSS THIS GROUND OF THE REVENUES APPEAL CHALLENGING THE ALLOWING OF SET OFF OF SPECULATION LOSS AGAINST THE NON-SPECULATIVE INCOME BECOMES AUTOMATI CALLY ALLOWABLE. IT IS ITA 3825/M/09 3 OBVIOUS THAT WHEN THE LOSS FROM DERIVATIVES HAS BEE N HELD TO BE SPECULATIVE LOSS IT CANNOT BE SET OFF AGAINST NON-SPECULATIVE BUSINE SS INCOME. THIS GROUND IS ALLOWED. 7. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 31ST DAY OF JANUARY 2 011. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN ) (R.S. SYAL) JUDICIAL MEMBER ACCOUN TANT MEMBER MUMBAI: 31ST JANUARY 2010. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-IV MUMBAI. 4 CIT-4 MUMBAI. 5.DR A BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA 3825/M/09 4 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 27-01-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 27-01-2011 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 ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *