IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 2885/MUM/2012 : (A.Y : 2007-08) M/s. Metropolitan Trading Company Vs. Addl. CIT-18(2), 10/76, Off Haines Road, Worli, Mumbai (Respondent) Mumbai 400 018 (Appellant) PAN : AAAFM1474C Assessee by : Smt. Vasanti B. Patel Revenue by : Shri M. Rajan Date of Hearing : 26/09/2016 Date of Pronouncement : 30/09/2016 ORDER PER G.S. PANNU, AM : This appeal by assessee is directed against order of CIT(A)-29, Mumbai dated 13.01.2012, pertaining to Assessment Year 2007-08, which in turn has arisen from order dated 30.12.2009 passed by Assessing Officer, Mumbai under section 143(3) of Income Tax Act, 1961 (in short Act ). 2. In this appeal, assessee has raised following Grounds of appeal :- 1. learned CIT(A) erred in confirming finding of assessing officer that loss of Rs.6,58,094/- was speculative in nature. 2 M/s. Metropolitan Trading Co. ITA No. 2885/Mum/2012 2. (a) Without prejudice to above, learned CIT(A) erred in not directing setting off of profit of Rs.1,26,357/- against loss of Rs.6,58,094/-. (b) learned CIT(A) failed to appreciate that nature of loss of Rs.6,58,094/- and profit of Rs.1,26,357/- was identical and having treated loss Rs.6,58,094/- as speculative loss, he ought to have treated profit of Rs.1,26,357/- as speculative and directed setting off of two. (c) learned CIT(A) failed to appreciate that assessing officer had not given any finding to effect that profit of Rs.1,26,357/- was on delivery-based transaction. 3. In brief, relevant facts that appellant is partnership firm which is engaged in business of manufacturing and sale of ties, shirts and other business incidental thereto. In course of assessment proceedings, Assessing Officer noticed that assessee had debited in Profit & Loss Account sum of Rs.6,58,094/- under head loss on commodities and derivatives . On being show-caused, assessee contended that transactions in commodities were undertaken where delivery was taken and storage charges were paid for storing same and that it was to be understood as business loss eligible for set-off against other business income and other incomes. Assessing Officer, however, negated plea of assessee and held that such loss was speculative loss hit by provisions of Sec. 43(5) of Act. CIT(A) has also affirmed said decision. Both lower authorities have concurrently recorded finding that assessee has not given any proof of taking actual delivery of commodities while concluding that transactions were speculative in nature. 3 M/s. Metropolitan Trading Co. ITA No. 2885/Mum/2012 4. aforesaid position continues even before us and, therefore, we find no reason to interfere with said conclusion of lower authorities. However, learned representative for assessee pointed out that aforesaid transactions were in Jeera which had been treated as speculative in nature. learned representative referred to copy of Profit & Loss Account placed in Paper Book at page 7 and pointed out that assessee had also credited sum of Rs.1,26,357/- as profit on commodities and derivatives . It has been pointed out that aforesaid crediting of income is on similar footing as loss on commodities and derivatives debited in Profit & Loss Account. According to her, profit earned under similar circumstances be also taken as of similar nature as loss of Rs.6,58,094/- considered to be speculative in nature. plea of learned representative is that assessee be allowed to set-off such profit and that balance of speculative loss be allowed to be carried and set-off in subsequent years against speculative income, as per law. 5. ld. DR merely placed reliance on order of lower authorities and contended that in absence of proof of delivery, loss has been rightly held to be assessable as speculative loss. 6. Having considered rival stands, we find that alternative plea raised by learned representative for assessee deserves to be upheld. No doubt, loss of Rs. 6,58,094/- has been rightly treated as speculative loss, so however, even profit declared by assessee of Rs. 1,26,357/- under similar circumstances deserves to be treated as speculative profit. Assessing Officer is directed to set-off 4 M/s. Metropolitan Trading Co. ITA No. 2885/Mum/2012 speculative loss against speculative income of current year and allow carry-forward of balance loss for adjustment in future years, as per law. Thus, on this aspect, assessee partly succeeds. 7. only other issue assailed by assessee is adhoc disallowance of 20% out of car expenses and depreciation disallowed by lower authorities on account of personal use of car. 8. On this aspect, learned representative for assessee referred to Paper Book and pointed out that expenses which have been subjected to disallowance cannot be construed as personal expenses because assessee has paid Fringe Benefit Tax on same. In this context, reference has been made to page 27 to 31 of Paper Book wherein details of Fringe Benefit Tax (FBT) paid have been placed. 9. Considering aforesaid submissions, we find no reason to uphold adhoc disallowance made by lower authorities especially considering fact that assessee has paid FBT on such expenses. order of CIT(A) is set-aside and Assessing Officer is directed to delete addition. 10. In result, appeal of assessee is partly allowed. Order pronounced in open court on 30th September, 2016. Sd/- Sd/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Date : 30th September, 2016 SSL 5 M/s. Metropolitan Trading Co. ITA No. 2885/Mum/2012 Copy to : 1) Appellant 2) Respondent 3) CIT(A) concerned 4) CIT concerned 5) D.R, B Bench, Mumbai 6) Guard file By Order Dy./Asstt. Registrar I.T.A.T, Mumbai M/s. Metropolitan Trading Company v. Addl. CIT-18(2), Mumbai