Madhuri Kotecha v. ACIT, Central Circle-2, Nashik
[Citation -2019-LL-0821-171]

Citation 2019-LL-0821-171
Appellant Name Madhuri Kotecha
Respondent Name ACIT, Central Circle-2, Nashik
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 21/08/2019
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags fresh assessment • trading activity • speculative loss • business income • revision order • business loss • delay in filing appeal • disallowance of loss • futures and options transaction • set off of loss
Bot Summary: Counsel for the assessee filed a letter dated 17.07.2019 withdrawing the appeal of the assessee on which ld. The assessee submits that the disallowance of set off of losses of Rs.94,26,738 incurred in the F O Trading Activity against the regular business income earned by the assessee was not justified and the learned A.O. may be directed to allow set off of the losses of Rs.94,26,738/- against the regular business income of the assessee. The assessee submits that the losses from F O Trading Activity were not speculative losses and the same were part of the regular business losses and accordingly, the losses from F O Trading Activity should have been set off against the regular business income of the assessee. Counsel for the assessee submitted that the main issue raised in these grounds relates to the losses earned on trading activity of the Futures and Options. The said losses eligible for set up against the regular business income of the assessee. In the result, the appeal of the assessee in ITA No.484/PUN/2019 is partly allowed. To sum up, the appeal of the assessee in ITA No.498/PUN/2019 is dismissed and the appeal of the assessee in ITA No.484/PUN/2019 is partly allowed as above.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, PUNE. BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM. ITA Nos.484 & 498/PUN/2019 Assessment Year 2007-08 Madhuri Kotecha, 4, Siddharth Bunglow, Sagar Society, Vardhman Nagar, Jalgaon-425001. PAN AHMPK6577H Appellant V/s. ACIT, Central Circle-2, Nashik. Respondent Assessee by Shri Harikrishan Revenue by Shri N. Ashok Babu / Date of Hearing 17.07.2019 Date of Pronouncement 21.08.2019 ORDER PER D. KARUNAKARA RAO, AM There are two appeals under consideration by assessee involving assessment year 2007-08. ITA No.498/PUN/2019 Revision Order u/s 263 of Act 2. This appeal is filed by assessee against order of Pr. CIT (Central), Nagpur dated 10.03.2016. 3. This appeal pertains to revisional order passed by Pr. CIT (Central), Nagpur u/s 263 of Act. This appeal is filed belatedly with delay of 1039 days. 2 ITA Nos.484 & 498/PUN/2019 4. Before us, on this appeal, ld. Counsel for assessee filed letter dated 17.07.2019 withdrawing appeal of assessee on which ld. DR for Revenue has no objection. 5. After hearing both sides, without going into issue of condonation, said appeal is dismissed as withdrawn. 6. In result, appeal of assessee in ITA No.498/PUN/2019 is dismissed. ITA No.484/PUN/2019 Fresh Assessment Order u/s 263 r.w.s. 143(3) of Act. 7. This appeal is filed by assessee against order of CIT(A)- 12, Pune dated 22.02.2019 u/s 143(3) r.w.s. 263 of Act. 8. This appeal is filed in connection with fresh assessment made by Assessing Officer giving effect to revisional order of Pr. CIT (Central), Nagpur made u/s 263 of Act. 9. In this appeal, grounds raised by assesseee are as under :- 1. learned CIT(A) erred in holding that he had no jurisdiction to decide issue on merits since learned A.O. had merely followed directions given by learned Pr. CIT(C) in order passed u/s. 263. 2. learned CIT(A) failed to appreciate that in order u/s 263 passed by learned Pr. CIT(C), she had merely set aside asst. order and had directed A.O. to pass fresh order and therefore, assessee was justified in agitating disallowance made by learned A.O. in order passed u/s 143(3) r.w.s. 263 and accordingly, learned CIT(A) should have decided appeal on merits. 3. learned CIT(A) ought to have appreciated that in order passed u/s 263 by learned Pr. CIT(C), she had not given any direction to learned A.O. for making any specific addition/ disallowance and on 3 ITA Nos.484 & 498/PUN/2019 contrary, asst. order was set aside with direction to A.O. to pass fresh order and therefore, learned CIT(A) erred in not adjudicating issue on merits. 4. assessee submits that disallowance of set off of losses of Rs.94,26,738 incurred in F & O Trading Activity against regular business income earned by assessee was not justified and learned A.O. may be directed to allow set off of losses of Rs.94,26,738/- against regular business income of assessee. 5. assessee submits that losses from F & O Trading Activity were not speculative losses and same were part of regular business losses and accordingly, losses from F & O Trading Activity should have been set off against regular business income of assessee. 6. learned CIT(A) has erred by defying squarely applicable Judgement of Jaipur ITAT which have been relied upon by appellant & Learned CIT(A) has erred by not considered said Judgement & also not taking said Judgement on record & has thus defied principles of natural justice. 7. appellant craves leave to add, alter, amend or delete any of above grounds of appeal. 10. Taking us through above extracted grounds, ld. Counsel for assessee submitted that grounds no.1, 2, and 3 are not pressed. Accordingly, same are dismissed as not pressed. 11. Referring to grounds no.4, 5 and 6, ld. Counsel for assessee submitted that main issue raised in these grounds relates to losses earned on trading activity of Futures and Options (F&O). For year under consideration i.e. A.Y. 2007-08, said losses constitute regular losses of business and not speculative losses. Therefore, said losses eligible for set up against regular business income of assessee. In this regard, ld. AR relied on various decisions including decision of Jaipur Bench of Tribunal in case of P. S. Kapur vs. ACIT, 120 TTJ 0422 (Jaipur-Trib.). Referring to contents of para 12 of said decision of Tribunal (supra), ld. Counsel submitted that year under consideration by 4 ITA Nos.484 & 498/PUN/2019 Tribunal is assessment year 2004-05 and losses from such futures and options were considered as normal business losses in view of prospective amendment to section 43(5)(d) of Finance Act, 2005 w.e.f. 01.04.2006. 12. On hearing both sides, we find it relevant to extract said para 12 of aforesaid decision of Tribunal (supra) and same are extracted hereunder :- 12. We further agree with submission of learned Authorised Representative that as per provisions of s. 73, speculative loss can be adjusted only against speculative profit. If cl. (d) to s. 43(5) is considered as prospective amendment and transaction in derivatives as speculative , then losses in derivative prior to amendment would be taken as speculative loss and profit after amendment as business income. This would negate adjustment of loss in derivative prior to asst. yr. 2006-07 from profit in derivative in asst. yr. 2006-07 and subsequently. This would result in hardship and double jeopardy in as much as earlier losses in derivative would not be available for set off against subsequent profit in derivative. This position can be reconciled only if insertion of cl. (d) to s. 43(5) is taken to be clarifying law as it always exists. Hence, on harmonious interpretation of law, derivative transaction can t be considered as speculative transaction. In view of above it is clear that transactions in derivative are normal business transactions. Accordingly loss suffered in trading in derivatives can t be considered as speculative loss. 13. We further extract conclusion of this decision of Tribunal (supra) as under :- Clause (d) inserted in proviso to sub-s. (5) of s. 43 by Finance Act, 2005 w.e.f. 1st April, 2006 is retrospective in application; loss claimed by assessee in derivative transaction is allowable as business loss as same is not covered by s. 43(5). 14. Considering above settled legal proposition of law on this issue and retrospective amendment of clause (d) of section 43(5) of Act, 5 ITA Nos.484 & 498/PUN/2019 we are of opinion that CIT(A) erred in treating same as speculative losses and, therefore, decision of CIT(A) requires to be set-aside. said retrospective amendments allow impugned losses as business losses only. Accordingly, relevant grounds no.4, 5 and 6 raised by assessee are allowed. 15. In result, appeal of assessee in ITA No.484/PUN/2019 is partly allowed. 16. To sum up, appeal of assessee in ITA No.498/PUN/2019 is dismissed and appeal of assessee in ITA No.484/PUN/2019 is partly allowed as above. Order pronounced on 21st day of August, 2019. Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Pune Dated 21st August, 2019. Sujeet Copy of Order forwarded to 1. Appellant. 2. Respondent. 3. CIT(A)-12, Pune. 4. Pr. CIT, Central, Nagpur. 5. DR, ITAT, Bench, Pune. 6. Guard File. / BY ORDER, True Copy Senior Private Secretary, ITAT, Pune. Madhuri Kotecha v. ACIT, Central Circle-2, Nashik
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