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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri Laliet Kumar
Per Laliet Kumar, J.M.
This is assessee’s appeal for the A.Y 2016-17 against the order of the CIT (A)- 4, Hyderabad, dated 25/01/2019. The assessee has raised the following grounds of appeal: “a) The commissioner appeal has wrongly upheld addition of losses of Rs2,56,62,416/-16.on account of F&O business to business income on the basis that the assessee himself has added the same in his return of income. The Commissioner appeals has not appreciated that this was brought to the notice of the assessing officer during the assessment proceedings ix[sec 143(2), the F&O losses were not claimed as a speculative loss, that the addition by the assessee in the income tax return was inadvertent and clerical, and most of all not consistent with the income tax law b) The commissioner appeals has wrongly upheld Rs40,81,346/- being not allowed as deduction from business income on the basis that the same was wrongly claimed for set off against short term capital gain. The commissioner appeals has not appreciated that the same was added in capital gains in the assessment order
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ITA No 421 of 2020 Mars Telecom Systems P Ltd Hyderabad
c) Any other ground as may be prayed”.
At the outset, the learned AR has submitted that the assessee has filed the application for admission of additional grounds which are as follows: “PETITION UNDER RULE 11 OF APPELLATE TRIBUNAL RULES, 1963
The Appellant had filed his return reporting a total income of Rs.3, 18,99,201 During the course of the income tax hearing u/se c143(2) a claim was made before the assessing officer that while computing the income by inadvertence loss on account of 'F&O' transactions was added back to the income. The Assessing officer did not allow the same as the claim was not made by way of a revised return. Subsequently before the Commissioner (appeals) a similar claim was made in the submissions made. The Commissioner(appeals) did not allow the claim. The Appellant with the leave of the Hon'ble Tribunal desires to raise the following grounds as additional grounds of appeal and requests that this ground is also heard along with the other grounds of appeal already filed.
ADDITIONAL GROUNDS
(1) The learned CIT(A) view for not following CBDT'S circular is contrary to the spirit behind circular for not collecting extra tax from taxpayer and therefore bad in law
(2) The learned CIT (A) having power to entertain new claim as held by various judicial pronouncements ought to have directed AO to consider F&O loss as per the claim and compute income.
(3) It is prayed that it is also within the power of the honorable tribunal as has been held by various judicial pronouncements to entertain a new claim as long as the evidence for the same was available before the assessing authorities to pass suitable directions to the Assessing officer for set off of F&O losses. It is submitted that the Appellant had submitted the case laws and the other evidence in support of the above referred ground before the CIT(A). It is prayed that the Hon'ble Tribunal may be pleased to admit the additional ground raised above and pass such other order(s) as the Hon'ble Tribunal deems fit and proper in the interest of justice”.
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It was submitted by the learned AR that these grounds are legal in nature and, therefore, the same may be admitted. The learned DR has not opposed the admission of the additional grounds. In the light of the above, the additional grounds raised by the assessee are admitted.
The grievance of the assessee before us, was that the assessee had inadvertently claimed Rs.2,56,62,416/- on account of F&O business as loss from speculative loss , therefore it was not allowed to be set-off from business income in terms of section 43 of the Act . It was the submission of the learned AR that the loss on account of future and option is actually to be considered as business loss in terms of section 43 of the Act and therefore, assessee was entitled to set off against the business income of the assessee. It was submitted that the request was made before the Assessing Officer to this effect , however, the Assessing Officer has declined the same.
Feeling aggrieved, the assessee appealed before the CIT (A) and the CIT (A) had also rejected the contention of the learned DR which is mentioned in Paragraph 5, 5.1 & 5.2 as under:
“5. I have carefully considered the assessment order, submissions of the AR, and the statements produced before me. The ground no. 1 & 3 is that AO should have allowed the loss of Rs 2,56,62,416/- as a loss from forwards & options and not as loss from speculative business as inadvertently shown by the appellant in its return of income. The appellant Company filed its return of income for AY 2016-17 on 17.10.2016 declaring total income of Rs 3,18,99.200/-. During the assessment proceedings, the appellant filed a letter before the AO that it had incurred loss of Rs 2,56,62,416/- on account of futures & options which was inadvertently claimed as loss from speculation business in the return of income and that the Aa may allow the same as business loss under the proviso to section 43(5). The AR claims that a letter was addressed to the Aa Page 3 of 7
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on 14.12.2018i.e. before the completion of assessment (assessment order u/s 143(3) was passed on 28.12.2018) stating as under:
"This is to inform you that while filing the return under Sec 139(1), we have by Inadvertence treated the loss on account of trading in futures and options of Citibank investments of RS.2,56,49,0251- as speculative loss. We beg to inform you that the same is not to be treated as speculative loss but normal business loss as per the provisions of sec 43(5) read with its proviso of the income tax act. This being so, as the assessment proceedings u/s 143(2) are underway, we shall be grateful if this is kindly corrected and treated as business loss and set off against other business income.
We wish to inform you that the time limit for filing of revised return is over for the return filed for asst. year 2016-17 and as such we are not able to revise the return and therefore particularly this request. ••
5.1 The appellant Company had filed its original return of income on 17.10.2016 which was the last date for filing return of income for AY 2016-17 after the CSDT had extended the due date for filing return for those taxpayers whose accounts are audited u/s 44AB from 30th September to 17th October of 2016. As per section 139(5) the appellant could have rectified its mistake by filing a revised return before the end of the relevant assessment year, i.e., 31st March 2017, or before the completion of the assessment, whichever is earlier. However, the appellant has failed to file any revised return. The AO rejected the request of the appellant by stating that the appellant ought to have rectified its mistake by filing a revised return and rejected the request of the appellant.
5.2 In my considered view the Aa has done the correct thing since as per the Apex Court has held in the case of Goetze (India) Ltd vs CIT [(2006) 157 Taxman 1 (SC)] that the only way any modification can be made in the return of income is through filing a revised return. The appellant's AR has referred to CBDT Circular no. 14 dated 11.04.1955 whereby the CBDT directed the Officers of the Department not to take advantage of the ignorance of an assessee and assist the taxpayers in all possible manner. However, the above-said Circular does not come to the rescue of the appellant since the AR has failed to explain in what manner the AO was taking advantage of the ignorance of the appellant. The appellant Company is a midsize Company engaged in the business of software development and cannot claim to be ignorant. In fact the appellant Company has been lethargic and negligent.
The appellant's AR has also referred to the decision of Hon'ble Delhi High Court in the case of CIT vs Sam Global
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Securities Ltd [(2013) 38 taxmann.com 129 (Delhi)]. But the same decision discusses the powers of the Tribunal and not of the assessing authority. Hence the appellant cannot draw any support from this decision. Therefore, in view of the above discussion, the grounds of appeal in this regard are dismissed”.
Aggrieved, the assessee is in appeal before the Tribunal raising the above mentioned grounds/additional grounds of appeal. At the outset the learned AR submitted that the order passed by the learned CIT (A) is incorrect as the learned CIT (A) had misdirected himself about the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd vs CIT [(2006) 157 Taxman 1 (SC)] and had wrongly relied upon the CBDT circular 14 dated 11.4.1955. It was the contention of the learned AR that from the bare reading of the Judgment of the Hon'ble Supreme Court and also the judgments of various High Court including the judicial High Courts, it is abundantly clear that the Tribunal/CIT (A) can examine a claim even if filled for the first time before the CIT(A)/Tribunal, which was not filed before the Assessing Officer. Our attention was drawn to the following judgments: A) Hon'ble Supreme Court in the case of Price Waterhouse Coopers vs. CIT (Civil Appeal No.69242012) of 2009 B) Hon'ble Supreme Court in the case of Jute Corporation of India Ltd vs. CIT, 1991 AIR 241, 1990 SCR Supl.(1) 340 dated 5.9.1990. C) Hon'ble Supreme Court in the case of NTPC vs. CIT, 229 ITR 383 (S.C) D) Hon'ble Supreme Court in the case of Goetze (India) Ltd vs. CIT 284 ITR 323 (S.C) dated 24.3.2006 E) Hon'ble Bombay High Court in the case of CIT vs. M/s Pruthvi Broker & Shareholders P Ltd in ITA No.3908 of 2010 dated 21/6/2012. F) Coordinate Bench of ITAT Bangalore in the case of Shri Thimmareddy Krishnareddy vs. Income Tax Officer in ITA No.2650/Bang/2019 dated 4.1.2021 G) Hon'ble Delhi High Court in the case of CIT vs. Sam Global Securities Ltd in ITA No.214/2013 dated 2/9/2013 H) Hon'ble Gujarat High Court in the case of CIT vs. Milton Laminates Ltd in ITA 1022/2010 dated 24.01.2012
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I) Hon'ble Gujarat High Court in the case of Gujarat Gas Co. Ltd vs. CIT (2000) 245 ITR 84 Guj. Dated 18.4.2000 J) ITAT Kolkata in the case of ACIT vs. Smt. Sharmila Kumar in ITA 679/Kol/2016 dated 14.5.2018
Per contra, the learned DR relied upon the orders passed by the lower authorities.
We have gone through the rival contentions and perused them material on record. On a perusal of the judgment of the Hon'ble Supreme Court in the case Goetze (India) Ltd vs CIT [(2006) 157 Taxman 1 (SC)], it is abundantly clear that the embargo was laid against the power of the Assessing Officer to entertain the fresh claim if not claimed either in Return of Income or revised return. However, that does not impinge on the power of the Appellate Tribunal u/s 254 of the Act/CIT(A). Admittedly, the issue was raised before the Assessing Officer, CIT (A) and before us. The learned CIT (A) had merely rejected the claim of the assessee on the ground that the same is not maintainable before him. In our view, the view taken by the learned CIT (A) had led to denial of justice and the issue raised by the assessee had remained unaddressed. In the light of the above, we deem it fit and proper to remand all the issues raised in the present appeal to the file of Assessing Officer with the direction to examine the claim of the assessee and decide the issue in accordance with law. Needless to say, that the objections raised hitherto by the Assessing Officer will not come in the way of the Assessing Officer to decide the issue afresh.
Resultantly, the appeal of the assessee is allowed for statistical purposes.
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Order pronounced in the Open Court on 31ST May, 2022.
Sd/- Sd/- (R.K. PANDA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated 31st May, 2022. Vinodan/sps
Copy to:
S.No Addresses 1 M/s. Mars Telecom Systems (P) Ltd, 7th Floor, Building No.H07, Avance Business Hub, Phoenix Infocity, Hightech City-2, Madhapur, Hyderabad 500032 2 ACIT, Circle-16(2), 2nd Floor, A Block IT Towers, AC Guards, Hyderabad 500004 3 CIT (A)-4, Hyderabad 4 Pr. CIT – 4, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File
By Order
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