ECD ELECTRONS & ELECTROLYSIS P.LTD,MUMBAI vs. ASST CIT CIR 2(1)(2), MUMBAI

O R D E R

PER RAM LAL NEGI, JM

2. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective ground:- Assessment Year: 2009-10 1. Ground – I Re-opening proceedings u/s 147 of the Act are bad in law 1 On the facts and circumstances of the case and in law, the Hon‟ble Commissioner of Income Tax (Appeals) [“the CIT (A)”] erred in upholding the action of the Assessing Officer (“the AO”) in re-opening the assessment and passing an order u/s 143 (3) read with section 147 of the Income Tax Act, 1961 (“The Act”) without there being there being any valid reason for re-opening. 2. The Appellant therefore prays that the order passed by the AO u/s 143 (3) r.w.s. 147 of the Act be quashed, as being void and bad in law.. Ground – II: Set off of loss from trading in shares against interest income 1.On the facts and circumstances of the case and in law, the CIT (A) erred in upholding the action of the AO in treating the loss, arising from sale of shares held as stock-in-trade as speculation loss by invoking Explanation to section 73 of the Act and not allowing to set off the same against the interest income from business of lending. 2.The Appellant, therefore prays that the aforesaid loss on sale of shares is a non-speculative business loss, hence be allowed to set-off against the interest from business of lending . Without prejudice to ground – II: Ground-III: Allocation of finance cost to share trading activity on proportionate basis. 1. On the facts and circumstances of the case and in law, the CIT (A) erred in upholding the action of the AO in allocating the finance cost to the trading activity of the Appellant, without appreciating the fact that the borrowed funds are deployed in granting loans and advances and other current assets (other than stock) 2.Without prejudice to the above, if finance cost is held to be allocated, the Appellant prays that the same be allocated on the basis of total assets and not merely Loans and Advances and stock in trade. 3. The Appellant, therefore, prays that the finance cost not be allocated to the trading activity or the allocation appropriately modified.” Assessment Year: 2009-10 3. The assessee raised the following additional grounds during pendency of the present appeal:

1. On the facts & circumstances of the case, the CIT (A) erred in enhancing the income by treating income earned from money lending business as income from other sources instead of Business Income without issuing notice u/s 251 (2) 2. The Appellant humbly prays that the aforesaid enhancement be deleted. Without prejudice to the additional ground No. 1 Additional Ground No. 2: Treatment of Business income as income from other sources 1. On the facts & circumstances of the case, the Ld. CIT (A) erred treating income earned from money lending business as income from other sources.

4. The Ld. departmental representative did not oppose the aforesaid submissions made by the Ld. counsel. 5. In the case of M/s. Nannusamy Mohan (HUF) vs. ACIT, TCA No 372 of 2020, the Hon’ble Madras High Court has dismissed the appeal of the assessee as withdrawn in which the counsel had made the similar submissions before the Hon’ble Court. The observations of the Hon’ble High Court are as under:-

“3. The learned counsel for the appellant / assessee, on instructions, submitted that the appellant / assessee intends to avail the benefit of Vivad Se Vishwas Scheme („VVS Scheme‟ for brevity) and in this regard, the assessee is taking steps to file the application / declaration in Form No. I.

6. The First Proviso to Section 3 states that in case, where an Appeal or Writ Petition or Special Leave Petition is filed by the Income Tax authority on any issue before the Appellate Forum, the amount payable shall be one-half of the amount in the table stipulated in Section 3 calculated on such issue, in such a manner as may be prescribed. The second proviso deals with the cases, where the matter is before the Commissioner (Appeals) or before the Dispute Resolution Panel. The third proviso deals with cases, where the issue is pending before the Income Tax Appellate Tribunal. The filing of the declaration is as per Section 4 of the Act and the particulars to be furnished are also mentioned in the Sub Sections of Section 4. Section 5 of the Act deals with the time and manner of the payment and Section 6 deals with Immunity from initiation of proceedings in respect of offence and imposition of penalty in certain cases. Section 9 of the Act deals with cases, where the Act 3 of 2020 will not be applicable.