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Income Tax Appellate Tribunal, “E”, BENCH
आदेश / O R D E R PER M. BALAGANESH (A.M):
These cross appeals in 1510/Mum/2014 for A.Y.2001-02 arise out of the order by the ld.
1510/Mum/2014 M/s. Triumph International Finance India Ltd., Commissioner of Income Tax (Appeals)-36, Mumbai in appeal No. CIT(A)- 36/AP-52/12-13 dated 13/12/2013 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 254 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 28/12/2011 by the ld. Asst. Commissioner of Income Tax, Central Circle, 40, Mumbai (hereinafter referred to as ld. AO). Since identical issues are involved in these appeals, they were heard together and are being disposed off by this consolidate order, for the sake of convenience.
2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in upholding the action fo the ld AO in not allowing the loss of Rs 4,84,12,423/- on share transactions to subsequent years, in the facts and circumstances of the case.
3. The brief facts of this issue are that the assessee company is engaged in the business of investment and trading in shares and securities. The assessee is also a stock broker. The original assessment was completed u/s 143(3) of the Act for the Asst Year 2001-02 on 30.3.2004 determining total income of the assessee at Rs 18,57,47,180/- as against the returned income of Rs Nil. The following additions / disallowances were made in the said assessment which are recorded in the impugned assessment order before us are as under:- :- a) Disallowance of Share Trading Loss - Rs 9,39,48,483/- b) Addition towards Dividend u/s 10(33) - Rs 39,37,900/- c) Bad Debts - Rs 8,76,88,237/- d) Penalty - Rs 2,04,061/-
1510/Mum/2014 M/s. Triumph International Finance India Ltd., 3.1. In respect of additions / disallowances made from b) to d) above, the assessee succeeded before the ld CITA and no further appeal was preferred by the revenue in that regard. The only issue which travelled to this tribunal in the first round of proceedings was with regard to disallowance of share trading loss of Rs 9,39,48,483/-. This tribunal in dated 25.6.2010 had observed that according to the assessment order, the assessee had claimed share trading loss as speculation loss and asked for carry forward of speculation loss to an extent of Rs 4,84,12,423/-. The ld AO had issued a show cause notice vide letter dated 15.3.2004 asking for details of losses on account of trading of shares and securities and also to prove the genuineness of loss of Rs 4,84,12,423/- with the requisite documents. The ld AO however, treated the loss of Rs 9,39,48,483/- as against the claim of Rs 4,84,12,423/- as non-genuine loss and disallowed and brought to tax thereby raising a demand on the assessee. The tribunal observed that it was submitted before the ld CITA that the ld AO was not correct in treating the losses as non-genuine when the assessee has entered the transactions on delivery basis and there were no non-delivery based transactions. It was also contested that the loss amount was wrongly taken by the ld AO at Rs 9,39,48,483/- as against the actual loss incurred of Rs 4,84,12,423/-.
3.2. The tribunal also observed that the learned counsel for the assessee before the tribunal had contested the fact of the action of the revenue in treating the share trading loss as non-genuine loss whereas the assessee had entered the transactions in the transactions recorded in the stock exchange as their regular trading transactions. It was the submission of the learned counsel that reference to JPC report and SEBI findings relied upon by the ld AO and ld CITA were not correct as the assessee had not 1510/Mum/2014 M/s. Triumph International Finance India Ltd., undertaken any of those transactions violating the principles. It was specifically pointed out that there was only one off-market transaction in sale of shares of Nirma Ltd on which the assessee made only profit and not loss. The learned counsel for the assessee referred to pages 1 to 91 of the paper book which included statement of purchases and sale of shares of Nirma Ltd , Visual Soft, Elque Polyster Ltd, Global Tele, Pentafour Soft, Ramco Systems and also the computation of total income of Asst Year 2001-02. Copy of the special audit report u/s 142(2A) of the Act and various letters filed with the ld AO were enclosed in pages 16 to 36 of the paper book filed. The learned counsel for the assessee argued before this tribunal in the first round of proceedings that neither the special audit report mentions about violations nor there was any evidence with the ld AO to treat the share transactions as bogus transactions. The counsel then referred to the para wise comments of the various remarks of the ld AO and the rebuttal given by the assessee in that regard. It was finally contended that the ld CITA in first round of proceedings had not considered any evidence filed before him and simply endorsed the action of the ld AO. Per contra, the learned counsel for the revenue submitted that the assessee was involved in stock market scam of 2001 and there were various reports of SEBI and JPC and in almost all the group companies, transactions were treated as non-genuine transactions in the absence of any evidence.
3.3. The Tribunal in the first round of proceedings observed as under:- 7. We have considered the issue, examined the paper book and copy of the written submissions made before the CIT(A). First of all there is no basis for arriving at the loss of Rs.9.39 crores taken by the AC. What we noticed from the paper book was that the assessee has earned profit of Rs.1,54,15,358/- from trading in securities and incurred a loss of Rs.6,36,99,614/- in respect of shares. Out of these shares mosl of the transactions are loss transactions except one transaction of profit of 1510/Mum/2014 M/s. Triumph International Finance India Ltd., Himachal Futurestics of Rs. 1,34,59,122/- and another profit in Reliance Industries of Rs. 1,67,67,885/-. There was, however, a loss in Nirma Ltd stated to be off-market transaction of Rs.9,41,15,765/-. It was a major transaction. Apart from the 3 major transactions, rest of the 93 transactions have more or less loss or profit of small amounts. If we consider this statement in respect of shares placed in the paper book, the net loss in the share transaction is only Rs.6,36,99,614/- and further setting off of profit in transactions of securities, the net loss claimed was Rs.4,83,34,256/- which was taken as speculation loss and requested for carry forward of loss. We were informed that the assessee's business transactions were suspended after this assessment year and there is no way of setting of this loss in later years till now whether it is treated as a genuine loss or speculation loss. It is also further submitted that even though the A.O. disallowed the loss there cannot be any profit computation as he has wrongly taken loss disallowed as income, which is not correct. We noticed from the computation of income on page No. 19 & 20 that the A.O. started from the net loss from the P & L Account and he added the loss on trading of securities for consideration separately and arrived at business loss to be computed including the depreciation at Rs. 11,13,02,045/-. Then he computed speculation business loss at Rs.4;83,84,257/- and loss carried forwarded to next year at Rs.4,84,12,423/-. To this he has added the share trading loss and bad debts and penalty dividend income to arrive at total income of Rs. 18,57,47,180/- . The amount of bad debt is being allowed but we are unable to under how this trade loss can be income. Be that as it may, it is the amount of Rs.9,39,48,483/- which cannot be verified and on what basis the A.O. considered this, is not placed before us. When the assessee has contested the same before the CIT(A), the CIT(A) also has not given any clear finding except stating that the assessee has admitted before the A.O. The learned Standing Counsel, however, admitted that he has not having the record with him to examine this aspect but stated that it is on the basis of assessee's letter only. We are unable to verify this amount of share trading loss arrived at by the A.O, in the absence of any detail in this regard. Even if we exclude the profits earned in the share transactions the loss figures are not tallying with the share trading loss. Moreover, when share trading loss is considered as speculative loss by virtue of section 73 Explanation the profits and losses are to be netted off and was correctly claimed by the assessee. Only the net amount can be considered for carry forward to be set off against speculation income in later years. So, on the issue of quantum of loss since there are no details on record we are of the opinion that this has to be examined by the A.O. and arrive at the correct quantum of loss.
8. Coming to the issue of genuineness of the loss claimed, it was the assessee's submission that he has given all the details before the A.O. and the CIT(A). As seen from the written submissions filed before the CIT(A)
1510/Mum/2014 M/s. Triumph International Finance India Ltd., also the assessee was referring to the various documents placed before the A.O. in proving the genuineness of the transactions. Neither the A.O. nor the CIT(A) examined or referred to this documents. Even though general comments were passed that the assessee failed to furnish evidences we fail to understand how these findings are given when the assessee has placed documents supporting the transactions before the A.O. and CIT(A). Be that as it may, the fact remains that neither the A.O. nor the CIT(A) examined these documents in its correct perspective but carried away more by the observations of the SEBI and JPC in the group cases which may or may not be relevant in the given set of facts. The learned counsel also referred to the special auditor's report which does not indicate any violation of transactions. In view of this, we are of the opinion that the A.O. has to examine the documents placed before him specifically and give a clear finding whether the transactions are delivery based transaction or not, whether the transactions have occurred in Stock Exchange or of-market transactions and finally whether the losses claimed are genuine or not keeping in view the fund flow and other aspects which the SEBI and JPC commented about transactions in the group cases. Since the facts of each case are different, one cannot take generalised opinion in disallowing the losses which might have occurred in the trades undertaken by the assessee company. Without given any conclusions about the various transactions undertaken by the assessee, we are of the opinion that the issue requires re-examination by the A.O. and for this matter the A.O. has to examine assessee's transactions to determine whether the loss claimed are genuine or not. Even the quantum of loss suffered by the assessee requires examination as stated above. For these reasons we set aside the orders of the A.O. and CIT(A) to that extent and restore the issue back to the file of the A.O. The assessee should be given proper opportunity for explaining the transactions and the claim of loss. It is not out of place to mention that the losses are to be considered as speculative loss as the assessee itself has offered speculation loss in view of the Explanation to section 73. The issue is restored back to the file of the A.O. for fresh consideration after due examination of the facts. Assessee's grounds are considered allowed.
Ground No. 3 pertains to the claim of set off of losses. In view of restoring ground Nos. 1 & 2 back to the file of the A.O., the A.O. is directed to examine this issue also at the time of recomputation of income after examining the above issue. With these directions the grounds are considered allowed 10. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 25th June 2010.
1510/Mum/2014 M/s. Triumph International Finance India Ltd.,
4. The ld AO in the second round of proceedings passed an order u/s 143(3) read with section 254 of the Act on 28.12.2011 simply stated that the assessee had not furnished the requisite documents before him and again disallowed the share trading loss of Rs 9,39,48,483/- , which was never claimed by the assessee in its return, and converted the same into income and raised demand on the assessee.
The ld CITA in the second round of proceedings (i.e the impugned order before us) observed that the ld AO in the order passed u/s 143(3) of the Act dated 30.3.2004 had actually allowed the share trading loss (i.e net speculation loss of Rs 4,84,12,423/-) to be carried forward to subsequent year. The ld CITA also gave a categorical finding that the actual net speculation loss is only Rs 4,84,12,423/- and not Rs 9,39,48,483/- as considered by the ld AO in the second round of proceedings. The ld CITA obtained the remand report from the ld AO and observed that the remand report does not controvert the assessee’s statement of income and that the assessee’s computation of income appears to be correct. The ld CITA further observed that the ld AO while passing the assessment order in the second round of proceedings had inadvertently omitted to allow the original speculation loss of Rs 4,84,12,423/-, for which he directed the ld AO to pass necessary rectification order u/s 154 of the Act. This direction of ld CITA is not contested by the revenue before us. However, the ld CITA strangely concludes that the correct speculation loss figure is only Rs 4,84,12,423/- and directed the ld AO to make addition only to that extent. In other words, the ld CITA also converted the loss figure of Rs 4,84,12,423/- into income thereby resulting in 1510/Mum/2014 M/s. Triumph International Finance India Ltd., demand to the assessee. Aggrieved, the assessee is in appeal before us.
We have heard the rival submissions and perused the materials available on record including the paper books of the assessee filed both in the first round of proceedings as well as in the second round of proceedings before us. At the outset, we find from the computation of total income for the Asst Year 2001-02 enclosed in page 1A of the paper book, the assessee had disclosed total loss from speculation business of Rs 4,84,12,423/- and had claimed the same to be carried forward to subsequent years. There is no figure of Rs 9,39,48,483/- representing loss on sale of shares in the said return warranting the ld AO to make any disallowance and treating the same as income and raising a demand thereon. What we find from the computation of share trading profits and losses, the assessee had earned profit from trading in securities (Debt market transactions) to the tune of Rs 1,53,15,358/- (Debt Bonds Wise Workings enclosed in pages 18 to 21 of paper book) and incurred a loss of Rs 6,36,99,614/- in respect of trading in shares (Scrip Wise Workings enclosed in pages 22 and 23 of paper book) thereby arriving at a net loss figure of Rs 4,83,84,256/-. In addition to this, there is yet another loss from share trading activity in the sum of Rs 28,167/-. Hence the total loss on share transactions worked out to Rs 4,84,12,423/- ( 4,83,84,256 + 28,167). This loss was treated as speculation loss by the assessee in the computation of total income and sought to be carried forward to subsequent years. We find that this tribunal vide its order dated 25.6.2010 in the first round of proceedings had taken cognizance of the fact (based on the statement made by the learned counsel for the assessee) that the assessee’s business transactions were suspended after this assessment year and that there is no way of setting off of this loss in 1510/Mum/2014 M/s. Triumph International Finance India Ltd., later years. Hence in any case, the speculation loss claimed by the assessee, even if carried forward, is not set off with any future income. Hence it could be safely concluded that there is absolutely no loss to the exchequer either in this year or in subsequent years because of the income tax behaviourial conduct of the assessee.
6.1. We find that the ld CITA had directed the ld AO to make an addition to the extent of Rs 4,84,12,423/- representing the net speculation loss. We are unable to persuade ourselves to understand as to how the same could be added to the total income. In the instant case, the assessee had only claimed carry forward of such net speculation loss of Rs 4,84,12,423/- to subsequent years and had not set off the same with any other income in the computation of income. Hence there is no question of treating the said loss as income and levying tax and interest on the same. We direct the ld AO to make necessary modifications in this regard while giving effect to this order.
6.2. We find that what is required to be examined is the genuinity of such net speculation loss of Rs 4,84,12,423/-. We find that the ld AO was directed by this tribunal to examine the various documentary evidences submitted by the assessee justifying the loss on sale of shares of various scrips, which had been summarily ignored by the ld AO in the second round. We find that the ld AO had made only general observations and remarks about the assessee being impleaded by other regulatory bodies ignoring the various documentary evidences available before him. As this is an old appeal, there is no point in giving another chance to the ld AO by sending it back to him, with the consent of both the parties before us, we decided to adjudicate the genuinity of the loss by examining the various documentary evidences available on record. At the outset, there
1510/Mum/2014 M/s. Triumph International Finance India Ltd., is no dispute that the assessee had accepted the net loss of Rs 4,84,12,423/- to be speculation loss in consonance with the provisions of Explanation to Section 73 of the Act. It is not in dispute that the entire documents numbering from pages 1 to 91 of the paper book filed before this tribunal in the first round were also placed before the lower authorities vide authorized representative letter dated 31.10.2011 filed on 1.11.2011 (enclosed in page 1 of paper book). We also find from the sequence of events mentioned in page 94 of the paper book that the ld AO on 24.11.2011 discussed the matter with the authorized representative of the assessee by referring to the letter dated 31.10.2011 and adjourned the hearing to 30.11.2011. On 30.11.2011, the ld AO had informed that he had written a letter to BSE to get the trades confirmed to adjudicate on the genuineness of the transactions. However , as the BSE had not responded till that date, the ld AO adjourned the hearing to 16.12.2011. On 16.12.2011, the ld AO informed the authorized representative that no response was received from the BSE to the queries raised by the ld AO. After this, no further hearing was granted to the assessee and finally the assessment was framed on 28.12.2011 by the ld AO.
6.3. Findings of Special Auditor u/s 142(2A) of the Act We find from the Special Audit Report issued u/s 142(2A) of the Act dated 5.7.2002 which was carried out by making due examination of the audited balance sheet and profit and loss account as on 31.3.2001 which matched with the books of accounts maintained by the assessee in computerized form and no deficiencies were found thereon by the Special Auditor. The Special Auditor also examined the software data, seized material, data supplied by the concerned Stock Exchange for carrying out its audit. It is not in dispute that the Special Auditor had given a clean and unqualified
1510/Mum/2014 M/s. Triumph International Finance India Ltd., report on the assessee u/s 142(2A) of the Act. It is not in dispute that the said Special Auditor was appointed at the behest of the revenue. The Special Auditor with regard to the shares held as stock in trade had specifically commented that the opening and closing stock in trade were valued at the lower of cost or net realizable value and there was no change in the method of valuation compared to preceding previous year. He had also stated that quantitative details in respect of securities were duly given (enclosed in Attachment 2 of Special Audit Report). The Special Auditor had specifically stated that the following books of accounts were maintained by the assessee and the same were subject to its examination :-
H.O. – Other than NSE 1. Cash Book 2. Bank Books 3. Petty Cash Register 4. Stock Register 5. Journal Register 6. Ledger NSE- Bombay 1. Register of Transaction (Sauda Book) 2. Clients Ledger 3. General Ledger 4. Journals 5. Bank Book 6. Copy of Contract Notes / Bills with Clients 7. Debit/Credit Notes Register NSE-Ahmedabad 1. Register of Transaction (Sauda Book) 2. Clients Ledger 3. General Ledger 4. Journals 5. Bank Book NSE-Chennai 1. General Ledger 2. Journals
1510/Mum/2014 M/s. Triumph International Finance India Ltd.,
Bank Book NSE-Indore 1. General Ledger 2. Clients Ledger 3. Journals NSE-Pune 1. General Ledger 2. Client Ledger 3. Bank Book 4. Journals NSE-Calcutta 1. General Ledger 2. Bank Book 3. Cash Book 4. Clients Ledger 5. Journals The Special Auditor had specifically mentioned that Bangalore and Mangalore records were destroyed by fire.
6.3.1. The following were the specific points of ld AO which was directed to be verified by the Special Auditor :-
“1. Vallanwise Statement of Share Transaction:- As explained by the assessee, at the end of each settlement, net position is reconciled by the assessee with the Client-wise settlement report generated from its back office software and the obligation statements received from the NSE.
We have verified the above said vallanwise statement received from NSE and the same is correct. Obligation statement received from NSE have been reconciled with inhouse statements generated & payments / receipts have been settled with the NSE accordingly.
1510/Mum/2014 M/s. Triumph International Finance India Ltd.,
But all off-market transactions have been settled by way of direct payment / receipts through their own account.
Please find enclosed herewith copy of account of National Stock Exchange in the books of accounts of the assessee (Attachment No. „1‟ – Page No. 1 to 42).
Please find enclosed herewith a CD containing electronic data about money statement / obligation provided by NSE and compared with the data of the assessee. (Attachment „A‟). Print out of Vallan Reports – (Attachment ‘A’)
We have enclosed herewith the duly Certified copies of all Bank Statements received from various banks, accounts maintained by the assessee.
(However, please find enclosed herewith a summary of names of Banks with Account No. (As per Attachment No. „2‟ Page No. 1 to 1).
Please find enclosed herewith a file containing bank statement of all banks specified as Attachment ‘B’ in a separate file.
3. In respect of cash credits, name & address of creditor, amount received, mode of receipt & payment:-
As explained by the assessee no cash credit have been received by them hence no details have been submitted by them (Please find enclosed herewith Attachment No. 3 Page No. 1 to 1).
Details of share transactions and other security transactions done on assessee‟s own account:-
(Please find enclosed herewith Attachment No. 4 Page No. 1 to 7 which is self explanatory)
5. Detail of speculation transactions done on your own account:- As explained by the assessee it is difficult to bifurcate trading activities with speculation. It is included in details given in attachment No. 4.
1510/Mum/2014 M/s. Triumph International Finance India Ltd.,
6. Year wise receipt of gross brokerage and other incomes:- (Please find enclosed herewith Attachment No. 5 Page No. 1 to 1).
In respect of payment of / credit of sub brokerage, submit name and address of the sub brokers, names of the clients handled by them and amount of such brokerage paid year wise:- (Please find enclosed herewith details of sub-brokerage paid during the year. Attachment No. 6 Page No. 1 to 7). 8. Details of other financial services rendered giving the name of the client, nature of services rendered, fees received and cost of such services:- Please find enclosed herewith details of other Financial Services rendered by the assessee (As per Attachment No. „7‟ Page No. 1 to 3). 9. Details of any repayment of loans/advances including any other account of credit where repayment is done by otherwise than by Account Payee cheque or demand draft:- Please find enclosed herewith a certificate issued by the assessee wherein it has been confirmed that no such repayment of loan / advances have been done by otherwise than by account payee cheque or demand draft. We are unable to comment about the same as the assessee is not in possession of evidences for the same. (As per Attachment No. „8‟ Page No. 1 to 1). 10. Details of all payment made through sister concerns covered u/s 40A(2)(b) showing their names, full address, services obtained and payment made:- Please find enclosed herewith details of all payments made to sister concerns covered u/s 40A(2)(b) as per attachment No. 9 Page No. 1 to 2).
Certified copies of annual statement of transaction issued by stock exchange board:- Turnover The assessee has submitted a certified copy of annual statement of transactions issued by the National Stock Exchange of India Ltd and the same has been reconciled with the turnover of the assessee. There has 1510/Mum/2014 M/s. Triumph International Finance India Ltd.,
been a total turnover of Rs 59704.31 Crores for the year and including own transactions and off-market deals as per the assessee‟s books. However as per confirmation received from NSE the total turnover amounted Rs 53669.71 Crores which included off market deals which amounted to Rs Nil. As explained by the assessee a reconciliation statement has been prepared showing the reasons for the discrepancies / differences. Please refer Attachment No. „10‟ Page No. 1 to 17).”
6.4. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Nirma Ltd (enclosed in page 37 of paper book) along with copies of correspondence for purchase of warrants from Nirav Trust and copies of ledger account showing payment to Nirav Trust (pages 38 to 42 of paper book) together with copies of bills and contract notes (pages 43 to 55 of paper book) ; copies of demat statement (page 56 of paper book) ; confirmation from Classic Credit Ltd (person to whom shares were sold in off market) (enclosed in pages 57 to 58 of paper book) ; copies of trade files of NSE (pages 59 to 61 of paper book) and copy of price list from the stock exchange (page 62 of paper book). In this regard , it would be pertinent to refer to the Circular issued by the CBDT vide Circular No. 704 dated 28.4.1995 wherein it was clarified that the share transactions carried on by the parties , if followed by delivery of shares and transfer deeds, then the same would have to be accepted. Though this circular was issued in the context of determination of ‘date of transfer’ and holding period for the purpose of computing the period for capital gains, the analody drawn thereon could be utilized to the facts of the instant case. It is not in dispute that the assessee had traded in shares of Nirma Ltd in off-market but the same was subsequently followed by delivery of shares and transfer deeds. The sale of shares is made following First In First Out (FIFO) basis and it is pertinent to note herein that the opening balance of shares held by the assessee were never doubted by the revenue. No deficiencies whatsoever
1510/Mum/2014 M/s. Triumph International Finance India Ltd., were brought out by the ld DR before us with regard to these documentary evidences. Hence the share transactions in respect of Nirma Ltd is to be considered as genuine and assessee had made profit in respect of this off-market transaction.
6.4.1. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Visual Soft Ltd (enclosed in page 63 of paper book) along with copies of bills and contract notes (pages 64 to 67 of paper book) ; copies of demat statement (page 68 of paper book) and copy of price list from the stock exchange (page 69 of paper book). No deficiencies whatsoever were brought out by the ld DR before us with regard to these documentary evidences. All these documents conclusively prove that the transaction carried out by the assessee is genuine.
6.4.2. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Elque Polyster Ltd (enclosed in page 70 of paper book) along with copy of price list from the stock exchange (enclosed in page 71 of paper book). No deficiencies whatsoever were brought out by the ld DR before us with regard to these documentary evidences. All these documents conclusively prove that the transaction carried out by the assessee is genuine.
6.4.3. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Global Tele Ltd (enclosed in page 72 of paper book) along with copies of bills and contract notes (page 73 of paper book) and copy of price list from the stock exchange (page 74 of paper book). No deficiencies whatsoever were brought out by the ld DR before us with regard to these documentary evidences. All
1510/Mum/2014 M/s. Triumph International Finance India Ltd., these documents conclusively prove that the transaction carried out by the assessee is genuine.
6.4.4. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Penta Four Soft Ltd (enclosed in page 75 of paper book) along with copies of bills and contract notes (pages 76 to 80 of paper book) ; copies of demat statement (pages 81 to 84 of paper book) ; copy of trade file of NSE (page 85 of paper book) and copy of price list from the stock exchange (page 86 of paper book). No deficiencies whatsoever were brought out by the ld DR before us with regard to these documentary evidences. All these documents conclusively prove that the transaction carried out by the assessee is genuine.
6.4.5. We find that the assessee had also submitted the statement giving details of purchase and sale of shares of Ramco Systems Ltd (enclosed in page 87 of paper book) along with copies of bills and contract notes (pages 88 to 91 of paper book). No deficiencies whatsoever were brought out by the ld DR before us with regard to these documentary evidences. All these documents conclusively prove that the transaction carried out by the assessee is genuine.
6.5. In view of the aforesaid observations in the facts and circumstances of the case, we direct the ld AO to treat the net speculation loss of Rs 4,84,12,423/- as genuine loss and allow the same to be carried forward to subsequent years. Accordingly, the grounds raised by the assessee are allowed. – Revenue Appeal
7. The only issue to be decided in revenue appeal is as to whether the ld CITA was justified in granting relief to the assessee with regard to 1510/Mum/2014 M/s. Triumph International Finance India Ltd., chargeability of interest u/s 234D of the Act in the facts and circumstances of the case.
We have heard the rival submissions. We find that the ld DR placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Indian Oil Corporation Ltd reported in (2012) 254 CTR 113 in support of his contentions. The brief facts of this issue are that the ld AO charged interest u/s 234D of the Act in the second round of proceedings completed by him vide order dated 28.12.2011 u/s 143(3) r.w.s. 254 of the Act. The ld AR contended that in the original assessment (i.e first round of proceedings, no interest u/s 234D of the Act was charged by the ld AO). The second assessment framed by the ld AO was only pursuant to the directions of this tribunal. This tribunal for the Asst Year 2001-02 in dated 22.9.2010 had held as under:- “8. We have considered the rival submissions made by both the sides. perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the intimation allowing refund was dated 06.03.2002 and the assessment u/s. 143(3) was completed on 30.03.2004. There is also no dispute to the fact that the Assessing Officer issued notice u/s.154 on 08.06.2004. There is also no dispute to the fact that the provision of sec.234D were brought to statute book w.e.f. 01.06.2003. It is the submission of the learned counsel for the assessee that since the provision was brought on the statute book w.e.f. 01.06.2003, therefore, interest u/s.234D should not be applicable to assessment year prior to that date. Further since the issue is debatable, therefore, this cannot be a subject matter of rectification u/s.154 of the I.T. Act. We find the co- ordinate Bench of the Tribunal in the case of ITO vs. M/s, Panther Industrial Products Pvt. Ltd. (supra), following the decision of Special Bench of the Tribunal in :.he case of Ekta Promoters Pvt. Ltd. reported in 117 TTJ 289, has held that provisions of sec-234]) should be applied for case where refund is granted u/s 143(1] after 01.06.2003 and no interest u/s.234D could be charged for earlier years even though regular assessment for these years are framed after 01.06.2003 or the refund were granted for those years after the said date. We find the Jurisdictional High court in the case of Bajaj Hindustan Ltd. had dismissed the appeal filed by the Revenue and held that the provision of 1510/Mum/2014 M/s. Triumph International Finance India Ltd., Sec.234D came into the statute book w.e.f. 01.06.2003 and the said provision does not have retrospective effect. The Hon‟ble High Court accordingly dismissed the appeal filed by the Revenue holding that no substantial question of law arises.
9. So far as the reliance placed by the ld. DR on the decision of the Hon‟ble Kerala High Court in the case of CIT vs. Ketala Chemicals & Proteins Ltd.(supra), in our opinion the decision of the jurisdiction High Court shall prevail over the decision of the Non-Jurisdictional High Court. Further, it is the settled proposition of the law that when two views are possible, the view favourable to the assessee has to be accepted. In this view of the matter we set aside the order of CIT(A) and direct the Assessing Officer to cancel the charging of interest u/s.234D of the IT Act. The grounds raised by the assessee are accordingly allowed. In the result, appeal filed by the assessee is allowed.” 10.
8.1. It could be seen that this tribunal had specifically directed the ld AO to cancel the interest u/s 234D of the Act which was sought to be levied by him in the rectification order u/s 154 of the Act and giving effect order to CITA order in the first round of proceedings. But we find that the ld AO ignoring this tribunal order, proceeded to charge interest u/s 234D of the Act in the second round of proceedings before him. This action of the ld AO was upheld by the ld CITA. We find that this tribunal had already directed the revenue not to charge any interest u/s 234D of the Act for the impugned assessment year and the ld AO cannot disregard the said directions while giving effect to the order of this tribunal. Moreover, the ld AR pointed out that the revenue had not challenged the order of this tribunal in dated 22.9.2010 before the Hon’ble High Court and hence the matter had reached finality. This fact has not been controverted by the ld DR before us. The case law relied upon by the ld DR on Hon’ble Jurisdictional High Court supra is factually distinguishable as it was rendered in the normal context of chargeability of interest in an assessment framed on or after 1.6.2003 and applicability of the said provision with retrospective effect. But the issue before us is 1510/Mum/2014 M/s. Triumph International Finance India Ltd., whether the interest u/s 234D of the Act could be charged by the ld AO in the giving effect proceedings to tribunal order , especially when the tribunal had already cancelled the chargeability of interest u/s 234D of the Act. Accordingly we hold that the decision relied upon would not come to the rescue of the revenue. Hence we hold that no interest u/s 234D of the Act could be charged on the assessee in the peculiar facts and circumstances of the instant case before us. We find that the ld CITA had followed this tribunal order which had attained finality. Hence we do not find any infirmity in the said order of the ld CITA . Accordingly, the grounds raised by the revenue are dismissed.
9. To sum up, the appeal of the assessee is allowed and appeal of the revenue is dismissed.