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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM & Hon’ble Shri S.S. Viswanethra Ravi, JM ]
ORDER Per J.Sudhakar Reddy, AM
This is an appeal filed by the revenue directed against the order of the ld. CIT(A)-19, Kolkata passed u/s 143(3) of the Income Tax Act, 1961 on the following grounds:
1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in directing the AO to allow set-off before applying Explanation to Section 13, when the condition as discussed in the Assessment order favour the application of the said Explanation?
2. Whether on the facts and in the circumstances in the case and in law, the Ld.CIT(A) was justified in ignoring the points raised in the assessment order in favour of the application of Explanation to Section 73 of the Income Tax Act,1961?
3. That it is prayed to set aside the order passed by the Ld.CIT(A)-19 and restore the assessment order passed by the Assessing Officer in this case.
M/s Suvridhi Capital Markets Ltd. A.Yr.2011-12 4. Department craves leave to add, alter or modify any or all of the above grounds of appeal at or before the time of hearing of the appeal.
After hearing rival submissions and on a careful consideration of the facts and circumstances of the case, a perusal of papers on record and orders of the lower authorities below, as well as case law cited, we hold as follows.
We find that the ld. First appellate authority has at para 4.3 of his order followed the judgment of the jurisdictional High Court in the case of Baljit Securities Pvt. Ltd. (supra). For the assessment year 2008-09, in the assessee’s own case, the ld. CIT(A) had granted relief and consistent with that view taken by his predecessor for the assessment year 2008-09, he granted relief.
4.We find that “B” Bench of ITAT in & 831/Kol/2015 in assessee’s own case for assessment year 2008-09 and 2010-11 had upheld this order of the Commissioner of Income Tax (Appeals). It was held as follows: “7.2 Having heard the rival submissions and perused the material available on record, we are of the view that both profit / loss from all the share delivery transactions and derivative transactions are having the same meaning, so far as Sec. 43(5) of the Act is concerned. Again, in view of the fact that both delivery based transactions and derivative transaction are non-speculative as far as Sec. 43(5) is concerned, it follows that both will have the same treatment as far as application of Explanation to Sec. 73 is concerned. Therefore aggregation of the share trading loss and profit from derivative transactions should be done before the Explanation to Section 73 of the Act, is applied. This view has been affirmed by the Kolkata High Court in GA No. 3481 of 2013 ITAT No. 215 of 2013 Commissioner of Income Tax, Kol III versus M/S Baljit Securities Pvt. Ltd. Therefore, it is clear that the profits from derivatives and share trading should be set off against each other before applying the setoff and carry forward provisions of section 73 of the Income Tax Act, 1961. In the present case, assessee is a share broker. The assessee is also in the business of buying and selling of shares for self where actual delivery is taken and given and also in buying and selling of shares where actual delivery was not intended to be taken or given. Therefore, the entire transaction carried out by the assessee, indicated above, was within the umbrella of non-speculative transactions. There was, as such, no bar in 2
M/s Suvridhi Capital Markets Ltd. A.Yr.2011-12 setting off the loss arising out of derivatives from the income arising out of buying and selling of shares. The case of the assessee clearly falls within the ambit of the judicial rulings of the Kolkata Tribunal and Kolkata High Court in the case of M/S Baljit Securities Pvt. Ltd (supra). Thus, there should be no reason for disallowing the adjustment of losses on share trading with other business income. Based on the above cited reasoning and factual position, we confirm the order of CIT(A).”
Consistent view taken we uphold the order of the Commissioner of Income Tax (Appeals) and dismiss this appeal of the revenue.
5.In the result, the appeal of the revenue is dismissed.
Order pronounced in the Court on 28.11.2018