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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI H S SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
This appeal is preferred by the revenue against the order of Ld. CIT(A) – IX, New Delhi dated 17.12.2013 wherein he deleted the addition of Rs. 20,94,678/- disclosed by the assessee in his return of income filed beyond time provided u/s 139(5) of the Income Tax Act 1961 for revising it. The following grounds of appeal of the revenue are raised by the revenue :
1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY i. Whether on the facts and on the circumstances of the case the Ld. CIT(A) was right in deleting the addition of Rs. 20,94,678/- which was disclosed for the first time in return of income, which was invalid being filed beyond the time provided u/s 139(5) of the I.T. Act 1961. ii. Whether on the facts and in the circumstances of the case, Ld. CIT (A) was right in allowing set off losses claimed for the first time by assessee through an invalid return filed beyond the time provided u/s 139(5) of the I.T. Act, 1961. iii. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.”
The brief facts of the case is that assessee is an individual who filed his return of income on 30.9.2008 declaring income of Rs. 4,08,662/-. During the assessment proceedings assessee vide letter dated 6.8.2010 filed a copy of revised return of income for asstt. year 2008-09 wherein assessee has included several incomes and losses in the revised return. Ld. AO rejected the claim of the assessee as the revised return was filed for asstt. year 2008-09 on 6.8.2010, this should have been filed by 31st March 2010. By virtue of this, the revised return was ignored and the short-term capital gain of Rs. 20,94,678/- included in the revised return was added to the total income of the assessee taking the original return income. Assessee being
1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY aggrieved with the order of Ld. AO preferred an appeal before the Ld. CIT(A) who in turn allowed the appeal of the assessee.
The main reason for allowing the claim of the assessee is that in the original return assessee declared Rs. 5 lacs as taxable income wherein Rs. 20,94,678/- was include as short term capital gain but was adjusted against loss from speculative business i.e. trading in F & O. Subsequently the assessee filed the revised return claiming that loss in speculative business should be treated as business loss and then short-term capital gain should be adjusted against it. Ld. CIT(A) relied on the decision of CIT vs. NASA Finlease Pvt. Ltd. 358 ITR 305. Ld. CIT(A) further discussed the decision relied upon by the AO in case of Goetz India Ltd. vs. CIT 284 ITR 323. Against the order of Ld. CIT(A), the revenue is in appeal before us.
Ld. DR stated that the assessee has incurred losses in the F & O business and assessee as well as AO has not brought any fact on record how the transactions are entered into on recognised stock exchange. The case law relied upon by the Ld. CIT(A) deals with the national stock exchange and Bombay 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY stock exchange, which are both recognised u/s 43(5) of Income Tax Act. However, it is not clear that on which exchange the assessee has incurred such loss and whether the same is incurred in securities , commodities or foreign exchange derivatives. If it is a recognised stock exchange for the respective securities then the issue falls within the interpretation of decision relied upon by the assessee otherwise not.
Ld. AR relied upon the orders of the Ld. CIT(A) as well as decision cited by the Ld. CIT(A).
We have carefully considered the rival contentions. Ld. CIT(A) has allowed the appeal of the assessee without ascertaining the facts that the speculative transactions of Rs. 65,66,127/- shown in the original return as well as in the revised return has loss from speculative business. However it is not known that these transactions have been carried on the recognised stock exchange or not and further for recognised transactions
1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY of securities, commodities or foreign exchange derivatives.
These facts are not coming out from the order of the Ld. CIT(A) as well as from the order of the AO. Even before us Ld. AR could not submit that the losses incurred in F & O were on transactions entered into at recognised stock exchange or not.
If the same was carried out on recognised stock exchange as provided u/s 43(5) of the Income Tax Act then the issue stands covered by the decision of CIT vs. NASA Finlease Pvt. Ltd. (2013) 358 ITR 305 and if the transactions are on unrecognised stock exchange then they remain speculative in nature and set off shall be allowed of short-term capital gain.
As these facts are not coming out from the material on record we set aside the issue back to the file of AO to ascertain whether the loss incurred of Rs. 65.66 lacs on F& O transactions is carried on recognised stock exchange for respective securities, commodities or Foreign exchange derivatives or not. If it is carried on recognised stock exchange then the short term capital gain of Rs. 20,94,678/- shall be adjusted against the business loss of Rs. 65,66,127/- . In case it is otherwise , then short-term capital gain cannot be 1532_ DEL _2014 ITO V PREM LAKHOTIA A Y 2008_09 - COPY adjusted. Needless to say, the AO shall grant proper opportunity of hearing to the assessee to adduce evidence regarding recognition of stock exchange.
In the result, appeal of the revenue is allowed for statistical purposes.
Order pronounced in the open court on 13/06/2016.