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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: PRADIP KUMAR CHOUBEY & SRI SANJAY AWASTHI
order
: July 23rd, 2024 ORDER
Per Sanjay Awasthi, Accountant Member:
In this case there is a delay of 1310 days for which the appellant has filed a petition for condonation as under: “1. The order passed by Ld. CIT(A) dated 03.10.2019 for A.Y 2013-14 against the assessment order passed u/s 143(3) was received by the assessee on the same day.
2. The assessee, through an acquiescence, approached CA Tapan Kumar Roy Choudhury, of 8/2, Kiron Sankar Road, 2nd Floor, Room No. 10, Kolkata - 700001, for the purpose of filing appeal before ITAT on or around I.T.A. No.: 678/KOL/2023 Assessment Year: 2013-14 Trade City Commodities Pvt. Ltd. the month of November 2019, and handed over all the relevant papers to him. 3. The assessee was under the bona fide belief that appeal has been filed by the said Ld. CA. 4. That in order to enquire status of appeal when the assessee tried to contact CA Tapan Kumar Roy Choudhury on or around 2nd week of June 2023, it transpired that the said CA had already expired on 10.01.2020. 5. The assessee then approached Sri Siddharth Agarwal, Advocate on 26.06.2023 for seeking guidance in the matter. The said counsel approached the office of ITAT to make enquiry about the status of appeal. On enquiry, it transpired that no appeal had. been filed in ITAT against the aforesaid order passed by Ld. CIT(A). 6. On 03.07.2023, the assessee requested the said counsel to take necessary steps in the matter and handed over all the relevant papers to him. 7. The appeal was then prepared by him by 05.07.2023 and the same was filed in the office of ITAT on 06.07.2023 after a delay of 1313 days. 8. That in view of the factors mentioned above, your petitioner most humbly submits that there is a reasonable cause for 1313 days’ delay in filing the appeal which may please be condoned and the case of your petitioner be heard on merit. In the circumstances, your petitioner prays that the delay in filing appeal before this Ld. Tribunal may kindly be condoned and the case be heard on merits or such order/orders be passed as this Ld. Tribunal deems fit and proper.” 1.1. Considering the facts mentioned in the application extracted (supra) and in the interest of substantive justice, this appeal is admitted for adjudication.
In this case the appellant filed the return of income for AY 2013-14 on 29.09.2013 and an order u/s 143(3) of the Income Tax Act, 1961 (in short the 'Act') was passed dated 22.03.2016. the Assessing Officer (hereinafter referred to as ld. 'AO') found that the assessee had shown ‘NIL’ income after setting off brought forward business losses as under: a) AY 2011-12 Rs. 8,69,256/- b) AY 2012-13 Rs. 5,48,378/- I.T.A. No.: 678/KOL/2023 Assessment Year: 2013-14 Trade City Commodities Pvt. Ltd. 2.1. The ld. AO concluded that these losses were on account of trading in commodities and thereafter, he proceeded to treat them as speculation losses u/s 43(5) of the Act. The ld. AO has also noted that prior to 01.04.2014, commodity loss was in the nature of speculation loss and hence, he deduced that such loss could not be set off against profits from non-speculative activity. It appears from a reading of the ld. AO’s order that the appellant did not adequately respond to queries in this regard. Thereafter, he proceeded to add the brought forward speculative loss to the tune of Rs. 14,17,634/-. 2.2. Aggrieved with this action of ld. AO, the appellant approached the Commissioner of Income Tax (Appeals)-2, Kolkata [hereinafter referred to as ld. 'CIT(A)']. Even at this stage, ld. CIT(A) is seen to have dismissed all the contentions of the appellant, even where it was requested that:
In that view of the matter, we submit that the AO be directed to give similar treatment of income arising out of similar nature of business activities, all being carried out before the cutoff date of April 01, 2013. The AO be further directed to allow setoff of brought forward losses (all now assessed after thorough scrutiny) and being arising out of similar nature of business activities. In alternate, if the submissions made under issue number (1) are not accepted, it Is humbly submitted to kindly direct the AO to allow set off of assessed brought forward business loss (including unabsorbed depreciation) to the extent of income determined for the assessment year under reference.
Having been denied relief by the authorities below, the appellant has approached the Tribunal with the following grounds of appeal:
“1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the A.O. in not allowing the set off of brought forward losses of Rs. 14,17,634/- by wrongly treating the same speculative loss.
2. Without prejudice to the above, Ld. CIT(A) ought to have given direction to the A.O. to allow set off of unabsorbed depreciation against the business income.
3. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.”
I.T.A. No.: 678/KOL/2023 Assessment Year: 2013-14 Trade City Commodities Pvt. Ltd. 3.1. The ld. Counsel for the assessee took us through several documents contained in a paperbook filed before us. He pointed out re-assessment orders passed u/s 147/143(3) of the Act for AY 2011-12 & AY 2012-13 in which loss or gain from speculation has been clearly mentioned in the computation of income. It has also been pointed out that the brought forward losses were a composite of unabsorbed depreciation of loss from business and loss from speculation as under:
Financial Year Unabsorbed Business Loss Speculation Depreciation Loss 08-09 496,635 - - 09-10 328,245 - - 10-11 586,011 869,256 - 11-12 456,539 324,268 16,303,924 1,867,430 1,193/524 16,303,924 3.2. Ld. D/R chose to rely on the orders of the authorities below.
We have carefully considered the documents placed before us, the orders of the authorities below and the averments of ld. A/R/ld. D/R. To appreciate the change in law with effect from 01.04.2014 the amended provision of Section 43(5) of the Act needs to be extracted for ready reference:
“43(5)(e)—an eligible transaction in respect of trading in commodity derivatives carried out in a recognised stock exchange, which is chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013)” 4.1. A careful perusal of the position of brought forward losses reveals that this matter is not a simple case of speculative income/loss versus business income/loss. There is the issue of unabsorbed depreciation as also the change in law with effect from 01.04.2014. A perusal of the orders of the authorities below reveals that the appellant’s averments regarding different kind of losses have not been duly considered and even his alternative submissions as canvassed before the ld. CIT(A), extracted (supra), have not been given the attention that they deserve. Accordingly, we deem it fit to restore this matter to the file of ld. CIT(A) for adjudicating on the issue of allowability of brought forward losses and passing a reasoned order on their allowability, or otherwise.