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Income Tax Appellate Tribunal, “ C” BENCH, KOLKATA
Before: Shri M. Balaganesh
The appeal of the assessee in for the Asst Year 2007-08 arise out of the order of the Learned CIT(A)-3, Kolkata in Appeal No.108/CIT(A)- 3/Cir-7(1)/14-15(12-13)/kol. dated 27.2.2015 against the order of assessment framed u/s 143(3) / 263 of the Act on 28.3.2013 .
The appeal of the assessee in for the Asst Year 2007-08 arise out of the order of the Learned CIT(A)-3, Kolkata in Appeal No.112/CIT(A)- 3/Cir-7(1)/14-15(13-14)/kol. dated 27.2.2015 against the order of assessment framed u/s 154 / 143(3) / 263 of the Act on 28.5.2013.
2.1 The brief facts of the case are that the return of income for the Asst Year 2007- 08 was filed by the assessee on 29.10.2007 and assessment u/s 143(3) was completed by the Learned AO on 24.12.2009 wherein the Learned AO had allowed the set off of loss in share trading business in the cash segment against other business income of the , 359/Kol/2015-C-AM 1 M/s. CD Equisearch Pvt. Ltd assessee. This order was subjected to revision u/s 263 of the Act by the Learned CIT wherein the Learned CIT directed the Learned AO to treat the loss suffered by the assessee in share trading in its own account in the cash segment as speculation loss amounting to Rs. 2,09,02,062/-. The assessee preferred an appeal before this tribunal against the section 263 order passed by the Learned CIT. This tribunal had confirmed the validity of invoking revisionary jurisdiction u/s 263 of the Act by the Learned CIT. The giving effect order was passed by the Learned AO u/s 143(3) / 263 of the Act on 28.3.2013 wherein the loss from trading in shares in the cash segment amounting to Rs. 2,09,02,062/- was treated as speculation loss and not set off against the other business income and was allowed to be carried forward in accordance with section 73 of the Act. This order was further subjected to rectification proceedings u/s 154 of the Act by the Learned AO vide order dated 28.5.2013 , wherein the loss from mutual fund units was reworked at Rs. 1,47,41,588/- ( as against the claim of Rs. 4,28,35,765/- by the assessee) ; and also reworking the speculation loss from trading in shares in the cash segment, pursuant to allocation of expenses, at Rs. 7,59,19,223/- (as against the claim of Rs. 2,09,02,062/- by the assessee) and allowing the same to be carried forward in accordance with section 73 of the Act. On appeal by the Assessee, the CIT(A) confirmed the orders of the AO. The assessee has filed two appeals before this tribunal , one against the order of CIT(A) confirming the order of the AO giving effect order passed u/s 143(3)/263 dated 28.3.2013 and another appeal against the order of CIT(A) confirming the order of the AO passed under section 154 order dated 28.5.2013 in and 359/Kol/2015 respectively.
The Learned AR argued that the assessee had derived the following income :-
Income from Derivatives 4,58,12,554 Loss from trading in shares (2,09,02,062) Stock Broking Income 5,50,13,773 Depository Income 29,61,098 Dividend Income 4,33,58,423 , 359/Kol/2015-C-AM 2 M/s. CD Equisearch Pvt. Ltd Loss from Trading in Mutual Fund Units (4,28,35,765) Keyman Insurance Policy Proceeds 1,79,00,000 Interest on Margin Deposits 75,80,632 Other Interest 18,908 Miscellaneous Income 15,50,644 ------------------ 11,04,58,205 He argued that the assessee was doing an integral business and the whole business was one, being done from a common platform through a common terminal and using common staff of the assessee. The entire income earned by the assessee were integrally connected to its share trading activity. It was also argued that the law does not make any distinction for purchase and sale of shares made on own behalf and / or on behalf of others. Hence it was argued that the intra head ‘set off of loss’ in the profits done by the assessee was justified. It was further argued that the derivative trading was done only for hedging the cash trading in shares. It was also argued that the notice u/s 154 of the Act was very vague and did not indicate clearly as to what the Learned AO was intending to rectify and in this regard, the Learned AR placed reliance on the decision of the Hon’ble Apex Court in the case of Additional CIT vs Shreyas Gramin Bank reported in (2012) 25 taxmann.com 282 (SC) dated 12.9.2012. The Learned AR further pointed out that the tribunal order in dated 30.12.2013 confirming the validity of section 263 order by the Learned CIT had been subsequently modified by setting aside to the file of Learned AO the issues considered in the order in Sec.263 of the Act in M.A.No. 13/Kol/2015 dated 6.11.2015, he prayed for setting aside of the entire appeals to the file of the Learned AO in order to put all the impugned disputes to rest. In response to this, the Learned DR fairly conceded for setting aside of the appeals to the file of the Learned AO.
4. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove and the sequence of events remain undisputed and hence are not reiterated herein for the sake of brevity. We find that the assessee , 359/Kol/2015-C-AM 3 M/s. CD Equisearch Pvt. Ltd had filed a miscellaneous application in MA No. 13/Kol/2015 before this tribunal against the order of tribunal in dated 30.12.2013 confirming the action u/s 263 by the Learned CIT . This Miscellaneous Application was disposed off by this tribunal vide order dated 6.11.2015 by observing as under:-
After hearing the rival contentions, we find that the plea of the assessee’s counsel is quite reasonable and accordingly, we direct the AO to consider the issue on merits and also considering the decision of Hon’ble Delhi High Court in the case of DLF Commercial Developers Ltd, supra. We direct accordingly.
5. In the result, Misc. Application of assessee is allowed.
4.1 We find that since the tribunal order confirming the section 263 proceedings had undergone modification by way of direction to the Learned AO to look into the issue on merits in the light of decision of Hon’ble Delhi High Court in the case of DLF Commercial Developers Ltd reported in 35 taxmann.com 280 (Delhi) , and these appeals are against the giving effect order to section 263 proceedings (i.e one appeal against the section 143(3)/ 263 order and another appeal against the section 154/143(3)/263 order), these orders do not have any basis on which they can be sustained. The orders are accordingly cancelled. Accordingly, the appeals of the assessee are allowed.
In the result, both the appeals of the assessee are allowed.
THIS ORDER IS PRONOUNCED IN OPEN COURT ON 03-02-2016