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Pr. Commissioner Of Income Tax-06 Vs. Moderate Leasing And Capital Services Pvt. Ltd.
November, 19th 2016
$~5
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                               Date of Decision:15th November, 2016

+                  ITA 721/2016 & CM No.39118/2016


       PR. COMMISSIONER OF INCOME TAX-06           ..... Appellant
                    Through: Mr. Rahul Choudhary, Senior
                              Standing Counsel and Mr. Udit Jain,
                              Advocate.

                          Versus

       MODERATE LEASING AND CAPITAL SERVICES PVT. LTD.
                                            ..... Respondent
                   Through: None.


       CORAM:
       HON'BLE MR. JUSTICE S. RAVINDRA BHAT
       HON'BLE MR. JUSTICE NAJMI WAZIRI

S. RAVINDRA BHAT, J. (Oral)


1.     The question of law urged by the Revenue is whether in the
circumstances of the case the direction to delete the penalty imposed was
justified?
2.     The assessee had claimed business loss for Assessment Year (`AY')
2004-05 in respect of a transaction i.e., sale of shares., which was disallowed
by the Assessing Officer (`AO'), who observed that the stocks were held as
investments, therefore, it should have been treated as capital loss. The
Commissioner of Income Tax (Appeals) [`CIT (Appeals)'] by order dated








ITA No. 721/2016                                                    Page 1 of 3
02.01.2009 set aside the AO's order dated 31.03.2008; the Income Tax
Appellate Tribunal (`ITAT') confirmed the same by the impugned order
dated 04.01.2016.
3.     This Court entertained an appeal under Section 260A of the Income
Tax Act, 1961 (for short `the Act') and remanded the matter for fresh
adjudication to the Tribunal, which then held that the loss had to be treated
in the capital side and claim for its being business loss was unwarranted.
The penalty proceedings were, therefore, drawn and the adjudication notice
was confirmed by the AO. The CIT (Appeals) was of the opinion that
assessment proceedings, since the assessee had originally succeeded, it was
only upon fresh consideration by the High Court that the assessee had faced
the adverse finding, which resulted in penalty, which was not justified.
4.     The Revenue urges that the impugned order is contrary to the
Explanation 1 to Section 271(1) (c) of the Act. It is stated that since the
assessee was aware all along about the true nature of the account and
investment which had been treated as part of the capital assets, the loss
report as of `business loss' amounted to projection of false facts.
5.     This Court has considered the materials carefully. It is evident that in
the quantification proceedings, both the Appellate Commissioner and the
ITAT granted relief to the assessee. It is only at the intercession of this
Court that the matter was remitted for reconsideration and it was held that
loss was capital in nature and could not be treated as having occurred in
trade. The ITAT noticed that since the assessee had succeeded both before
the CIT (Appeals) and ITAT in the quantification proceedings, penalty was
not justified.
6.     We do not find any substantial error in its reasoning warranting any








ITA No. 721/2016                                                      Page 2 of 3
intervention by this Court.
7.     The appeal alongwith pending application is, therefore, dismissed.



                                               S. RAVINDRA BHAT, J.



                                                NAJMI WAZIRI, J.
NOVEMBER 15, 2016
sb




ITA No. 721/2016                                                  Page 3 of 3

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