IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "B" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, AM
AND SHRI GEORGE GEORGE K, JM
ITA No. 5126/Del/2012
AY : - 2009-10
DCIT, Circle 3(1) vs. Committed Trading P.Ltd.
New Delhi B 82, 2nd floor, Naraina Vihar
New Delhi 110 028
PAN: AACCC 4073 A
(Appellant) (Respondent)
Appellant by : Smt.Parwinder Kaur, Sr.D.R.
Respondent by: Sh. TN Chopra, Adv.
ORDER
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue directed against the order of the
Ld.CIT(A) dated 3.7.2012 for the AY 2009-10.
2. Facts in brief:- The assessee is a company carrying on the business of
buyers, sellers, importers, exporters, distributors, brokers, commission
agents and dealers. It filed its return of income electronically declaring
income of Rs.2,41,18,350/-. The AO passed an order u/s 143(3) on 8th
December,2011 determining the total income at Rs.2,42,20,140/- inter alia
disallowing Rs.1,01,790/- u/s 14A and treating the short term capital gain
earned and claimed by the assessee, as business income.
2.1. The sole basis on which the AO came to a conclusion that the income
from purchase and sale of shares by the assessee be assessed under the
head `business' and not under the head `short term capital gains, was that
the assessee in the earlier AY 2008-09 claimed loss on diminution of value
of shares belonging to M/s Bhushan Steel and Strips at Rs.1,39,55,045/-.
There is no other ground taken by the AO for coming to such conclusion.
ITA 5126/Del/2012
AY 2009-10
Committed Trading Pvt.Ltd.
3. The Ld.CIT(A) has reversed this finding of the AO by holding that (a)
the shares were held by the assessee as investments in its balance sheet; (b)
The AO has not established that the shares held as investments by the
appellant were stock in trade and not capital assets; (c ) merely because the
assessee made a wrong claim for deduction in the AY 2008-09, the income
from capital gains does not get converted into income from business, as two
wrongs do not make a right; (d) the claim for deduction for the AY 2008-09,
on the ground of diminution in the value of investments, is blatantly wrong
and the AO should take remedial measures as per law.
3.1. On the deduction u/s 14A he held that (a) Rule 8D cannot be applied
in a mechanical manner; (b) the AO has not recorded his satisfaction
regarding the claim of the assessee company that no expenditure has been
incurred by them for earning of exempt income in the form of dividend.
Thus he applied the decision of the Jurisdictional Tribunal in the case of
Jindal Photo in ITA 814/Del/2011 and granted relief. Aggrieved the
Revenue is in appeal before us on the following grounds.
4. Ld.Sr.D.R. Smt.Parwinder Kaur submitted that the assessee had, in
the AY 2008-09, claimed income/loss connected with the purchase and sale
of shares under the head `income from business and profession' and this is
clear from page 8 para 1 of the assessment order. She submits that the
First Appellate Authority has erred in not considering this factual decision.
5. The Ld.Counsel for the assessee Shri TN Chopra on the other hand
submitted that merely because the assessee had made a wrong claim in the
year 2008-09, the AO cannot in the current year come to a conclusion that
the income from purchase and sale of shares, which is disclosed as
investments, is to be assessed as income from business. He filed an
assessment order passed u/s 143(3) r.w.s. 147 of the Act on 13.12.2013 for
the AY 2008-09 and submitted that the claim of the assessee on account of
diminution in the value of shares, was specifically disallowed and the
assessee has accepted this order. Thus he contends that the very basis on
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ITA 5126/Del/2012
AY 2009-10
Committed Trading Pvt.Ltd.
which the AO has come to a conclusion that the income from sale and
purchase of shares of the assessee is to be assessed under the head income
from business', is no more in existence. He further submitted that the
assessee has never declared the income from purchase and sale of shares
under the head income from business or profession'and the AO's
observation at page 8 of the assessment order is wrong. He relied on the
order of the First Appellate Authority and submitted that the Revenue
should take a consistent stand for both the AYs and cannot be allowed to
flip flop.
6. After hearing rival contentions, we find force in the submissions of
Shri TN Chopra. The sole ground on which the AO came to a conclusion
that the income from purchase and sale of shares has to be assessed under
the head income from business' and not under the head income from capital
gains', is a claim of Rs.1,38,55,045/- made by the assessee on account of
diminution in the value of investments, during the PY 2008-09. The
assessment order dt. 13.12.2012 for the AY 2008-09 passed u/s 143(3)
r.w.s. 147 of the Act, the AO disallowed this claim. Hence the findings of the
AO has no legs to stand on. If the Revenue's appeal is to be accepted, then
the loss claimed by the assessee on diminution in the value of shares cannot
be disallowed for the AY 2008-09. But this is not the case of the assessee.
Thus in our view the First Appellate Authority was right in his findings.
6.1. Be it as it may, the papers which would demonstrate that the assessee
has not disclosed any income from sale and purchase of shares under the
head `income from business or profession', as claimed by the Ld.Counsel for
the assessee, is not before us. Thus, we deem it appropriate to set aside the
matter to the file of the AO for the limited purpose of verifying the same. If
the assessee has not offered income from sale and purchase of shares
under the head `income from business' for the AY 2008-09, the question of
assessing the income in question under the head `income from business or
profession' during the current AY does not arise.
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AY 2009-10
Committed Trading Pvt.Ltd.
7. In the result the appeal of the Revenue is treated as allowed for
statistical purposes.
Order pronounced in the Open Court on 11th December,2014.
Sd/- Sd/-
(GEORGE GEORGE K) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 11th December, ,2014
*manga
Copy of the Order forwarded to:
1. Appellant;
2.Respondent;
3.CIT;
4.CIT(A);
5.DR;
6.Guard File
By Order
Asst. Registrar
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