, `'
INCOME TAX APPELLATE TRIBUNAL,MUMBAI "E" BENCH
. ., , ,
Before S/Sh. A.D. Jain,Judicial Member & Rajendra,Accountant Member
/.ITA No.6130/Mum/2013, /Assessment Year-2001-02
Indosuez WI Carr Securities DCIT Range-4(1)
(India)Pvt. Ltd.Hoechst House, 12th 6th Floor, Room no.640
Floor,Nariman PointMumbai- 21. Vs Aayakar Bhavan
PAN: AAACI 9368 J M.K. Road, Mumbai-20.
( /Appellant) ( / Respondent)
/.ITA No.5772/Mum/2013, /Assessment Year-2001-02
DCIT Range-4(1) Indosuez WI Carr Securities
Mumbai. Vs (India)Pvt. Ltd.Mumbai-400 021.
( /Appellant) ( / Respondent)
/Assessee by : Shri K. Gopal -AR
/ Revenue by : Shri H.M. Wanare-DR
/ Date of Hearing : 20 -07-2015
/ Date of Pronouncement : 20 -07-2015
, 1961 254(1)
Order u/s.254(1)of the Inco me-tax Act,1961(Act)
PER RAJENDRA, AM-
Challenging the order dated 26.07.2013of the CIT(A)-15,Mumbai,the Assessing Officer (AO)
and the assessee have filed cross appeals raising following Grounds of Appeal:
ITA No.6130/Mum/2013:
"1. On the facts and in the circumstances of case, the learned CIT(A) grossly erred in not allowing
the full amount of business loss of Rs. 65,34,607/-, whereby an amount of only Rs. 26,70,230/- is
treated as business loss and the balance amount of Rs.39,61,958/- is disallowed for want of
supporting evidence,
2. The learned Commissioner of Income Tax (Appeal) failed to appreciate the fact that the
documents submitted by the assessee to the extent of the loss of Rs. 26,70,230/-, represented the
full nature of business loss in totality, as under the circumstances of the case, and inspite of its
best efforts, it was not possible for the assessee to locate all its old records.
"The appellants crave leave to amend or alter any ground or add a new ground which may be
necessary" .
ITA No.5772/Mum/2013:
1. "On the facts and in the circumstances of fact and in law, the Ld.CIT(A) erred in allowing the
appeal of the assessee to the extent of Rs.26,70,230/- accepting the contention of the assessee that
the loss incurred on account of squaring up of transactions undertaken on behalf of clients due to
error in execution of trading."
2. "On the facts and in the circumstances of fact and in law, whether the Ld.CIT(A) was right in
treating the speculation loss as business loss in spite of the fact that the assessee failed to prove
his contention at the time of scrutiny proceeding as well as during remand proceeding."
ITA/6130 & 5772/Mum/2013,AY.01-02-Indosuez.
3. "On the facts and in the circumstances of the case and in law, the impugned order of the
Ld.CIT(A) is contrary to law and consequently merits to be set aside that of the Assessing Officer
be restored."
4. "The appellant craves leave to amend or alter any ground or add a new ground which may be
necessary."
Brief History:
Effective ground of appeal filed by the assessee is about not allowing the full amount of business
loss of Rs. 65,34, 607/- and restricting the claim to Rs.26.70 lakhs.Assesse-company,dealing in
shares and stock,filed its return on 10.10.2001,declaring the income of Rs.50,02 lakhs.The AO
complete the assessment on 22.03.2004,determining its income at Rs. 1,67,28,670/- u/s. 143(3)of
the Act.The matter travelled up to the Tribunal.Vide its order dated 30.03.2010,the Tribunal set
aside the matter to the file of the AO for fresh adjudication.The AO framed the assessment on
28.12.2011,u/s.143(3)r.w.s.254 of the Act at total income of Rs.1,31, 13,502/-.
3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate
Authority(FAA).During appellate proceedings,the assessee filed details of loss of Rs. 65,34,607/-
incurred on account of error in sale purchase of shares executed on behalf of clients. In its
statements dated 22.05.2012 it explained the reasons as to why the same could not be furnished
in earlier assessment proceedings.Considering the facts and circumstances the additional
evidence filed by were admitted as additional evidence under rule 46 A of the Income tax Rules,
1962.The FAA found that the assessee had filed supporting evidence in respect of net loss of Rs.
26,70,230/ - incurred on account of share discrepancy report, error in share trading etc.,executed
on behalf of client.
After considering the submissions of the assessee along with the additional evidences and the
assessment order the FAA held that that the assessee was engaged in sale purchase of shares on
its own account and sale purchase of shares on behalf of its client,that for the transaction entered
in to on behalf of the clients it would earn brokerage income,that it had huge brokerage business
of large number of clients,that the brokerage earned during the year was approximately Rs.27
crores.He referred to the provisions of explanation to section 73 of the Act and held that the
explanation was applicable only to the extent of sale purchase of shares carried out on assessee's
own account,that the assessee had proved with documentary evidence the loss of Rs.26,70,230/-
that was incurred during the business transactions carried out on behalf of its clients,that such
loss was not incurred on account of sale purchase of shares on assessee's own account,that the
provisions of section 73 were not applicable to this loss,that the Tribunal had held that if the loss
had arisen because of squaring up of transactions undertaken on behalf of clients due to error in
execution of trading the loss would be allowable as business loss,that in the case under
consideration the assessee had claimed deduction of loss of Rs.65,34,607/-,that it had filed
documentary evidence in respect of loss of Rs. 26,70,230/- only arisen on account of squaring up
of transaction undertaken on behalf of client due to error in execution of trading,that the claim of
loss to that extent was allowed as business loss,that the balance claim of loss was to be upheld
for want of supporting evidence.
4.During the course of hearing before us,Authorised Representative(AR)stated that the assessee
had not carried out any business on its own account,that all the transactions were entered in to on
behalf of the clients,that it had only two scrips in the balance sheet,that assessee loss had arisen
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ITA/6130 & 5772/Mum/2013,AY.01-02-Indosuez.
on account of the clients'business.Departmental Representative(DR)stated that the assessee had
not produced borkers' notes,that no evidence were produced in support of the claim made by it.
5. We have perused the material before us.We find that the only issue is disallowance upheld
by the FAA.The assessee is aggrieved by the addition upheld by the FAA and the AO has
challenged the relief granted by the FAA,amounting to Rs.26.70 lakhs.It is the second round
of appeal.Vide its order dated 30.03.2010 the Tribunal had held that if the assessee was not
trading in shares on own account and that loss had arisen because of squaring up the
transactions undertaken on behalf of clients due to error in execution of trading the loss
would be allowable as business loss otherwise it would be treated as speculation loss as per
the explanation to the section 73 of the Act.Thus,the issue before the AO/FAA was very
narrow.They had to find out as to whether the assessee had traded the shares on his account
or on behalf of the clients and the assessee had to prove that loss suffered was on account of
`the squaring up the transactions undertaken on behalf of clients due to error in execution
of trading'.The assessee produced fresh evidences before the FAA to prove its claim stating
that the same could not be produced earlier.The FAA had admitted the evidences as per the
provisions of Rule 46A of the Act.After considering the available evidences,he found that
the assessee was able to prove that loss amounting to Rs.26.70 was suffered by it due to the
transactions entered in to on behalf of the clients.As there was no evidence that the
remaining loss was result of the clients' transaction,so,he held that same was not allowable.
We are of the opinion that it was the duty of the assessee to produce the evidence that the
loss had not arisen from the transaction undertaken by it.It failed to discharge the primary
onus. Just making a claim in the books of accounts is not sufficient-it has to be proved by
documentary evidences.A claim made without evidence is like a wall without any founda -
tion.Therefore, same has to fall some-day.The FAA allowed the claim to the extent the
evidences were produced,as instructed by the Tribuanl.We do not find any legal or factual
infirmity in his order,therefore,confirming it we decide the effective ground of appeal
against the assessee.
ITA No.5772/Mum/2013:
As far as the appeal of the AO is concerned it is suffice to say that the FAA had called for a
remand report after admitting additional evidences produced by the assessee,that he had
allowed the loss that was proved by the assessee with documentary evidences and had
sustained the balance disallowance.We do not want to interfere with his order,as it is a
legally and factually sound order.Effective ground of appeal is decided against the AO.
As a result,appeals filed by the assessee and the AO stand dismissed.
.
Order pronounced in the open court on 20th,July,2015.
20 ,2015
Sd/- Sd/-
(.. /A.D. Jain) ( / RAJENDRA)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
/Mumbai, /Date:20.07.2015
. ..Jv.Sr.PS.
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ITA/6130 & 5772/Mum/2013,AY.01-02-Indosuez.
/Copy of the Order forwarded to :
1.Appellant / 2. Respondent /
3.The concerned CIT(A)/ , 4.The concerned CIT /
5.DR A Bench, ITAT, Mumbai / , ,.. .
6.Guard File/
//True Copy//
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai.
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