TMI Blog2007 (8) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... i ) Business loss (-) Rs. 45,91,536 ( ii )Dividend Income Rs. 3,83,247 ( iii )Capital Gains Rs. 6,48,092 The Assessing Officer noted that assessee was engaged in the business of investment and trading in shares and securities, hence, asked the assessee to explain why Explanation to section 73 of the Act was not applicable. The Assessing Officer also required the assessee to work out the net loss after taking into account the expenses. The assessee submitted that loss had arisen during the year in the regular course of business. The Assessing Officer held that assessee s case was not covered under the exception provided in Explanation to section 73. The Assessing Officer relying on the decision in the case of CIT v. Sun Distributors Mining Co. Ltd. [1993] 68 Taxman 223 (Cal.), CIT v. Arvind Investments Ltd. [1991] 192 ITR 365 (Cal.) and Eastern Aviation Industries Ltd. v. CIT [1994] 208 ITR 1023 (Cal.) held that share trading loss was to be treated as speculation loss. The Assessing Officer also attributed expenses in the ratio of sales to total turnover to arrive at the net loss and completed the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that only Ground Nos. 1 and 2 were pressed as was the case during the course of hearing on 7-8-2006. The learned counsel also narrated the factual background and pointed out that during the course of original hearing, the revenue had not cited any decision. In this background, the learned counsel took a preliminary objection that the Tribunal had pronounced the order, hence, if any decisions was taken contrary to the decision pronounced, it would amount to review of order and which was beyond its powers. The ld. counsel for the assessee, in this regard, placed reliance on the decisions of the Hon ble Delhi High Court in the case of CIT v. Sudhir Choudhrie [2005] 278 ITR 490 1 and in the case of CIT v. G. Sagar Suri Sons [1990] 185 ITR 484 . 9. The ld. DR, at this stage, pointed out that the decision of the Hon ble Delhi High Court in the case of G. Sagar Suri Sons ( supra ) was altogether in a different context wherein the written order was at variance with the pronouncement made during the course of hearing and in that situation, it was held that there was a mistake in the written order which could be rectified. The learned DR also contended that this propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, the limitation also starts from the date when the order is served, hence, oral pronouncement does not give any inherent right or creates any limitation with regard to statutory rights of the parties to the disputes. Even an entry to this effect, in the Order Sheet signed by the Members of the Bench would not constitute an order within the meaning of rule 34 of the ITAT Rules because as judicially settled that an order is a mandate precept or command but the reasoning is its soul, hence, without any reasoning or conclusion based upon considered or authoritative opinion on a matter or context, oral pronouncement cannot be an order in a strict sense. Thus, in our considered opinion, there is no merit in the contentions raised by the ld. counsel in this regard. 11. To sort out this controversy, we would further like to deal with the matter even if it is presumed that oral pronouncement during the course of hearing is an order, then the Tribunal being a Court of plenary jurisdiction is well within its powers within the meaning of section 254(1) of the Act to re-fix it for clarifications before passing an order in writing. The Hon ble Punjab High Court, in the case of Oriental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raj [2002] 256 ITR 252, wherein reference application was dismissed by the Tribunal as one filed beyond time which was subsequently restored by the rectification of the dismissal order. The Hon ble Kerala High Court held that the Tribunal had jurisdiction to restore the reference application once dismissed by it as time-barred by mistake. The relevant observations of the Court are as under: [[[ "In any case in view of the developments in this case, we proceed to consider whether the Tribunal has jurisdiction to restore the reference application once dismissed by it as time-barred by mistake. We are inclined to agree with the position canvassed by counsel for the Department that the Tribunal has inherent power to correct its own mistakes, because the party cannot be made to suffer on account of a mistake committed by a Court or Tribunal. Our attention was invited to the decision of the Allahabad High Court in Srimathi Lachmana alias Mulraia v. Deputy Director of Consolidation [1966] RD 419, wherein the Allahabad High Court held that the Tribunal has inherent jurisdiction apart from statutory jurisdiction to correct an error committed by it. Similarly, the Punjab High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is nothing wrong in the procedure adopted by the Tribunal. 12. We would further add that many times ex parte orders are passed on merits. However, when an application is being made by the aggrieved party for re-hearing the appeal after giving an opportunity to the assessee, such ex parte order is re-called though there is no express provision exist in this regard because the source of such power exist under section 254(1) of the Act itself. In the situation, when the Tribunal is clear in its mind that the provisions of section 254(1) were not complied in true spirit in passing the ex parte order it can recall such order for disposal afresh after giving an opportunity of hearing to both the parties and in such cases it does not amount to review of its earlier order because the purpose of setting aside an ex parte order is to consider the whole matter afresh by affording an opportunity of being heard. Similarly, the Tribunal before passing a written order can re-fix the case suo motu for clarifications so as to apprise the issue afresh in the light of other facts or material. There is nothing wrong in it because principles of natural justice are equally applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concord Commercials (P.) Ltd. ( supra ) is different only to the extent that business loss was less than the income from dividend as against it being more from income from different heads in the present, however, the ratio of that Special Bench decision regarding whether loss is to be considered for deciding the applicability of exception is concerned, the same has to be taken into consideration. The relevant observations of the Special Bench of the Tribunal are reproduced as below : "Para 31: Once we have held that the rule to be followed in the present case is the test of gross total income , we have to examine how the gross total income of the assessee in this case, is made up of. The assessee-company has earned a profit of Rs. 2,83,29,053 from its business of trading in steel, yarn and fabrics and from service charges. The assessee-company has also incurred a loss of Rs. 2,84,26,411 in the purchase and sale of shares. Altogether, the income from business is a loss of Rs. 97,358. The assessee-company has further earned dividend income of Rs. 10,18,914 from shares held as its stock-in-trade. The loss of Rs. 97,358 has been computed under the head Profits and gains of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Ltd. v. CIT [1994] 208 ITR 1023 (Cal.), the assessee had a share trading loss of Rs. 12,90,145 and a speculation loss of Rs. 7,95,447. The positive income from other sources was Rs. 3,87,603. In Aryasthan Corpn. Ltd. v. CIT [2002) 253 ITR 401 (Cal.) also, the facts were identical where the business loss was higher than positive income from other sources. But in assessee s case, dividend income is higher than the business loss. Income from other sources by way of dividend was Rs. 10,18,914 whereas income from business was a loss of Rs. 97,358. Even when business loss is treated as negative profit, the negative profit was less than the positive income from dividends. Therefore, on the facts of the present case, the above two decisions of the Calcutta High Court are not applicable to issue. Para 49 : The revenue has also raised certain supporting arguments that the case need to be considered in the light of the intention of the Legislature in enacting Explanation to section 73, which has been clarified in CBDT Circular No. 204, dated 24-7-1976 [110 ITR (St.) 21, 32] and that the meaning of the expression gross total income defined in section 80B(5) cannot be import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Thane Electricity Supply Co. Ltd. ( supra ) and has held that the decision of a non-jurisdictional High Court in the absence of contrary decision of another non-jurisdictional High Court had a great persuasive value which was required to be followed. We further find that the Tribunal in the case of Yucca Finvest (P.) Ltd. ( supra ) has rejected the contention of the assessee that even positive figure of Rupee one was more than the loss of any extent, hence, in cases where there was a loss under the business head and positive income in other heads, the assessee would always fall under exception. The relevant findings of the Tribunal are as under : "We have another reason to hold that it is the absolute figures of the loss or of income either under the head Business or under the head Other sources without sign which should be taken for comparison. To consider the figures along with sign for comparison will yield distorted results. To consider the figures with sign means income of Rs. 100 will be greater than loss of Rs. 1 lakh, i.e., if income from other sources is Rs. 100 whereas the loss from trading in shares is Rs. one lakh, then by considering the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for comparison for deciding as to whether the case falls in the first exception of Explanation to section 73 or not. Further, we are of the view that loss is always chargeable to tax as it is liable to be adjusted against other income under the head Business in the current year or if allowed to be carried forward then income of following year/s. According to us, word chargeable used in Explanation to section 73 does not mean charged . In other words, when we say that high negative income, i.e., higher figure of loss is less than the positive income from other sources, i.e., lesser figure of income, we indirectly subscribe to the view that the loss is not chargeable to tax. According to us, the word chargeable used in Explanation to section 73 would refer to chargeability to tax under the Act. This would only mean that loss may not be charged to tax directly in the current year. But by adjustment against other business income in that year or in following years, it reduces the other income on which tax is levied. Hence, negative income, i.e., loss is as equally chargeable to tax as positive income. Hence, we have to consider absolute figure to determine as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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