TMI Blog2010 (4) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... in shares and allowed the said loss as speculation loss, not as short-term capital loss - The learned Departmental Representative, on the other hand, relied on the order of the learned AM and contended that the genuineness of the transaction entered into by the assessee are required to be looked into and for that purpose the matter be restored to the file of the AO – It was held that the matter will now go before the regular Bench for deciding the appeal in accordance with the majority opinion - ITA NO. 366/AGRA/2006 - - - Dated:- 13-4-2010 - P.K. BANSAL, ACCOUNTANT MEMBER (AS A THIRD MEMBER) HARI OM MARATHA, JUDICIAL MEMBER AND SANJAY ARORA, ACCOUNTANT MEMBER ORDER P.K. Bansal, Accountant Member (As Third Member). This appeal came before me as a Third Member to express my opinion on the following questions : 1. Learned CIT(A) has erred in law and in facts in confirming the addition made by the learned Asstt. CIT, Circle 2(1), Farrukhabad on account of long-term capital gain. 2. Learned CIT(A) has erred in law and in facts in holding the transaction for purchase and sale of shares as speculative transaction instead of investment and therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital gain at Rs. 11,33,690 by taking the fair market value of the land as on 1st April, 1981 @ Rs. 4/ per sq. mtr. against the capital gain declared by the assessee at Rs. 1,45,199. When the matter went before the CIT(A), the CIT(A) also confirmed the addition. 5. Learned JM took the view that the working given by the assessee is comparatively correct as against the figure adopted by the AO. He observed that the AO has worked out the capital gain on the presumption that the land in question was agricultural land. The application of the agricultural rates is not correct. The Inspector has ascertained the rates as on 1st April, 1981 relating to agricultural land. The activities of the assessee are commercial one and the building of cold storage is within the municipal limit. He also observed that when there are two possible views, one favouring the assessee has to be adopted. 6. The learned AM did not agree with the learned JM and, therefore, wrote separate order and restored the issue to the file of the CIT(A) with the direction that the CIT(A) shall, either directly or through the AO, confront the assessee with all the material with the Revenue, and on which it places reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the land comes to Rs. 22.37 per sq. mtr. while the assessee has estimated fair market of the land only @ Rs. 20 per sq. mtr. Referring to para No. 4 of the order of the learned AM, it was pointed out that the learned AM has also accepted the factual position such as development of the area, provision of amenities, land use, etc. affects the fair market value of the land. The AO has taken the instance only of the agricultural land which was duly confronted with the assessee. Therefore, remitting the matter back to the file of the CIT(A) for the purpose of confronting the same material to the assessee or AO will not be justified. 8. Departmental Representative, on the other hand, relied on the order of the AO as well as on the order of the learned AM. 9. I have considered the rival submissions along with order of the learned AM and the learned JM. It is an undisputed fact that the assessee had set up the factory during the period 1968 to 1969. The land was sold by the assessee during the year under consideration. Thus, the land as on date when it is sold was not agricultural land but was a land which is actually used for commercial purposes. The assessee had estimated the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instance taken by the AO cannot be regarded to be the comparable instance for the purpose of estimating the fair market value of the land and I am accordingly of the view that it will not serve any purpose if the matter is remanded to the file of the CIT(A) for fresh adjudication as has been directed by the learned AM as in my opinion the AO has already confronted the assessee with the material collected by him. Remitting the matter to the file of the CIT(A) will unnecessarily delay the adjudication of the issue. I, therefore, agree with the view taken by the learned JM and accordingly accept the fair market value of the land as has been estimated by the assessee @ Rs. 20 per sq. mtr. as on 1st April, 1981. Thus, the question No. 1 as referred to me is answered in favour of the assessee that the assessee has been able to prove the long-term capital gain on the sale of the cold storage unit and this issue does not require further investigation through the learned CIT(A). 10. The facts relating to the second issue are that the assessee has claimed the short-term capital loss at Rs. 41,27,145 on the purchase and sale of shares. The AO did not agree with the claim of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue, albeit as speculative, even as it challenges the stated determination. It was also observed that there was hardly any enquiry into the delivery aspect and most of the questions were directed on the genuineness aspect of the transaction. The AO has not allowed the loss, yet not given any definite finding on the allowability of the claim. 13. Learned Authorised Representative before us supported the order of the learned JM. He pointed out by referring to the assessment order that the AO has rejected the claim of the assessee as short-term capital loss but treated it as speculative loss to be allowed from speculation profit. The genuineness of the transaction has not been rejected by the AO rather he treated the loss sustained in such trading as speculation loss. The CIT(A) observed that these entries of purchase and sale are not in the capital account of the partner Shri Jitendra Kumar. CIT(A) failed to appreciate that these entries were in the share account of the firm as they belonged to the firm. The assessee was in appeal before the Tribunal and the issue before the Tribunal relates to treating the loss on share transaction as speculative loss instead of short-term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough actual delivery. Therefore, the question of speculative transaction does not arise. 14. The learned Departmental Representative, on the other hand, relied on the order of the learned AM and contended that the genuineness of the transaction entered into by the assessee are required to be looked into and for that purpose the matter be restored to the file of the AO. 15. I have carefully considered the rival submissions and perused the material on record along with orders of the learned JM as well as learned AM. As the question referred to me which arises out of ground No. 2 taken by the assessee before the Tribunal which reads as under : 2. Learned CIT(A) has erred in law and in facts in holding the transaction for purchase and sale of shares as speculative transaction instead of investment and therefore treating the loss on shares transaction as speculative loss instead of short-term capital loss. 16. From the said question, it is apparent that the question before me does not relate to the genuineness of the transaction. The ground No. 2, from which the question referred to, emanates is similar to the question referred to me. I have gone through the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
