TMI Blog2011 (7) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... f business - It is settled position of law that where shares are traded for the purpose of business, any loss arising therefrom will be considered as “Business Loss”. (CIT v. Ashoka Marketing Co -1971 (7) TMI 8 - SUPREME Court). Thus the Tribunal was right in holding that the assessee is entitled to set off the loss in share trading business from that of travel agency business - The case of the assessee comes within the purview of Section 70 - in favour of assessee and against the revenue. - ITA No.310/2009, ITA No.358/2011, ITA No.1115/2010 - - - Dated:- 27-7-2011 - MR. JUSTICE A.K.SIKRI, MR. JUSTICE M.L.MEHTA, JJ. For Appellant: Ms. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anand, Advocates For Respondent: Mr. A.N. Hakser, Sr. Advocate with Mr. Udyan Jain and Mr. Ashok Sikka, Advocates M.L.MEHTA, J. 1. These three appeals being ITA No. 310/09, 1115/10 and 358/11 are preferred against the orders passed by Income Tax Appellate Tribunal ( the Tribunal‟ for short) dated 22/08/08, 17/06/2009 and 16/07/2010 relating to assessment years 2003-04, 2005-06 and 2007-08 respectively. Since the substantial questions of law in ITA 1115/10 and ITA 358/11 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve credit of 10% on account of travel agents commission after ascertaining actual outgoings in this regard. CIT (A) also confirmed the order of the AO not allowing the adjustment of losses in share transaction business to be set off against income from the business of travel agency, holding that the accounts for each business have to be maintained separately and the loss from one activity cannot be set off against the income from the other. 6. Aggrieved by the order of CIT (A), the assessee again preferred appeal before the Tribunal. The Tribunal allowed the appeal and deleted the entire addition made by the AO holding that the receipt by itself does not result into the income unless corresponding service have been performed. Either under cash system of accounting or mercantile system of accounting, the receipt becomes income only when the customer boards the cruise and it departs. The Tribunal also allowed the assessee to adjust the loss from share transaction business against the profits of travel agency business holding that the assessee was carrying on two businesses concurrently as Proprietor and therefore, profits of one can be set off against loss of another in view of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and lays down that qualified bookings are all F.I.T. and group bookings which become sailed booking, which were made in accordance with RCCL‟s applicable policies and procedures, and for which full payment is received by RCCL. Learned counsel for the assessee contends that the commission for such bookings is available to the assessee only on qualified bookings. The assessee has no right to receive any commission on the advance amounts received for the bookings in case the cruise doesn‟t depart. The advance doesn‟t on its own become revenue for the assessee till the booking becomes a sailed booking and full payment is received by the RCCL. Once the sail takes place and commission accrues to the assessee, he offers his income for taxes. Taxing the advance received considering it as income will also lead to double taxation since the assessee offers the final income for taxation in the subsequent years. In this regard, he relies upon the judgments of Raja Mohan Raja Bahadur v. CIT AIR 1968 SC 114, State Bank of Travelcore v. CIT, (1986) 2 SCC 11, Devsons Pvt. Ltd v. CIT, 329 ITR 483 (Delhi), Amiantit International Holding Ltd. IN Re 322 ITR 678 (AAR), CIT v. Din ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g‟ is synonymous with arising‟ in the sense springing as a natural growth or result. The three expressions accrues‟, arises‟ and is received‟ having been used in the section, strictly speaking, accrues‟ should not be taken as synonymous with arises‟ but in the distinct sense of growing up by way of addition or increase or as a accession or advantage, while the word arises‟ means comes into existence or notice or presents itself. The former connotes the idea of growth or accumulation and the latter of the growth or accumulation with a tangible shape so as to be receivable. 12. In Dinesh Kumar Goel (Supra), it was observed as under: ..It is important, therefore, that receipt of a particular amount in the relevant year should be an income‟ under the aforesaid provision. What is the relevant yardstick is the time of accrual or arisal for the purpose of its taxation, viz, in order to be chargeable, the income should accrue or arise to the assessee during the previous year. If income has accrued or arisen, even if actual receipt of the amount is not there, it would be chargeable to tax in the said year. Though the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the travel agent from 25% commission to be charged from RCCL. was the sole responsibility of the assessee, Thus, as and when the ticket is booked and full payment is received, the assessee becomes entitled to deduct the commission of 25% and remit the balance to RCCL. The commission accrues to the assessee with the booking of tickets and against full payment. This is notwithstanding that the customer may not board the cruise or cancel the trip. 14. There is a procedure prescribed for cancellation of bookings. Section 20 of the Agreement provides for cancellation charges. This section reads as under: Section 20. Cancellation Charges. IR acknowledges that RCCL suffers injury when (i) bookings are cancelled but RCCL does not receive proper notice, or (ii) bookings are cancelled close to the scheduled departure. IR shall be liable to RCCL for payment of cancellation charges in accordance with RCCL‟s applicable cancellation charge schedule as may be amended from time to time. The current cancellation charges for individual bookings are set forth in Exhibit B and for group bookings in Exhibit A. These cancellation charges are subject to the following rules: (a) RCCL r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved as under: It is wrorthy of note that though the profits of each distinct business may have to be computed separately, the tax is chargeable under section10, not on the separate income of every distinct business, but on the aggregate of the profits of all the businesses carried on by the assessee. It follows from this that where the assessee carried on several businesses, he is entitled under section 10, and not under section 24(1), to set off losses in one business against profits in another . 19. Admittedly, the assessee was doing share trading business although in his own name and not in the name of M/s Titun Travel Market. The assessee was dealing in shares not for the purpose of investment but for the purpose of business. It is settled position of law that where shares are traded for the purpose of business, any loss arising therefrom will be considered as Business Loss . (CIT v. Ashoka Marketing Co., 1971 (III) UJ 895). Hence, we are of the view that the Tribunal was right in holding that the assessee is entitled to set off the loss in share trading business from that of travel agency business. The case of the assessee comes within the purview of Section 70 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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