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2015 (6) TMI 169 - ITAT MUMBAI

2015 (6) TMI 169 - ITAT MUMBAI - TMI - Disallowance of STT payment - CIT(A) allowed part relief - Held that:- The AO has disallowed the relief to the assessee only on the technical ground of delay in filing the revised return. It is pertinent to note that the AO has to assess the correct income of the assessee on the basis of the provisions of the Act and in case if the assessee inadvertently has offered the higher income the same cannot be taxed by taking the excuse of technicalities. Even othe .....

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d on the basis of revised return - Held that:- Since on merits the AO has not disputed the claim of the assessee, therefore we do not find any error or illegality in the order of the Ld. CIT(A) in allowing the correct figure of donation paid by the assessee in the revised return of income. - Decided against revenue.

Disallowance of bad debts - Held that:- The relevant finding of the AO and submitted that the Board of Directors of the assessee has approved the bad debts in the meeting .....

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le as business loss. Accordingly, we do not find any merits in the grounds raised by the Revenue when the bad debts were actually written off by the assessee being unrecoverable and it is regarding the advance given by the assessee in the business of money lending. - Decided against revenue.

Disallowance of loss of commodity futures by treating as speculation loss - Held that:- This ground is covered against the assessee by the decision of this Tribunal of “Varsha Corporation Ltd. vs. .....

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n the books of account, then no adjustment can be made while computing the book profit under section 115JB as this amount does not represent any provision on account of bad debts. - Decided against revenue.

Disallowance of depreciation and boat expenses - Held that:- Except the year under consideration the AO has accepted the claim of the assessee on account of depreciation and other expenses on boat. When there is no change in facts and circumstances in this year under consideration, .....

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issue to give an factual finding about the allowable business loss and unabsorbed depreciation as well as the legal point whether the gross total income under the head ‘Business and profession’ has to be computed after giving effect to the setting off of brought forward business loss as well as brought forward unabsorbed depreciation for the purpose of arriving to a decision that the income from other sources is more than the income from business and profession - this issue is set aside to the r .....

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he CIT(A) for the assessment year 2007-08. The Revenue has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in deleting the addition of 59,095/-, made on account of disallowance of STT payment, on the basis of revised return filed by the assessee, without appreciating that the revised return was filed by the assessee beyond the time limit prescribed u/s. 139(5) as such the revised return filed is invalid. 2. On t .....

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n of 3,50,481/-, made on account of disallowance of bad debts claimed, following the decision of Hon'ble Apex Court in the case of TRF Limited ( Civil Appeal No. 5293 of 2003), without appreciating that the decision relied upon is not relevant to the facts of the case as on the basis of evidence furnished at the time of assessment proceedings the loss claimed was capital in nature. Without prejudice to the above the bad Debt claimed cannot be allowed as it is approved on 30-04-2007 as such i .....

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es of the case and in Jaw, the Id. CIT (A) erred in holding that the AO was not justified in making adjustments for computing book profit u/s.115JB in respect of bad debts disallowed of 3,50,481/-. 6. On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in deleting the addition of 11,69,603/- made by way of disallowance of depreciation and boat expenses, Without appreciating that in the course of assessment proceedings the assessee failed to furnish any evidence to .....

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igh Court in the case of Darshan Securities Pvt. Ltd. [ITA No.2886 of 2009 dated 02.02.2012], relied upon by the Ld CIT (A), is not relevant to the facts of the assessee's case." 2. Ground No.1 is regarding the disallowance of STT paid by the assessee. The assessee has filed a revised return and claimed the deduction of correct amount of STT paid by the assessee in the revised return of income. The Assessing Officer (AO) has rejected the claim of the assessee on the ground that the revi .....

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sed return. It is pertinent to note that the AO has to assess the correct income of the assessee on the basis of the provisions of the Act and in case if the assessee inadvertently has offered the higher income the same cannot be taxed by taking the excuse of technicalities. Even otherwise there is no restriction on the jurisdiction and the power of appellate authority to consider a fresh plea in view of the judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT .....

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rn filed by the assessee is beyond the time limit prescribed under section 139(5). The Ld. CIT(A) has accepted the claim of the assessee. Since on merits the AO has not disputed the claim of the assessee, therefore we do not find any error or illegality in the order of the Ld. CIT(A) in allowing the correct figure of donation paid by the assessee in view of our finding on ground No.1. 3. Ground No.3 is regarding the disallowance of bad debts. The assessee claimed as written off the bad debts to .....

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CIT [2010] 323 ITR 397 (SC) allowed the claim of the assessee. 4. We have heard the Ld. D.R. as well as the Ld. A.R. and considered the relevant material on record. The Ld. D.R. has referred the relevant finding of the AO and submitted that the Board of Directors of the assessee has approved the bad debts in the meeting held on 30.04.07, therefore the resolution is subsequent to the financial year closed on 31.03.07. We further note that the amount of bad debts written off represents the loan in .....

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ing the advance given by the assessee in the business of money lending. 5. Ground No.4 is regarding the disallowance of loss of commodity futures by treating as speculation loss. We have heard the Ld. D.R. as well as the Ld. A.R. and considered the relevant material on record. The Ld. A.R. of the assessee has fairly conceded that this ground is covered against the assessee by the decision of this Tribunal dated 17.01.14 in the case of Varsha Corporation Ltd. vs. DCIT in ITA No.6534/M/2012. Howev .....

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or the assessee as well as learned DR for the department. Admittedly, MCX, through which the assessee has carried out the transactions, is not a recognized stock exchange as required under the provisions of Section 43(5)(d) of the Act. As it can be seen from the abovementioned Notification dated 2911-2013, which has been relied upon by the learned AR, which has also been reproduced in the above part of this order, the MCX, through which the assessee has carried out the transactions, is notified .....

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given by the statute is w.e.f. 1-4-2014 and this is inserted by the Finance Act, 2013. In pursuance of the amendment, Notification No.51, dated 4-7-2013 has been issued by the CBDT, vide which Rule 6DDD is inserted in the Income Tax Rules. The said notification read as under :- INCOME-TAX (NINTH AMENDMENT) RULES, 2013 -INSERTION O F R U L E S 6 D D C , 6 D D D AND FORM NO. 3BC NOTIFICATION NO.51/2013 [F.NO.142114/2013-TPLJ/S0 2017(E), DATED 4-7-2013 In exercise of the powers conferred by clause .....

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l be inserted, namely :- "6DDC. Conditions that a recognized association is required to fulfill to be notified as a recognized association for the purposes of clause (e) of the proviso to clause (5) of section 43. - For the purposes of clause (e) of the proviso to clause (5) of section 43, a recognized association shall fulfill the following conditions in respect of trading in derivatives, namely:- (i) the recognized association shall have the approval of the Forward Markets Commission esta .....

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t of derivative market) for a period of seven years on its system; (iv) the recognized association shall ensure that transactions (in respect of derivative market) once registered in the system are not erased; (v) the recognized association shall ensure that the transactions (in respect of derivative market) once registered in the system are modified only in cases of genuine error and maintain data regarding all transactions (in respect of derivative market) registered in the system which have b .....

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52) as a recognized association for the purposes of clause (e) of the proviso to clause (5) of section 43 may be made to the Member (Legislation), Central Board of Direct Taxes, North Block, New Delhi. (2) The application referred to in sub-rule (1) shall be accompanied with the following documents, namely :- (i) approval granted by Forward Markets Commission for trading in derivatives; (ii) up-to-date rules, bye-laws and trading regulations of the recognized association; (iii) confirmation rega .....

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ed1ssociation as a recognized association for the purposes of clause (e) of the proviso to clause (5) of section 43 or issue an order rejecting the application before the expiry of four months from the end of the month in which the application is received. (5) The notification referred to in sub-rule (4) shall be effective until the approval granted by the Forward Markets Commission is withdrawn or expired, or the notification is rescinded by the Central Government." 3. In the said rules, i .....

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seeking benefit of clause (e) of proviso to Section 43(5), then such benefit can be extended to assessee only in respect of assessment year 2014-2015 as the provisions of clause (e) of proviso to Section 43(5) are inserted by the Statute w.e.f. 1-4-2014. However, in the present case, the transactions done by the assessee relate to financial year 2008-09. For these transactions, there was no provisions in the statute to give the benefit to the assessee in respect of transactions of commodities, w .....

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e.f. 1-4-2006. Therefore, for the transactions, which were under consideration in that case, were held to be not of speculative nature under the provisions of clause (d) of the proviso to Section 43(5) of the Act and the said case relates to assessment year 2007-08. The transactions entered into by the assessee after insertion of clause (d) of the proviso to Section 43(5), were held to be of non-speculative nature as there was a provision on the statute. However, in the present case, when the as .....

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2006. It was the case of the assessee that the transaction conducted by it from July 2005 to September, 2005, cannot be rejected for the benefit of proviso (d) to sub-section 5 of Section 43(5) as there was a provision on the statute in the shape of clause (d). The lapse in the issue of notification etc. was only on account of delay by CBDT. It is in these circumstances, the Hon ble High Court has upheld the order of the Tribunal vide which the relief was given to the assessee. Thus, in that cas .....

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set aside the impugned order of the Ld. CIT(A) qua this issue and restore the findings of the AO. However, as pointed out by the Ld. A.R. that the quantification of the speculation loss has to be recomputed by the AO, therefore for the limited purpose quantification the issue is set aside to the record of the AO. 7. Ground No.5 is regarding the adjustment made by the AO for computing book profit under section 115JB on account of bad debt disallowance. We have heard the Ld. D.R. as well as the L .....

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not represent any provision on account of bad debts. 8. Ground No.6 is regarding the disallowance of depreciation and boat expenses. The AO has disallowed the depreciation and expenses in respect of luxury boat owned by the assessee on the ground that the same are personal in nature. On appeal, the Ld. CIT(A) has allowed the claim of the assessee on the ground that the claim of the assessee was allowed in the earlier years as well as in the subsequent years and therefore the same are to be allow .....

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the claim of the assessee in all the assessment years are as under: Sr. no Asst. Year Expenses on Boat Depr. On Boat Allowability Assessment Completed u/s 1 2006-07 Claimed Claimed Allowed by AO 143(3) 2 2007-08 Claimed Claimed Under Appeal Under Appeal 3 2008-09 Claimed Claimed Allowed by AO 143(1) 4 2009-10 Claimed Claimed Allowed by AO 143(3) 5 2010-11 Claimed Claimed Allowed by AO 143(3) 6 2011-12 Claimed Claimed Allowed by AO 143(1) 7 2012-13 Claimed Claimed Allowed by AO 143(3) Therefore, .....

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ation loss in view of the explanation to section 73. The assessee has invested in shares of various companies. The loss on such trade has been treated as non speculative business loss by the assessee in the return of income. During the course of assessment proceedings, the AO asked the assessee as to why the share trading activity should not be treated as speculation activity and why the set off of loss of speculation business should not be disallowed. In response, the assessee vide its letter d .....

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ess profit which was disclosed by the assessee of ₹ 2,14,93,920/-. 11. Before the Ld. CIT(A), the assessee has contended that the assessee falls under the exception provided under explanation to section 73 because the gross total income of the assessee is mainly of head of the income from other sources. The Ld. CIT(A) accepted the claim of the assessee and directed the AO to treat the applicant s claim as business loss and not as speculative loss. 12. Before us, the Ld. D.R. has referred t .....

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ished the details showing the income from business as well as the income from other sources. He has further contended that after setting off of brought forward business losses of ₹ 2,47,76,604/- under section 72 of the Act the gross income from business comes to nil in comparison to the income from other sources at ₹ 75,26,828/-, therefore the assessee falls under the exception provided in explanation to section 73. He has further contended that for computation of gross total income .....

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r the year under consideration and not the income of the earlier years for the purpose of explanation to section 73. 14. We have considered the rival submissions as well as relevant material on record. There is no quarrel as far as the exception carved out in the explanation to section 73 of the Act that if the company whose gross total income consists mainly of income which is chargeable under the head interalia Income from other sources then the deeming fiction created by the explanation treat .....

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