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2015 (6) TMI 637 - ITAT MUMBAI

2015 (6) TMI 637 - ITAT MUMBAI - TMI - Disallowance of speculation loss from trading in gold bullions - CIT(A) deleted disallowance admitting additional evidence - Held that:- If a person purchases any item and then sold the same in both situations, there is a physical delivery is taken and given. It is also noted that the parties from whom the dealing in gold was made like Shri Rakesh Patel of Jorss Bullions, Pushpak Bullions and R.S. Bullions were produced before the Assessing Officer, who acc .....

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noted that the assessee paid VAT on the turnover, which is applicable to delivery based trading. The totality of facts clearly indicates that the assessee in fact transacted in gold and bullions in the normal course of business to earn profit. No prudent businessman will intentionally incur losses. Even otherwise, all the payments are through banking channel; therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against revenue.
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revenue. - ITA NO.4926/Mum/2012 - Dated:- 10-6-2015 - Shri Joginder Singh and Shri D. Karunakara Rao,JJ. For the Petitioner: Shri Amar Gahlot &Shri S. Sriram For the Respondent: Shri Vijay Kumar Bora-DR ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 31/05/2012 of the ld. First Appellate Authority, Mumbai, broadly on the ground in deleting the disallowance of ₹ 2,63,53,556/- made on account of speculation loss from trading in gold bullion .....

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ground raised. On the other hand, Shri Amar Gahlot along with S. Sriram, ld. counsel for the assessee, defended the conclusion arrived at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion we are reproducing hereunder the relevant portion from the conclusion drawn in the impugned order for ready reference and analysis:- 4. I have considered the facts of the case and and submissions of the assessee. T .....

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sputed the loss incurred by the assessee in trading of gold and bullion because finally she has accepted the loss but the only dispute is that she has held it as speculation loss, whereas, assessee claimed it as normal business loss. The A.O. has given three reasons for treating it as speculative loss i.e. intention of the company not to earn profit but to incur loss, no actual delivery was taken and no stock register is maintained, whereas, as far as stock register is concerned, assessee has he .....

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of trading activity speculative or normal trading cannot be based on maintenance of stock register at all. If a person has purchased any item and then sold the same and at both times physical delivery is taken and given then it will not be a speculative trading irrespective of the fact whether the stock register is maintained or not. The A.O. has disputed the intention of the company and held that company wanted to incur losses but in this regard it is relevant to mention that in the earlier yea .....

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the facts of transactions have not been disputed, though the loss is allowed as speculative loss. On the contrary" the assessee has been claiming that it wanted to enter into the business and further wanted to have transactions with MMTC and, therefore, the declared intention is to earn profit from the trading activity. Coming to the issue of delivery of goods transacted i.e. actual delivery of gold and bullion involved in the transactions the assessee has produced all the parties with whom .....

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s receipts and delivery of the gold and bullion traded. These challans were produced before the A.O. also as claimed by the assessee and no defect, whatsoever has been found in the challans by the A.O. Therefore, it is only on the basis of conjuncture and surmises that A.O. has held that the transactions were without any physical delivery, whereas, there is no evidence to suggest that there was no physical delivery. On the contrary assessee has produced challans (delivery note) and the concerned .....

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assessee genuinely transacted in gold and bullion in the normal course of business with the intention to earn profit and to enter into this business in a big way and physical delivery of gold and bullion was taken and given in the normal course. Hence the loss incurred by the assessee in transactions relating to trading of gold and bullion are treated as normal business loss and not speculation loss. In result, the ground of appeal of the assessee is allowed. 2.2. The facts in brief, are that t .....

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77; 13.14 crores against the profit of ₹ 27.7 lakhs in the immediate preceding year. The assessee earned a profit of ₹ 16.94 crores from its consultancy business which was set off against the loss of ₹ 2.64 crores from the bullion trading business. The ld. Assessing Officer asked the assessee to submit the details of purchase and sale of gold. On the basis of details, submitted by the assessee, it was found by the Assessing Officer that:- 1. The transaction of purchase and sale .....

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he assessee vide communication dated 01/11/2010 claimed that the type of transaction is not available on record as the dealer did not include the time in the invoice and further all the purchases and sales are by way of cheques and also the gold was transported physically to the dealer by the staff members of the assessee firm. The ld. Assessing Officer issued noticed u/s 131 of the Income Tax Act, to the dealers from whom the assessee claimed to have made purchases and sales, namely, Pushpak bu .....

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ugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that broadly the ld. Assessing Officer opined that the loss incurred by the assessee on account of purchase and sale of gold and bullion is a speculative loss and further doubted the trading activity by the assessee in the precious metal but the fact remains that she accepted the transaction by holding the same as of speculative in nature. Meaning thereby, ulti .....

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efore the ld. Commissioner of Income Tax (Appeals), which gives the complete details of stock available with the assessee. In any case, the nature of trading activity whether speculative are normal is not in dispute. We note that if a person purchases any item and then sold the same in both situations, there is a physical delivery is taken and given. It is also noted that the parties from whom the dealing in gold was made like Shri Rakesh Patel of Jorss Bullions, Pushpak Bullions and R.S. Bullio .....

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