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M/s Srestha Arts And Commodities Pvt Ltd Versus Dy. CIT (OSD) -2 (3) , Mumbai

2015 (10) TMI 1470 - ITAT MUMBAI

Addition on 'speculation loss' - the same was not eligible for set off against the business income of the appellant as held by CIT(A) - whether the impugned transaction is of speculative in nature or not? - Held that:- One of the tests to determine whether the transaction is done with an intention to speculate and make profit from the rate fluctuation is to see whether the assessee has sufficient funds to make the payment for purchases. If the assessee does not have money to make the payment for .....

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ITAT MUMBAI). In that case the parties were produced before the AO .

We also find that in that case the AO has issued summons u/s. 131 of the Act to the dealers from whom the assessee claimed to have purchases and sales, such investigations are not made in the present case. Therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to verify the impugned transactions from the respective parties by making verifications from the .....

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aiya, AM. This appeal by the assessee is preferred against the order of the Ld. CIT(A)-6, Mumbai dt. 28.3.2013 pertaining to Assessment year 2008-09. 2. The assessee has raised 3 substantive grounds of appeal. At the very outset, the Ld. Counsel for the assessee stated that he is not pressing ground No.1 alongwith its sub-grounds, the same is dismissed as not pressed. 3. Ground No. 2 & 3 with sub-grounds read as under: "2.1. The Ld. CIT(A) erred in confirming the action of the AO in mak .....

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mitted that in the facts and the circumstances of the case and in law no such action was called for and the loss of ₹ 2.61 crores was required to be held as fully allowable as normal business loss." 4. The assessee is dealing in commodities and providing consultancy in prospecting of Minerals. The return was selected for scrutiny under CASS. Accordingly, statutory notices were issued and served upon the assessee. While scrutinizing the return of income qua the books of account, the As .....

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e added back to the total income. In its reply dated 23.12.2010, the assessee explained that in order to get direct supply from MMTC, the assessee is required to have huge turnover in Bullion for five years. In order to achieve that the assessee negotiated with several parties and decided to purchase Bullion. It was further explained that the assessee was not having that much of capital or bank facility to left the commodity and store it because of these peculiar factors these transactions were .....

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d that the impugned transactions were of speculative in nature as per Sec. 43(5) of the Act. Infact the First Appellate Authority allowed an opportunity to the assessee to explain why the transaction should not be treated as speculative in nature. The Ld. CIT(A) observed that no evidence whatsoever was furnished as to how and when the delivery was taken. The Ld. CIT(A) finally concluded by dismissing the appeal and holding that the loss of ₹ 2.61 crores is a speculative loss. 6. Aggrieved .....

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is the say of the Ld. Counsel that on identical set of facts and transactions with some parties, the Tribunal has decided this issue in favour of the assessee and against the Revenue. 8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the AO treated the entire transaction as a sham transaction whereas the First Appellate authority has confirmed the findings of the AO treating the loss as a speculative loss which means that now the genu .....

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