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2015 (12) TMI 1231 - ITAT AHMEDABAD

2015 (12) TMI 1231 - ITAT AHMEDABAD - TMI - Levy of penalty u/s. 271(1)(c) - Assessee was not entitled to adjust the dividend income against the business loss - CIT(A) deleting addition - Held that:- CIT(A) while deleting the penalty has given a finding that Assessee had disclosed all the relevant facts regarding the computation of income, the income from business and the dividend earned on shares in the return of income and none of the particulars furnished by the Assessee were found to be fals .....

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Sphere Stock Holding Pvt. Ltd. (2011 (8) TMI 1124 - GUJARAT HIGH COURT) has upheld the view of ld. CIT(A) as well as Tribunal that the irrespective of provisions contained in Section 56 of the Act and Explanation to 73, loss should be adjusted against such business income.

In view of the aforesaid facts and in the absence of any contrary binding decision brought to our notice by Revenue, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is di .....

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ee is a company stated to be engaged in the business of trading of shares. Assessee filed its return of income for A.Y. 1997-98 on 30.11.1997showing total loss of ₹ 11,76,10,593/- and thereafter Assessee filed revised statement of total income showing loss of ₹ 8,23,70,792/-. Subsequently the assessment was framed u/s. 143(3) vide order dated 13.03.2000 wherein the dividend income of ₹ 67,87,702/- was taxed under the head "income from other sources" and the business l .....

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dismissed the appeal of the Assessee. A.O thereafter initiated penalty proceedings u/s. 271(1)(c) as he was of the view that Assessee was not legally entitled to set off the dividend income against the other losses. He therefore held that Assessee had furnished inaccurate particulars of income and that the Assessee was liable for penalty u/s. 271(1)(c) of the Act and therefore by order dated 30.03.2011 levied penalty of ₹ 29,18,711/-. Aggrieved by the order of A.O., Assessee carried the m .....

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order of the Assessing Officer. 3. It is therefore, prayed that the order of the Ld. Commissioner of income-Tax (Appeals)-XIV, Ahmedabad may be set-a-side and that of the order of the Assessing Officer be restored. 4. The Assessee in C.O has raised the following grounds:- 1. On the facts and in the circumstances of the respondent's case, the learned CIT(A) has erred in rejecting the relevant Ground of Appeal raised before him by the respondent company to the effect that the impugned order p .....

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ssment treated the loss as speculation loss and the set off of dividend income was denied by him as he was of the view that the set off was not permissible as per law and he therefore concluded that Assessee has furnished inaccurate particulars of income and levied penalty u/s. 271(1)(c) of the Act. In appeal, the penalty levied by A.O was deleted by ld. CIT(A) by holding as under:- 3.3 I have carefully considered the penalty order and the submission made by the appellant during the course of ap .....

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ted by the appellant that the ITAT, Ahmedabad in subsequent decision in the case of Spare Stock Holding Pvt. Ltd. (Supra) has held that the dividend income can be set off against the speculation loss and the appeal of the department against that order has been rejected by Gujarat High Court vide order dated 23/08/2011. A copy of the order has also been submitted by the appellant. I have carefully perused the said order of the Hon'ble High Court. The Hon'ble Court has discussed various as .....

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fore, irrespective of the provisions contained in section 56 of the Act and Explanation to Section 73, loss should be adjusted against such business income. After consideration of all above facts, I am of the considered opinion that penalty u/s. 271(1)(c) is not eligible on the appellant. First of all, the appellant had disclosed all the relevant facts regarding the computation of income, the income from business and the dividend earned on shares in the return of income. None of the particulars .....

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atable. Further, there is an opinion of the jurisdictional High Court on the same issue that the income / loss can be adjusted against the dividend income irrespective of provisions of section 56 and 73. In these circumstances, the decision of Hon'ble Supreme Court in the case of Reliance Petro products Pvt. Ltd reported in 322 ITR 158 is clearly applicable. According to the decision, where there is no finding that any details were supplied by the assessee in its return of income found to be .....

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d. CIT(A) and further submitted that even on merits, the issue is covered in favour of the Assessee by the decision of Hon'ble Gujarat High Court in the case of CIT vs. Sphere Stock Holding Pvt. Ltd. (in Tax Appeal No. 2583 of 2009 order dated 23.08.2011). He also placed on record the copy of the aforesaid decision. He thus supported the order of ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to the levy of .....

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