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M/s. Fairgrowth Enterprises Pvt. Ltd and M/s. Hari Finance & Trade Pvt. Ltd Versus I.T.O Ward 5 (4) , Kolkata

2016 (4) TMI 427 - ITAT KOLKATA

Loss from commodity trading business disallowed - refusal to allow to be set off against any other income or to be allowed to be carried forward for future set off against the income from speculation business - Held that:- We hold that without carrying out requisite enquiries as provided in the Act, merely treating the loss claimed to be a fictitious loss based on surmise and suspicion and by making general baseless allegations without bringing any evidence on record, the action of the Learned C .....

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loans and advances. He had reached this conclusion on the ground that interest income on loans of ₹ 35,21,584/- is more than the income from share trading of ₹ 13,62,106/-. Accordingly he held that the assessee’s case falls under the exception to Explanation to Section 73 of the Act. Having concluded so, he ought to have treated the loss on commodity transactions as a normal business loss and allowed to be set off against the speculative income as admittedly in the instant case the .....

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appeals of the assessee arise out of separate orders of the Learned CIT(A)-VI, Kolkata in Appeal No. 136/CIT(A)-VI, Wd. 5(4)/10-11/Kol dated 12.10.2012 for the assessment year 2008-09 in the case of M/s Fair Growth Enterprises Pvt Ltd and Appeal No.137/CIT(A)-VI, Wd. 5(4)/10-11/Kol dated 12.10.2012 for the assessment year 2008-09 in the case of M/s Hari Finance & Trade Pvt Ltd against the separate orders of assessment framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as .....

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ces of the case, the learned Commissioner of Income Tax (Appeals) erred in holding the loss from commodity trading business amounting to ₹ 6261870/- as fictitious and non genuine thereby refusing to allow to be set off against any other income or to be allowed to be carried forward for future set off against the income from speculation business. 2. For that on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (appeal) should have held that the loss suff .....

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ore or at the hearing of appeal. The same grounds has been raised by the assessee in ITA No. 1875/Kol/2012 except change in disallowance of loss on commodity transactions amounting to ₹ 46,62,796/-. We proceed to adjudicate the issue in the case of ITA No. 1876/Kol/2012 and the decision rendered thereon would apply with equal force to ITA No. 1875/Kol/2012 also. 5. The brief facts of the case in ITA No. 1876/Kol/2012 is that the assessee had incurred a loss of ₹ 62,61,870/- in commod .....

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cordingly held that the assessee falls under the exception clause provided in Explanation to Section 73 of the Act. Then he proceeded to disallow the claim of loss on commodity transactions in the assessment. On first appeal, the Learned CIT(A) confirmed the disallowance made by the Learned AO but by stating that the entire loss on commodity transactions claimed by the assessee is fictitious in nature. Aggrieved, the assessee is in appeal before us by raising the aforesaid grounds. 6. The Learne .....

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him, the Learned AO ought to have considered the interest payment also and then decide whether there is resultant profit thereon and the profit , if any, figure so arrived needs to be compared with income from share trading. If that is done, there is only a net loss after reducing interest paid on loans which would automatically lead to a situation that income from share trading more than the interest income (net) and hence it would naturally follow that assessee would fall under Explanation to .....

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71/Kol/2008 dated 21.7.2011 in support of his conclusion that the loss on commodity transaction is bogus and colourable device to evade the taxes, is totally misplaced as the facts in that case are totally different from the facts of the instant case. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 7. We have heard the rival submissions and perused the materials available on record including the certified copy of the paper book filed by the assessee .....

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ading activity through a recognized and registered commodity broker viz Kshitiz Commotrade Pvt Ltd, 205, Rabindra Sarani, 4th Floor, Room No. 139, Kolkata - 700007 having FMC Code : MCX/TCM/CORP/1266 duly mentioning its PAN and Service Tax Registration Number in the contract notes. It is not in dispute that M/s Kshitiz Commotrade Pvt Ltd is a member of Multi Commodity Exchange of India Ltd and the purchase and sale of silver have been carried out on mark to market basis by duly suffering service .....

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ess allegations in his order to reach to a pre-determined conclusion. The Learned CIT(A) agrees that assessee had filed contract notes. Because he uses the same while making one allegation against the assessee. The Learned CIT(A) nowhere concludes that the loss on commodity transactions is non-genuine. He only states in pg 20 para 15 of his order that the genuineness of the loss from commodity trading could not be examined and verified by him. The Learned CIT(A) in order to justify his suspicion .....

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he case of ITO vs M/s Ellenbarrie Exim Ltd in ITA No. 1871/Kol/2008 dated 21.7.2011 in support of his conclusion that the loss on commodity transaction is bogus and colourable device to evade the taxes, is totally misplaced. In the said case, the issue involved was with regard to allowability of commission expenditure to certain parties which are supported by commission agreement. This tribunal in the facts and circumstances of the case had held that merely because payment is made pursuant to an .....

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