New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (4) TMI 671 - ITAT CHENNAI

2016 (4) TMI 671 - ITAT CHENNAI - TMI - Loss relating to trading in gold and silver - business loss OR speculation loss - Held that:- In view of the order in the case of Varsha Corporation [2015 (6) TMI 124 - ITAT MUMBAI] we are inclined to uphold the order of the Assessing Officer that loss arising out of the commodities dealt with by the assessee i.e gold, silver, copper, zinc, natural gas, nickel etc are to be considered as speculation loss only and the assessee is not entitled to set off the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oduced by the assessee is foolproof. Since the assessee has not produced all relevant records to prove the genuineness of the local purchases made by the assessee, the Assessing Officer is justified in disallowing the claim towards the local purchases of old gold jewellery made by the assessee. - Decided against assessee

Addition made u/s 68 towards sundry creditors - Held that:- CIT(A) simply observed that "I find that the Assessing Officer after due verification has not commented ad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

i, AM And Duvvuru RL Reddy, JM For the Appellant : Dr B Nischal, JCIT For the Respondent : Ms Lakshmi Sriram, Adv ORDER Per Chandra Poojari, Accountant Member These appeals by the Revenue and the assessees are directed against the respective orders of the Commissioner of Income-tax(Appeals) for assessment years 2007-08, 2008-09. Since the issues involved in these appeals are common in nature, these were clubbed together, heard together and disposed of by this common order for the sake of conveni .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ties inex futures. He asked the assessee to establish that such activities had nexus to its business operation. The assessee produced the ledger account showing the transactions trading in futures executed through Religare Commodities Ltd and Angel Commodities Broking (P) Ltd. These deposition showed that the assessee had business activity as it was executing contracts for various commodities such as crude oil, zinc, nickel etc besides gold and silver. The assessee subsequently explained that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er of gold ornaments and in purchase of its business operation the assessee buys old gold, bullion gold, bullion jewellery from other manufacturers and also gets his gold converted into jewellery and they are not dealing with crude oil, lead, zinc etc. during the financial year relevant to the assessment year 2008-09, the behavior exhibited by the assessee in trading in the futures and commodities market do not appear to hedge their business risks thus this activity has no nexus to the business .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee, in reply, produced resolution of the Board of Directors of the company wherein it authorized Shri Sujith Cherian to deal in commodity market through MCX & NCDEX commodity brokers. The Assessing Officer observed that the resolution did not have any reference to any hedging operation. The Assessing Officer stated that "Assigning the reason that it is for the purpose of hedging the business operations appears to be an after thought connived to take advantage of the loss to be adj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in granting such a privilege to the Director and such approval cannot be recognized. He referred to provisions of sec 43(5) and sec 73 of the Act and disallowed the set off of aforesaid speculation loss and added it to the total income of the assessee. On appeal, the ld. CIT(A) observed that the assessee is not covered by Notification No.46/2009 dated 22.5.2009 so as to be covered by the exception provided under clause(d) of se 43(5) of the Act because MCX Stock Exchange Ltd has been notified as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of ₹ 37,31,630/- is relating to trading in gold and silver which could be considered as not speculative loss. Regarding the balance amount of ₹ 1,04,96,303/- relating to other commodities such as copper, natural gas, zinc, lead etc., these commodities have no nexus with the business of the assessee. Accordingly, the CIT(A) observed that this loss cannot be considered to be speculative loss. The Revenue is in appeal before us with regard to deletion of addition of ₹ 37,31,630/- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g loss on account of cancellation of forward contracts in forex derivatives as business loss and not as speculation loss. We have gone through the above order of the tribunal. In that case, the Tribunal observed that the CIT(A) is justified in remitting the matter back to the Assessing Officer to verify any forward contracts have been cancelled prematurely and verify the reasons for premature cancellation in the light of the order of the Tribunal in the case of London Star Diamond Company (I) P. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Tribunal in the case of Varsha Corporation Ltd vs DCIT, 153 ITD 395 wherein held as follows: MCX, through which the Assessee had carried out the transactions, was not a recognized stock exchange as required under the provisions of Section 43(5)(d) of the Act. MCX, through which the Assessee had carried out the transactions, was notified as a "recognized association" for the purposes of clause (e) of proviso to clause 5 of Section 43 of the Act. Clause (e) of proviso to sub-section (5) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsactions 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, which was ultimately settled otherwise then by actual delivery or transfer of the commodity as per Section 43(5) of the Act. Assessee was not entitled to claim the benefit of clause (e) of the proviso to Section 43(5) of the Act." 5. In view of the above order in the case of Varsha Corpo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

491 and 1493/Mds/2012 for assessment year 2007-08 and I.T.A. No.1492/Mds/2012 for assessment year 2008-09 is with regard to deletion of addition made towards inflated purchase of gold. ₹ 1.06 crores and ₹ 75.40 lakhs in assessment year 2007-08 and ₹ 2.36 crores in assessment year 2008-09. 7. We narrate the facts of assessment year 2007-08 in I.T.A.No.1491/Mds/2012. The assessee purchased old gold of ₹ 1,06,80,212/-. The Assessing Officer asked the assessee to produce the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es of sales tax assessment order, stock reconciliation, sample sales invoices for purchase of gold and billlwise purchase of old gold. He also called for the remand report from the Assessing Officer. After going through it, the CIT(A) observed that it is common practice in jewellery business that consumers exchange/sell old jewellery to buy new ornaments and receive cash for the excess jewellery sold. He satisfied with the reconciliation statement showing purchase of old gold, conversion of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 9. We have considered the rival submissions and the material available on record. Admittedly, in this case, the assessee said to be purchased old gold jewellery from customers for which the assessee has not produced the names and addresses of the parties from whom it has purchased old jewellery. When the assessee claims any expenditure, it is the duty of the assessee to support the same by producing relevant evidence such as bills and vouchers. In this case, when the assessee is not in a posit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ly concerned with the sales tax on the sales made by the assessee. They are not certifying the correctness of the local purchases made by the assessee. Being so, it cannot be considered as the evidence produced by the assessee is foolproof. Since the assessee has not produced all relevant records to prove the genuineness of the local purchases made by the assessee, the Assessing Officer is justified in disallowing the claim towards the local purchases of old gold jewellery made by the assessee. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ledger copies of the creditors and no further evidence was produced. Therefore, the Assessing Officer treated the amount as unexplained cash credit u/s 68 of the Act and made addition. On appeal, the CIT(A) simply observed that "I find that the Assessing Officer after due verification has not commented adversely on any of the explanation given by the appellant" and deleted the addition. The findings of the CIT(A) is very cryptic. There are no details on the basis of which he has given .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessing Officer on perusal of the ledger of director's loan noticed that the assessee has received cash of ₹ 63,47,441/-. The Assessing Officer also perused the bank statements and found that the assessee has credited cash deposits into bank ac. Since the assessee could not produce the details of parties from whom the cash was received and was not able to offer explanation about its nature and source, the Assessing Officer treated the sum of ₹ 63,47,441/- as unexplained cash cred .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version