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2016 (8) TMI 457 - ITAT JAIPUR

2016 (8) TMI 457 - ITAT JAIPUR - TMI - Revision u/s 263 - AO holding Loss incurred to be “Speculative Loss” - Held that:- It is an admitted case that the assessee is not the member of NCDEX and it is also admitted case that during the 263 proceedings before the ld Commissioner that the profit of physical delivery of the commodities were not received by the assessee. However during this proceedings, the assessee had produced the bills of purchase and sale of the commodities case and had also file .....

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loss as business loss is erroneous and prejudicial to the interest of the revenue as the ld Assessing Officer has allowed the setting of the speculative loss of ₹ 18,31,596/- against the business income of the assessee - Decided against assessee. - ITA No. 501/JP/2011 - Dated:- 20-6-2016 - SHRI BHAGCHAND, AM AND SHRI LALIET KUMAR, JM For The Assessee : Shri Rajeev Pandey (CA) and Shri Dakshayani Pandey (Adv) For The Revenue : Shri M.S. Meena (CIT) ORDER PER: LALIET KUMAR, J.M. This is an a .....

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revenue and not following provisions of law. 2. In holding Loss incurred amounting to ₹ 18,31,596/- to be Speculative Loss and in not appreciating facts already visited and perused by ld A.O. during course of assessment proceedings and not following provisions of law. 2. The brief facts of the case are that the assessee is proprietor of M/s Laxman Das Bansal & Sons, Dholpur and carrying on business of purchase and sell of grain and other kind of agricultural merchandise for past many .....

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he ld Assessing Officer under original assessment dated 02/1/2008 wherein item No. 18 mentioned as under:- 18. Please explain the NCDEX loss of ₹ 1831596/- with supporting documentary evidence. The assessee filed reply to the questionnaire and submitted as under:- Sir, With reference to above subject, we are enclosing the notes on NCDEX loss, (hedging loss). It is submitted that NCDEX loss is not a speculative loss but it is business loss that is occurred on account of hedging transactions .....

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the following grounds:- During the relevant financial year 2006-07, you were engaged in the business of sale and purchase of grains and a sum of ₹ 18,31,596/- was debited in P&L account against NCDEX loss. You were not a member of NCDEX as no account statement from NCDEX was produced so the loss claimed was not tenable. As physical delivery of commodities was not received by you so the whole transaction would fall within the purview of speculative loss, which cannot be allowed against .....

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1990. Assessee s main source of income is from this business activity. The books of account of the firm have been audited by a qualified chartered accountants firm for the assessment year under consideration. Assessee filed return of income for the assessment year 2006- 07 and declared income of ₹ 179730/-. The Ld. Assessing Officer issued notice U/s. 143(2) of the Income Tax Act. On 29.03.2007 and completed assessment on 26.12.2008 and assessed the income at ₹ 260010/- against the d .....

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etailed reply dated 19.11.2008 is enclosed herewith for your kind perusal please. Sir, assessee has already given all the explanation/details for claiming loss of ₹ 1831596/-. Assessee also submitted all the books of account and vouchers etc. for the verification and the same were test checked by the Ld Assessing Officer. Sir, it is also submitted that the books of account for the said assessment year were audited by the qualified chartered accounts firm. Sir, neither the Ld. Assessing Off .....

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e. The Ld. A.O. passes assessment order after making due relevant enquiries and keeping in view the submission of the assessee. 3.1 During the proceedings before the Ld. Commissioner, the CIT has recorded the order sheet and on 17/3/2011, it was recorded as under:- Sh. M.L. Mittal, C.A. and Sh. Laxman Das Bansal, Assessee attended. The assessee deals in forwarding trading of commodity. Files the written submissions. The assessee has not produced the proof for actual delivery. The case is reserve .....

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ly engaged in the business of sale and purchase of grains so the loss claimed is not tenable. Hence, the assessee was not entitled to claim loss as business loss and the same is treated as Speculative Loss amounting to ₹ 18,31,596/- which was claimed by the assessee and erroneously allowed by the A.O. while completing the assessment. Considering the facts of the case and claim of the assessee, the issue requires proper verification at the level of the Assessing Officer. Accordingly, the as .....

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account of hedging transactions and therefore, the order passed by the ld Assessing Officer in the original proceedings should not have been interfered by the ld. Commissioner after passing the impugned order. 5. On the other hand, the ld CIT DR has submitted that the order passed by the ld Assessing Officer is erroneous and prejudicial to the interest of the revenue and therefore, order passed by the ld CIT, whereby the assessment proceedings were set aside, were in accordance with law. 6. We h .....

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rt of his case, the effect of these documents and affidavit shall be dealt by us in the separate proceedings in the matter in Appeal number 446/14. In our view, the observation of the ld CIT that loss caused to the assessee on account of speculative business as concluded by the ld CIT on the basis of the material available with him, cannot be permitted to be set off U/s 72 of the Act. Therefore, in our view, the order of the assessing officer, whereby he kept the speculation loss as business los .....

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ithout application of mind. Indeed, the High Court recorded the finding that the Income-tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statem .....

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at any stage of the proceedings, that the amount in question was fixed or quantified as loss of agricultural income and admittedly it is not so found by the Tribunal. The further question whether it will be agricultural income within the meaning of section 2(1A) of the Act as elucidated by this court in CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466, does not arise for consideration. It is evident from the order of the High Court that the findings recorded by the Tribunal that the appellant .....

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