TMI Blog2017 (2) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... ee namely M/s. Growmore Leasing Investment [ 2015 (3) TMI 1342 - ITAT MUMBAI ] held that such transactions would be speculated transactions. Loss/profit from shares market transactions can very well be set off/adjusted against loss/profit of money market transactions. This issue has already been decided in favour of the assessee by the Tribunal in the case of group company of the assessee namely M/s. Growmore Leasing Investment (supra) as discussed above also. No distinction has been pointed out on facts or legal position by the Ld. Special Counsel of the Revenue, therefore we find that the claim of the assessee is allowable. Therefore disallowance made by the AO is directed to be deleted. Thus, ground no.2 is allowed. Addition towards maintenance of accounts - disallowance was made by the lower authorities on the ground that the assessee was not able to prove rendering of service with regard to payment claimed to be made to one ABCD Group which refers to Account Backlog Clearance Department - HELD THAT:- It is noted that the assessee has claimed that payment was made to the said ABCD group for clearing of backlog of accounting work. But, neither the assessee was able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER For the Appellant : Shri Dharmesh Shahl Dhaval Shah (AR) For the Revenue : Dr. P. Daniel, (DR) ORDER Per Ashwani Taneja, AM: This appeal has been filed by the Assessee against order of Ld. Commissioner of Income Tax (Appeals), Mumbai-52 (in short CIT(A) }, dated 30.01.2015 passed order against u/s 143(3) r.w. section 150(1) 147 of the Income Tax Act, 1961, Assessment order dated 30.03.1999 for Assessment Year 1990-91 on the following grounds: 1.The Ld. Commissioner of Income-Tax (Appeals) ought to have appreciated that as per the decision of Hon'ble Special Court dated 30.04.2010 in MP No. 41 of 1999, the assets under consideration and the consequential income belongs to Late Shri Harshad S. Mehta and hence the Income confirmed by the learned Commissioner of Income-Tax (Appeals) ought to have been taxed in the hands of Late Shri Harshad S Mehta and not in the hands of the appellant. 2.The Ld. Commissioner of Income-tax (Appeals) has erred in Law and in facts in confirming the disallowance of ₹ 1,95,57,742/- on account of toss from stock market activity claimed as set off against the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee namely M/s. Growmore Leasing Investments Ltd. v. ACIT for A.Y. 1990- 91 to 2000-01 dated 12th December 2007 in ITA No.483/Mum/2007, wherein it was held that the transactions in money market securities done by the assessee without taking or giving delivery were also speculative transactions and special court has already held that these transactions were legal transactions. Therefore, profit earned on these transactions was speculative profit against which speculative loss of share market was allowable to be set off. Our attention was drawn on various pages of the paper book wherein complete details were given about money market transactions showing that these transactions were done by the assessee company without giving or taking delivery. 3.4. Per contra, Ld. Counsel appearing on behalf of the Revenue submitted that money market units are transacted on non- speculative basis. Further he placed reliance on the judgment of Hon ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT 255 ITR 274 wherein it was held that buying and selling of units by the assessee company could not be treated as speculative business. He requested for upholding the orders of the lower authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the assessee, has placed before us a copy of the judgment in Suit No.1 of 2005 (O.S. Transferred Suit No.4018 of 1995) delivered on 17.4.2007, by the Special Court in the case of Canbank Financial Services Limited Vs. M/s.V.B.Desai The suit raised issues relating to the nature of legality of forward contract transactions in Government securities. Issues No.4 and 5 framed by the Special Court are as follows:- 4. Whether the Suit transactions are prohibited by the Securities Contract (Regulation) Act, 1956 as alleged in para V of the Written Statement? 5. Whether the Suit is based on an illegality and is liable to be dismissed on that ground as alleged in para IV and VI of the Written Statement? 5.5 The finding of the Special Court on the above two issues are extracted as follows:- In my opinion, therefore, the fact that units of Mutual Funds were included in the definition of the term securities by amending Act clearly, shows that the units of the mutual funds were not included in that definition before the amendment. As observed by the Supreme court in its judgment in the case of R13! Vs. Peerless General Finance and Investment Co. Ltd AIR 1987 SC 1023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd transactions entered into by the assessee were not illegal. Therefore, the loss cannot be disallowed on that ground. 3.8. Thus, from the above order it is clear that special court has held that the forward transactions in Government securities were not illegal. It was further held that these transactions were speculative transactions. As far as reliance placed by Ld. special counsel upon the judgment of Hon ble Supreme Court in the case of M/s. Appollo Tyres Ltd. (supra) is concerned, it is noted that the said judgment merely analysed the scope of section 73 wherein expression used by the legislature was shares . On the other hand, the expression used in section 43(5) is not only shares but securities as well . This distinction has been very well analysed by the Delhi Bench of the Tribunal in the case of ANZ Grindlays Bank v. DCIT (supra) wherein it has been held after considering aforesaid judgment of Hon ble Supreme Court in the case of Appollo Tyres Ltd. (supra) that transactions of sale and purchase of units and government securities by the assessee through a broker without exchange of actual delivery would fall within the scope of speculative transactions as define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of depreciation amounting to ₹ 2,25,000/-. 5.1. The brief background is that the disallowance has been made of ₹ 2,25,000/- on account of depreciation on the computer purchased during the year for ₹ 5,75,000/- on the ground that user of the computers could not be proved by the assessee during the year before us. Ld. CIT(A) upheld the order of the AO. 5.2. During the course of hearing, it was stated by the Ld. counsel that complete evidences have been given for acquisition and installation of the computer but these have been rejected and disallowance has been made, whereas in the first round, Ld. CIT(A) had allowed relief to the assessee on this ground. Our attention was drawn on the various evidences enclosed in the paper book in this regard. 5.2. Per contra, Ld. Special counsel relied upon order of the lower authorities. 5.3. We have gone through the orders passed by the lower authorities. It is noted that in the first round when Ld. CIT(A) had passed the order dated 7th April 1994, then relief was allowed on this score by observing as under: Regarding depreciation on computer system, the appellant has filed copy of receipt dated 31.3.90 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) for fresh adjudication. Respectfully following the findings of the Coordinate Bench, we restore this issue to the files of the Ld. CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to the assessee. 6. Before closing this issue, the Ld. Counsel for the assessee pointed out that the Ld. CIT(A) has held that the issue of interest expenditure is pending before the Hon ble Special Court. It is the say of the Ld. Counsel that the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT(A) in the impugned order. We, therefore, direct the Ld. CIT(A) to consider this fact while deciding the issue afresh. The Ld. CIT(A) may also direct for the taxing of income in the hands of the recipient (family members) in accordance with the method of accounting followed by them and as per the provisions of the law. Ground No. 4 is treated as allowed for statistical purpose. 6.2. During the course of hearing before us, no distinction has been made on law and facts. Therefore, respectfully following the aforesaid order, we send this issue back to the file of Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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