TaxTMI 
TaxTMI 
2019 (1) TMI 97
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sources and denied set off against the forwarded loss by the reasons as under: a. "The Auditor had qualified In the Tax Audit Report that the investments were held in the name of the Director of the Company. b. The investments transacted in the course of the year were held in the demat account of the Director. The AO also concluded that the contract notes would be in the name of the Director. c. As the Company and the Director are distinct and separate entities, the transactions made by the Director cannot be treated as those of the Company. d. According to the Ld. AO, the property/Capital asset was held by the Director, and the company- assessee did not have any rights over them. The Ld AO depended upon the case laws cited in the assessment order. e. As the transactions had been made in the demat account of the Director, the Company was not at all the owner of the transactions leading to assets. f. The Ld AO did not take cognizance of the submission that the demat account of the Director was used for the transactions, as according to the Ld. AO a new demat account for the Company could have been quite easily opened. g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n shares which were held In the Director's demat etc were disclosed in the assessee's balance sheet as its Investment since the funds required for making investments were expended out of Company's own resources. A copy of the Assessment Order for A.Y. 2003-04 was also enclosed to bring to notice that In the immediate preceding year the Ld. AO did not draw the inference that the shares transacted through the Director's demat a/c did not belong to Company, even while the shares were transacted through the director's demat etc, it was not held by the AO that the shares,' belonged to Director. On the contrary, it was argued the losses incurred by the assessee on sale of investment shares were assessed as appellant's own Income/loss. The shares held as investments were sold in the earlier year and loss incurred was assessed as deemed "speculation loss" but on appeal it was held that the loss was assessable in the assessee's hands under the head capital gain and it was allowed to be carried forward in the assessee's hands." g. It was argued by the appellant / Ld. A.Rs for the appellant that in the assessee's own case the factual matrix dur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'derived from the flat after 1973 was the income of the assessee l.e. husband. It will thus be noted that the High court considered the substance of the transaction and found that husband was the real owner of the property even though legal title to the flat was in the name of his wife. According to High Court the income actually belonged to the person who had provided the resources for purchase of the property and mere legal title was not sufficient for deciding the issue of taxability in the hands of the real owner. i. It was argued by the Ld.A.Rs. for the appellant-company that if one applies the ratio laid down in this decision then it will be noted that funds required for purchase of the investments were provided by the Company, and that whatever money that was necessary for making investment went out of Company's coffers. It was submitted that all the transactions for purchase & sale of shares were accounted in the Company's books though transacted through Director's demat a/c. It was submitted that in the earlier year when the loss was incurred from investment transactions routed through the director's demat a/lc; the loss was assessed in the Co&....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s under the head capital gains." 7. The CIT(A) considering the submissions of the assessee, deleted the addition and directed the AO to assess the said sum as capital gain and allowed set off against the forwarded loss. The relevant portion of which is reproduced herein below:- 3. "I have carefully examined the facts of the case, and find that there is no dispute that the demat account of the Director of the Company was utilized' for routing the transactions in shares made by the appellant-company. I have also examined the copy of the assessment order for the immediate preceding assessment year 2003- 04, passed by the Ld AO u/s 143(3) of the Income Tax Act dated 31.03.2006, and the order of the Ld.CIT(Appeals) passed in Appeal No. 934/CIT(A)-XXIV/W-11(2)/11-12 dated 29.06.2012. The Order of the 1st appellate Authority was also challenged in the Hon'ble ITAT by the Department, and the Hon'ble ITAT-"C"-Bench, Kolkata, in ITA NO.1305/Kol/2012 dated 08.01.2014 has dismissed the grounds taken by Revenue before that forum. These precedents may not exactly cover the matter at hand in the present ground of appeal, but it is also true that on a similar set of facts a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellant against the brought-forward losses from earlier years under the head Capital Gains. Grounds 1 to 4 accordingly stand allowed in favour of the assessee-appellant." 8. Before us, the Ld.DR submits that, the assessee did not produce relevant evidence i.e. auditor note, contract note, order and referred to page no.3 of AO and CIT(A) accepted the submissions of the assessee and given relief. The Ld.DR relied on the order of the AO. 9. Ld.AR submits that the assessee has no demat account on its own and it has become compulsory to have own demat account for companies from 2010 onwards. The assessee admits that it was a mistake to transact in the demat account of its Directors and it was rectified from subsequent years. The Ld.AR placed reliance on the decision of Hon'ble High Court of Caluctta and argued that the income has to be assessed in the hands of person or company which provided funds to the transaction. The Ld.AR submits that the order of CIT(A) is perfect and supported the same. 10. Heard both parties and perused the material available on record. It is observed that all the investments made out of assessee's account and it was routed through the demat a....