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2020 (6) TMI 535
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....ainst other business income. The inter connected issue involved therein is as to whether the ld. CIT(A) was justified in confirming the action of the ld. AO in apportioning the expenditure of Rs. 16,55,463/- as expenditure incurred for the F & O transactions. Yet another interconnected issue to be decided herein is as to whether the ld. CIT(A) was justified in observing that the F & O transactions carried out by the assessee were not genuine in the facts and circumstances of the instant case. 2.1. The assessee company is engaged in the business of developing real estate, leasing of different properties and trading in derivatives. During the year under consideration, the assessee company suffered loss of Rs. 63,47,155/- on derivative transactions which was set off by the assessee against other business income earned by it. The said derivative transaction loss was treated by the ld. AO as speculative loss by applying the provisions of Explanation to Section 73 of the Act. The ld. AO accordingly, disallowed the said loss of Rs. 63,47,155/- by treating the same as speculative loss to be set off only against speculative income and not against regular business income earned by the ass....
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.... components of gross total income, it could be seen that the assessee company had derived income from house property, income from capital gains and income from other source of Rs. 17,82,098/- which collectively represented 69% of gross total income of the assessee company. This clinching fact and evidence, which remains undisputed by the revenue before us, goes to prove that the assessee's gross total income mainly consists of income from house property, capital gains and other sources and accordingly, the case of the assessee squarely falls in the first exception provided in Explanation to Section 73 of the Act. For the sake of convenience, the relevant provisions of Section 73 of the Act are reproduced below: "Losses in speculation business. 73. (1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business. (2) Where for any assessment year any loss computed in respect of a speculation business has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income....
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.... for incurrence of the aforesaid derivative loss and the manner in which such losses were worked out. We find that this argument of the ld. DR was refuted by the ld. AR by referring to the affidavit filed by the Director of the assessee company dated 27/01/2016 before this Tribunal wherein it had been categorically affirmed that the said Director Mr. Ghansham Hemdev had appeared in person before the ld. AO on various occasions and had filed the following documents on 15/01/2013, 24/01/2014, 29/01/2014 and 05/02/2014:- a) All contract files for F & O derivative transactions b) Copies of Demat accounts of all the brokers namely India Infoline Ltd., Enam Securities Ltd., and Kotak Securities Ltd., c) Global statements / confirmations of all the brokers 2.7. The aforesaid affidavit dated 27/01/2016 also contain the affirmation of the Director Mr. Ghansham Hemdev that he had even appeared before the ld. CIT(A) alongwith his Advocate and had explained the entire manner of incurrence of the loss on derivative transactions carried out by him and had also filed the following documents before the ld. CIT(A) on 22/07/2015:- a) Global statement of F & O d....
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....rect. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Mehta Parikh & Co. vs CIT reported in 30 ITR 181 (SC). From the aforesaid various documentary evidences filed by the assessee company before the ld. AO as well as before the ld. CIT(A), we do not find any justifiable reason for the ld. CIT(A) to come to a conclusion that the transactions in F & O carried out by the assessee as not genuine. We hold that this conclusion of the ld. CIT(A) is contrary to the facts and evidences on record. 2.10. We also find that the provisions of Section 43(5) define the expression "speculation transaction". There is no dispute that the derivative transaction carried out by the assessee were carried out in recognised stock exchange through a registered stock broker registered with SEBI. As per Section 43(5) of the Act "Speculative transaction" is defined to mean a transaction in which the contract for the purchase or sale of any commodity, including the stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip. Clause (d) of proviso to Section 43(5) provides that for the purpose....
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..... 3.1. We have heard rival submissions and perused the materials available on record. We find that the assessee had claimed dividend income as exempt of Rs. 16,33,798/- and had not disallowed any expenditure for the purpose of earning such exempt income in the return filed. The ld. AO observed that assessee had claimed interest expenses of Rs. 5,31,274/- as deduction but on the other hand also had lot of liquid assets in the form of mutual funds to the tune of Rs. 4,19,87,830/-. The ld. AO observed that no prudent person will hold liquid assets of Rs. 4.20 Crores and pay interest of Rs. 5,31,274/- on the borrowings. The ld. AO presumed that borrowed funds were utilised for making investment in mutual funds and shares. The ld. AO proceeded to make disallowance u/s.14A of the Act by applying second and third limb of Rule 8D(2) of the rules and arrived at the disallowance of Rs. 4,28,713/- in the assessment. This disallowance was upheld by the ld. CIT(A). 3.2. We find that the ld. AR had submitted that in the instant case, there were no borrowings made by the assessee in order to make payment of interest thereon. The total interest of Rs. 5,31,274/- was paid for delayed deliv....
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....djudication of the primary facts placed on record and the issue involved therein. We find that the ld. CIT(A) despite written submissions being available on record containing additional evidence did not bother to even address the same much less give his finding on the admission of additional evidence. We find that the ld. DR before us merely relied on the order of the ld. AO with regard to this disallowance u/s.14A of the Act. In these circumstances, we deem it fit not to remand this matter to the file of the lower authorities as all the evidences were already placed on record before the ld. CIT(A) and accordingly, proceed to adjudicate the same on merits at our level. From the perusal of the various documentary evidences placed on record, we hold that the interest payment of Rs. 5,31,274/- was paid by the assessee company as per the directions of the Maharashtra State Consumer Disputes Reddressal Commission for delayed delivery of flat to one of the buyers and the said payment of interest has got absolutely nothing to do with the investment activity carried out by the assessee. Hence, there cannot be any proportionate disallowance of interest in terms of second limb of Rule 8D(2) ....
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....pronouncement. (c ) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 8. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar l....
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....xtended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic ....