Income Tax Appellate Tribunal - Kolkata
Pan Emami Cosmed Ltd., Kolkata vs Department Of Income Tax on 13 May, 2013
आयकर अपीलीय अधीकरण, Ûयायपीठ - " ए ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "A", KOLKATA
[(सम¢) ौी के.के.गुƯा,
ा, लेखा सदःय, एवं ौी महावीर िसंह, Ûयायीक सदःय]]
[Before Hon'ble Sri K.K.Gupta, AM & Hon'ble Sri Mahavir Singh, JM]
आयकर अपील संÉया /ITA No.1418/Kol/2010
िनधॉरण वषॅ/Assessment Year : 2003-04
(अपीलाथȸ/APPELLANT ) -वनाम- (ू×यथȸ/RESPONDENT)
A.C.I.T., Central Circle-VIII, Pan Emami Cosmed Ltd.
Kolkata . -versus- Kolkata
(PAN : AABCP 5150 G)
बास आपǒƣ/C.O.No.109/Kol/2010
आयकर अपील संÉया /A/o ITA No.1418/Kol/2010
िनधॉरण वषॅ/Assessment Year : 2003-04
(बास आपǒƣ /Cross Objector) -वनाम- (ू×यथȸ/RESPONDENT)
Pan Emami Cosmed Ltd. A.C.I.T., Central Circle-VIII,
Kolkata. -versus- Kolkata
(PAN : AABCP 5150 G)
अपीलाथȸ कȧ ओर से/ For the Department Shri Ranadhir Gupta,
Sr.DR
ू×यथȸ कȧ ओर से/For the Assessee Shri D.K.Kothari
सुनवाई कȧ तारȣख/Date of Hearing : 13.05.2013
घोषणा कȧ तारȣख/Date of Pronouncement : 16.05.2013.
आदे श/ORDER
Per Shri K.K.Gupta, AM
The Revenue is in appeal on the ld. CIT(A) having reduced the estimated disallowance of expenditure attributable to share trading (speculation business) to 50% of the total expenses in place of 96.11% calculated by the AO stating that the estimate as made by the ld. CIT(A) was without any actual calculation basis.
2. The assessee respondent has also preferred a Cross Objection inter-alia objecting to the ld. CIT(A) upholding the initiation and completion of re-assessment ITA No.1418/Kol/20120& C.O.109/Kol/2010 2 Pan Emami Cosmed Ltd., A.Yr.2003-04 proceedings whether in accordance with the provision of law and were not illegal or void as put forth by the assessee before the ld. CIT(A).
3. The brief facts relating to the issue as have been brought on record are that assessment u/s 143(3) of the Act was passed on 24th March, 2006 on a total income of Rs.10,24,610/- when proceedings were initiated u/s 147 of the Act The AO treated a sum of Rs.41,29,814/- as speculation loss in terms of Explanation to Section 73 of the I.T.Act. While determining such speculation loss the ld. A.O. allocated 96.11% of the administrative expenses, depreciation and preliminary expenses amounting to Rs.14,46,385/- to such speculation income which was added by the AO. Being aggrieved the assessee preferred an appeal before the First Appellate Authority, who considered the assessee appellant's submission before it with respect to change of opinion by the AO for initiating proceedings u/s 147/148 of the Act. The ld. CIT(A) negated the claim of the assessee appellant by holding a view that change of opinion cannot be the basis to belief was not an opinion as put forth by the AO, in so far as, at the time of original assessment it was a question of fact and was a case specific. However, he had considered the fact that speculation loss claimed by the assesee whether could be increased or decreased by the AO was not the contention, in so far as, it was not the case of the assessee to allocate the expenses which in itself are loss for disallowance would rather for increasing the business income of the assessee and not otherwise was considered in accordance with the provision of the I.T.Act was estimated disallowance at 50%.
4. We have heard the rival contentions and carefully perused the material available on record. As per the submissions by the respective parties, we are of the considered view that in the case of ACIT Mumbai and Ors. Vs ICICI Securities Primary Dealership Ltd. rendered by the Hon'ble Bombay High Court and confirmed by the Hon'ble Supreme Court in Civil Appeal No.5960 of 2012 dated 22nd August, 2012 it has categorically given a finding that the objection of the assessee for reopening have to be taken care of in so far as the whole of the income was rendered to tax by the assesee was not to be considered for deriving speculation loss or profit ITA No.1418/Kol/20120& C.O.109/Kol/2010 3 Pan Emami Cosmed Ltd., A.Yr.2003-04 whether it existed in the original assessment. The ld. Counsel for the assessee has furnished a copy of the said order which directly goes to the root of the question before us raised by the Revenue whether for determining the income on the basis of the share trading could the loss be disallowed on finding the speculation loss which could be allowed in accordance with the provision of section 73 whether would be for re-assessment of finding of income having escaped or disallowance of expenditure claimed for earning such income. In other words, the ld. Counsel for the assessee has submitted a paper book wherein the original assessment indicating the total turn over on account of share trading and share business has been verified by the AO. The assessee being a limited company was holding shares as investment and also for trading, therefore cannot be subject itself to determine the speculation loss, if any, was not to be tinkered with under the provision of section 147/148 of the Act. Similarly the disallowance in the light of holding a view that whether the share trading business resulted in speculation loss, a loss being a negative figure which expenses claimed against itself estimated at a higher figure is purely disallowance of expenses relating to the other business therefore would have only reduced the other income, in so far as, the allocation of the expenditure to a particular head of income by adjusting the income has to be correspondingly reduced, was considered appropriately by the ld. CIT(A). Therefore, on the basis of the facts brought out from the record, we are of the considered view that the appeal of the Revenue does not have legs to stand on and has to be dismissed. However, on the issue raised by the assessee-appellant as Cross Objection regarding the validity of reopening in the light of the Supreme Court's decision brought on record as of now was to be considered, in so far as, the ld. CIT(A) did not distinguish another Apex Court's decision in the case of CIT vs Kelvinator of India Ltd. reported in 320 ITR 561 (SC) which was brought to the notice of the ld. CIT(A) by the assessee that the law is settled that the change of opinion cannot be the basis for a reason to believe and review of the order u/s 147 of the Act. We do not find any infirmity in the contention of the ld. Counsel for the assessee, in so far as, the ld. CIT(A) has brought on record the facts for deleting the disallowance of speculation loss whether could be correspondingly increase for reducing the income from the gross total business of the assessee has not been addressed by him. Therefore, the facts ITA No.1418/Kol/20120& C.O.109/Kol/2010 4 Pan Emami Cosmed Ltd., A.Yr.2003-04 thereto squarely apply to the facts of the assessee's case and we are inclined to admit as valid. In this view of the matter we find that the ld. CIT(A) has erred in not holding the assessment u/s 147 of the Act as against the settled principle laid down by the Hon'ble Supreme Court in an earlier decision also in the one relied by the ld. Counsel for the assessee.
5. In the result the appeal of the Revenue is dismissed and the Cross Objection of the assessee is allowed.
Order pronounced in the court on 16.05.2013.
Sd/- Sd/-
[ौी.महावीर िसंह, Ûयायीक सदःय ] [ौी के.के.गुƯा,, लेखा सदःय]
[Mahavir Singh ] [K.K.Gupta]
Judicial Member Accountant Member
(तारȣख)
तारȣख)Date: 16.05.2013.
R.G.(.P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः-
Copy of the order forwarded to:
1. Pan Emami Cosmed Ltd., 687, Emami Tower, Anandpur, EM By Pass, Kolkata-
700 107.
2 A.C.I.T., Central Circle-VIII, Kolkata.
3. CIT Kolkata 4. CIT(A)-Central-I, Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
स×याǒपत ूित/True Copy, आदे शानुसार/ By order, Deputy /Asst. Registrar, ITAT, Kolkata Benches