TMI Blog2017 (8) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... of income as the assessee could not be said to have filed inaccurate particulars or concealed particulars of his income, which was chargeable to tax. The penalty imposed by the Assessing Officer under section 271(1)(c) was not sustainable as mere treatment of business loss as speculation loss by the Assessing Officer did not automatically warrant inference of concealment of income and there was nothing on record to show that in furnishing its return of income, the assessee had either concealed its income or had furnished any inaccurate particulars of income. See CIT –vs.- Auric Investment & Securities Limited [2007 (7) TMI 276 - DELHI HIGH COURT ] Thus no infirmity in the impugned order of the ld. CIT(Appeals) cancelling the penalty imposed by the Assessing Officer under section 271(1)(c) - Decided in favour of assessee. - I.T.(SS)A No.32/Kol/2014 - - - Dated:- 2-6-2017 - Sri N.V.Vasudevan, JM And Shri Waseem Ahmed, AM For the Appellant : Shri Niraj Kumar, CIT(DR) For the Respondent : Shri K.K.Chhaparia, FCA ORDER Per N.V.Vasudevan, JM This is an appeal by the Revenue against the order dated 20.12.2013 of CIT(A)- Central-II, , Kolkata relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this indenture, then the Seller shall be liable to bear and pay the compensation to the Purchaser which shall be equivalent to the amount calculated at the rate being difference between the market rates of the materials and the rates agreed herein. 8. That, in case the Purchaser fails to lift the materials as agreed herein and also the rates of the materials decrease during the subsistence of this indenture, then the purchaser shall be liable to bear and pay the compensation to the seller which shall be equivalent to the amount calculated at the rate being difference between the rates agreed herein and the market rates of the materials. 9. That, in the event of breach of any of the terms' of this indenture, the, suffering party shall serve a written notice to the defaulting party by notifying to remedy the breach within 15(fifteen) days time and the suffering party shall be with an option to terminate this indenture at its sole discretion by claiming compensation, if any, to the defaulting party . 5. The Assessee who was purchaser under the agreement failed to lift the material on the date fixed for performance of the agreement. Therefore the Assessee p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in the case of CIT Vs. Shantilal Pvt.Ltd. 144 ITR 57 (SC) in which it was held damages paid for breach of contract was not to be regarded as speculative loss. In this regard the plea of the Assessee was that, though the Assessee had leased out its manufacturing facility to Kalyani Steels Ltd., it was expecting to take over the manufacturing facility from Kalayani Steels and the materials were agreed to be purchased in anticipation of Assessee beginning manufacturing activity and there was no element of speculation in the agreement to purchase materials which were admitted used in the manufacture of steel. This plea of the Assessee was disbelieved by the revenue authorities and the revenue took the view that non delivery of material was contemplated in the contract itself and the payment of ₹ 51 lakh was emanating directly from the settlement of the contract rather than on account of any arbitration award on account of any separate suit filed by the counter party for the breach of contract. The non delivery of material under agreement was never a breach of contract but is a part of contract under clause 7 and 8 of this contract and either Assessee or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lloys Pvt. Ltd and consequent addition made to the total income of the assessee the AO made penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars and concealing particulars of income. In the penalty proceedings the assessee took a stand that it had furnished all the particulars of the transaction with M/s. Global Alloys Pvt. Ltd. It was not disputed by the AO that the transaction was a genuine transaction. The bone of contention of the revenue was that since there was no delivery of the transaction agreed to be sold under the agreement with M/s., Global Alloys Pvt. Ltd and since the transaction was ultimately settled by paying the difference in the price of the material on the date fixed for performance of the contract compared with the rates agreed under the contract with M/s. Global Alloys Pvt. Ltd, the loss was considered as speculative loss. It was submitted that the assessee contemplated the terms of the agreement by which the entire factory premises had given on lease to Kalyani Steel Ltd and took back possession and run the factory on its own. The materials that were agreed to be purchased by the assessee from Global Alloys Pvt. Ltd were intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also found that in the following cases the courts have taken a view that treating a loss claimed as normal business loss as a speculative loss and consequent addition made to the total income cannot amount to furnishing of inaccurate particulars of income. i) CIT vs SPK Steels Pvt. Ltd. 270 ITR 156 (MP) ii) CIT vs Auric Investment and Securities Ltd. 310 ITR 121 (Delhi) iii) CIT vs Bhartesh Jain 323 ITR 358 (Delhi) iv) ITO vs GACL Finance Ltd. 30 SOT 360 (Mum) v) ITO vs Oasis Securities Ltd. 37 SOT 63 (Mum). For the above reasons the CIT(A) cancelled the order of the AO imposing penalty on the assessee. 12. Aggrieved by the order of CIT(A) the revenue has preferred the present appeal before the Tribunal. 13. The ld. DR brought to our notice the findings of the Tribunal in the quantum proceedings whereby the treatment of loss of ₹ 51,00,000/- was held to be a speculative loss and therefore not capable of being set off as normal business loss. The ld. DR placed reliance on the decision of the Tribunal in the case of Classic Credit Ltd vs 126 ITD 469 (Mum) wherein it was held that the findings in the quantum proceedings can be the basis for levying penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT vs.- Auric Investment Securities Limited [310 ITR 121 (Delhi)] before the Hon ble Delhi High Court, the claim of the assessee for set off of share trading loss against other income of non speculative nature was disallowed by the Assessing Officer by treating the same as the loss of speculative nature by invoking the Explanation to section 73. The Assessing Officer also imposed penalty under section 271(1)(c) on the ground that the assessee had furnished inaccurate particulars of income to the extent of making a wrong claim for set off of share trading loss against normal income. Hon ble Delhi High Court, however, held that the penalty imposed by the Assessing Officer under section 271(1)(c) was not sustainable as mere treatment of business loss as speculation loss by the Assessing Officer did not automatically warrant inference of concealment of income and there was nothing on record to show that in furnishing its return of income, the assessee had either concealed its income or had furnished any inaccurate particulars of income. Similarly in the case of CIT vs.- Bhartesh Jain [323 ITR 358 (Delhi)], the Hon ble Delhi High Court held that mere treatment of business loss as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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