2018 (12) TMI 1334 - HC - Income Tax

Allowability of speculative loss - Held that - Both the CIT(A) and the Tribunal have come to a concurrent finding of fact that actual delivery of the bullion had taken place. Therefore, the loss on account of trading in bullion was not a speculative loss but a business loss. Thus, the above finding of fact led to allowing the loss on account of trading in bullion, being set off as a business loss from the profits made on account of consultancy in mining. This concurrent findings of fact by the CIT(A) and the Tribunal, has not shown to be perverse in any manner. No substantial question of law.

Summary

Issues:
- Whether the loss of ?2.64 crores on bullion trading was speculative or a business loss for the respondent.

Analysis:
The case involved an appeal challenging the order of the Income Tax Appellate Tribunal regarding the treatment of a loss of ?2.64 crores incurred by the respondent on bullion trading for Assessment Year 2008-09. The Revenue contended that the loss should be considered speculative as no actual delivery of gold was taken or given. However, the Commissioner of Income Tax (Appeals) found that actual delivery of gold had indeed taken place, supported by evidence such as production of parties involved and delivery notes. The CIT(A) also noted that VAT was paid at a higher rate applicable to delivery-based transactions, further supporting the claim that the loss was a normal business loss, not speculative. Consequently, the CIT(A) allowed the set off of the loss against profits from consultancy business.

The Revenue then appealed to the Tribunal, which upheld the CIT(A)'s decision after considering all the facts presented. Both the CIT(A) and the Tribunal concurred that actual delivery of bullion had occurred, leading to the conclusion that the loss from bullion trading was a business loss, not speculative. This finding allowed for the set off of the loss against consultancy business profits. The High Court noted that the concurrent findings of fact by the CIT(A) and the Tribunal were not shown to be perverse in any manner, indicating a reasonable and justified decision based on evidence.

Ultimately, the High Court found no substantial question of law arising from the case and dismissed the appeal, affirming the decisions of the lower authorities. The court held that the loss on bullion trading was a business loss, not speculative, and allowed for its set off against profits from consultancy business. The appeal was therefore dismissed with no order as to costs.