2020 (4) TMI 164 - AT - Income Tax

Condonation of delay of 884 days - in response to the query from the Bench what prevented steps took by the assessee for filing of the appeals before 22.05.2016, ld. Counsel, referring the revision proceedings and the orders thereof, relied heavily on the order of the CIT(A) for the assessment year 2006-07 and submitted that likely favourable relief given by the CIT(A) for this assessment year and further years under revision as well - HELD THAT - We find the reasons given by the ld. AR for the assessee are without merits. We further find, when there is a revision order and an adverse order against the assessee then why the assessee should not have filed the appeal in time, where the issue under consideration was undisputedly decided against the assessee. Considering the same, we are of the opinion that the delay is not condonable and the reasons given by the applicability of the judgment of the Hon ble Bombay High Court in the case of Kolte Patil Developers Ltd. 2017 (4) TMI 1061 - BOMBAY HIGH COURT is directly applied to this case.Accordingly, the delay is not condoned. Speculation loss in the light of amended provisions of section 43(5)(d) - assessee entered into Futures and Options (F O) trading activities and earned loss and said loss was claimed as speculation loss and not claimed the same as business profits of the assessee - CIT assumed jurisdiction u/s 263 of the Act and passed an order directing the Assessing Officer to withdraw the said relief granted to the assessee - HELD THAT - Fresh assessment orders were made by the Assessing Officer and the loss was treated as speculative loss denied the set off against the income of other heads. These facts are identical to that of the facts of Madhuri Kotecha 2019 (8) TMI 1469 - ITAT PUNE case, who is spouse of the present assessee as mentioned that the provisions of section 43(5)(d) of the Act was amended and the said amendment is found to be operational prospectively useful to the assessee - we are of the opinion that these five appeals should be remanded to the file of the CIT(A) for fresh adjudication. CIT(A) is directed to comply with the order of the Tribunal in the case of Madhuri Kotecha (supra). The assessee is also directed to demonstrate the comparability of the facts before the CIT(A) - Appeal of assessee allowed for statistical purposes

Summary

Issues Involved:
1. Condonation of Delay in Filing Appeals
2. Nature of Losses as Speculative or Business Losses

Issue-Wise Detailed Analysis:

Condonation of Delay in Filing Appeals:

The preliminary issue addressed was the condonation of a delay of 884 days in filing appeals against the revision orders passed by the Pr.CIT. The assessee's counsel argued that the delay was due to reliance on a favorable order from the CIT(A) for the assessment year 2006-07, which allowed the loss claim as a business loss. However, the Tribunal found the reasons for the delay unconvincing, noting that the assessee should have filed the appeal in a timely manner given the adverse revision order. The Tribunal referenced the judgment of the Hon’ble Bombay High Court in the case of Kolte Patil Developers Ltd., which was directly applicable. Consequently, the delay was not condoned, and the appeals in ITA Nos.1680 to 1684/PUN/2018 were dismissed as time-barred.

Nature of Losses as Speculative or Business Losses:

The main issue in the remaining appeals (ITA Nos. 1675 to 1679/PUN/2018) was whether the losses incurred from Futures and Options (F&O) trading were speculative losses or business losses in light of the amended provisions of section 43(5)(d) of the Act. The assessee argued that similar issues had been adjudicated in favor of the assessee in the case of Madhuri Kotecha vs. ACIT. The Tribunal in that case had concluded that losses from F&O trading activities were business losses, not speculative losses, due to the retrospective amendment of section 43(5)(d).

The Pr.CIT had directed the Assessing Officer to treat the losses as speculative, which the CIT(A) upheld without adjudicating on the merits, merely following the Pr.CIT’s directions. The Tribunal found that the CIT(A) erred in not deciding the issue on merits and directed the CIT(A) to comply with the Tribunal’s order in the Madhuri Kotecha case, which treated such losses as business losses. Therefore, the appeals were remanded to the CIT(A) for fresh adjudication, with instructions to consider the comparability of facts with the Madhuri Kotecha case.

Conclusion:

The appeals concerning the condonation of delay (ITA Nos.1680 to 1684/PUN/2018) were dismissed as time-barred. The remaining appeals (ITA Nos.1675 to 1679/PUN/2018) were allowed for statistical purposes and remanded to the CIT(A) for fresh adjudication in line with the Tribunal’s decision in the Madhuri Kotecha case.

Order Pronounced:
The order was pronounced on February 13, 2020.