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TMI Blog2016 (4) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... activity of trading in commodity transactions by the assessee could be construed as speculation activity in the facts and circumstances of the case in the context of section 73 of the Act read with its Explanation thereon. We find that the Learned AO had treated the assessee’s activity of share trading to be normal business as according to him the principal business of assessee is granting of loans and advances. He had reached this conclusion on the ground that interest income on loans of ₹ 35,21,584/- is more than the income from share trading of ₹ 13,62,106/-. Accordingly he held that the assessee’s case falls under the exception to Explanation to Section 73 of the Act. Having concluded so, he ought to have treated the loss on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case towards loss on commodity transactions. 4. The assessee has raised the following grounds in ITA No. 1876/Kol/2012 :- 1. For that on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in holding the loss from commodity trading business amounting to ₹ 6261870/- as fictitious and non genuine thereby refusing to allow to be set off against any other income or to be allowed to be carried forward for future set off against the income from speculation business. 2. For that on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (appeal) should have held that the loss suffered by the appellant in commodity trading business was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls under the exception clause provided in Explanation to Section 73 of the Act. Then he proceeded to disallow the claim of loss on commodity transactions in the assessment. On first appeal, the Learned CIT(A) confirmed the disallowance made by the Learned AO but by stating that the entire loss on commodity transactions claimed by the assessee is fictitious in nature. Aggrieved, the assessee is in appeal before us by raising the aforesaid grounds. 6. The Learned AR argued that the Learned AO agreed to the fact that the loss on commodity transactions is normal business loss ought to have allowed to be set off against income from share trading and other income and ought not to have made a separate disallowance. He further stated that the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d DR vehemently supported the orders of the lower authorities. 7. We have heard the rival submissions and perused the materials available on record including the certified copy of the paper book filed by the assessee containing the details of loss in commodity business transaction at page 36 of the paper book and contract notes and invoices given by the broker for dealing in silver (commodity trading) at pages 37 to 44 of the paper book among others. From the pages 36 to 44 of the paper book, we find that the assessee was involved in purchase and sale of silver in its commodity trading activities during the assessment year under appeal. It is not in dispute that the assessee had carried out this commodity trading activity through a recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiries with Kshitiz Commotrade Pvt Ltd by using his unfettered powers provided in the statute. Absolutely no enquiry was carried out by the Learned CITA with regard to these transactions with the broker by either referring this issue to the AO of the broker or by directly summoning the broker to understand the impugned transactions and the beneficiaries in the said transactions. We also find that the case law of this tribunal relied upon by the Learned CIT(A) in the case of ITO vs M/s Ellenbarrie Exim Ltd in ITA No. 1871/Kol/2008 dated 21.7.2011 in support of his conclusion that the loss on commodity transaction is bogus and colourable device to evade the taxes, is totally misplaced. In the said case, the issue involved was with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 73 of the Act. Having concluded so, he ought to have treated the loss on commodity transactions as a normal business loss and allowed to be set off against the speculative income as admittedly in the instant case the profit from trading in shares has been accepted as arising from speculative business. Hence there was no need to make any addition towards loss on commodity transactions. 7.2. In view of the aforesaid facts and findings , we have no hesitation in directing the Learned AO to delete the additions made in the sum of ₹ 62,61,870/- in ITA No. 1876/Kol/2012 and ₹ 46,62,796/- in ITA No. 1875/Kol/2012. Accordingly, the grounds raised by the assessee in this regard are allowed. 8. In the result, the appeals of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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