Commissioner Of Income Tax (Central), New Central Revenuebuilding Statue Circle, Jaipur Raj v. Shri Prakash Chand Jain, 305 Jaipur Tower 3Rd Floor, M.i. Road,Jaipur Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 18/2014 Commissioner Of Income Tax (Central), New Central RevenueBuilding Statue Circle, Jaipur Raj ----Petitioner Versus Shri Prakash Chand Jain, 305 Jaipur Tower 3Rd Floor, M.i. Road,Jaipur Raj ----Respondent For Petitioner(s) : Mr. Siddharth Bapna for Mr. Anil MehtaFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 19/04/2018 Order By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal in part preferred by the assessee. This Court while admitting the matter framed followingquestion of law:- “Whether the Tribunal was justified in reversing thefindings given by Assessing Officer as well asCIT(A), thereby deleting the addition of Rs.1,34,62,163/- by holding that the transactions ofjobbing/arbitrage entered into by the assessee arenot speculative transaction and proviso © of Section43(5) of the Act is applicable in the case of theassessee, despite the assessee failing to meet themandatory conditions provided in the said proviso?” The identical matter for the same assessee came to beconsidered by this Court in case of Commissioner of Income Tax vs. Shri Prakash Chand Jain (DBITA No. 16/2014) decided on 18[th]September, 2017 wherein it has been held as under:- “6.He has relied upon the decision in case ofCommissioner of Income Tax vs. Ram KishanGupta [2014] 361 ITR 387 (Allahabad) wherein ithas been held as under:- “27. The Tribunal having returned a finding thatthe details of each and every transaction weredisclosed by the assessee which were part of thepaper book. No discrepancy in any of thetransactions can be pointed out by the AssessingOfficer nor the bona fide of the transactions weredoubted, the transaction thus carried out werepart of the "jobbing" within the meaning ofproviso (c) to section 43(5). 28.We are thus of the view that the order of theTribunal allowing the appeal of the assessee is tobe upheld although confined to the ground thatthe losses suffered by the assessee cannot betermed to be speculative loss by virtue of proviso(c) to section 43(5). In view of the foregoingdiscussions, all the questions are answered infavour of the assessee and against the Revenue.The appeal is dismissed. 6.1. He has also relied upon the decision in caseof Commissioner of Income Tax vs. SharwanKumar Agarwal [2001] 249 ITR 233 (All) whereinit has been held as under:- “2. The assessee is a share broker and filed hisreturn of income on December 13, 1994. Theassessment was completed under Section 143(3)of the Income Tax Act, 1961. During the course ofassessment proceedings, the Assessing Officerhad found that the assessee had at times settledthe share transactions by corresponding deliveriesand at times settled the contract without effectingthe delivery. On an examination of invoice bills,the Assessing Officer found that the assessee hadearned a profit of Rs. 32,80,949 and suffered aloss of Rs. 1,10,14,010, thereby incurring a netloss of Rs. 77,33,061. It was held that this wasspeculative transaction within the meaning ofSub-section (5) of Section 43 of the Income TaxAct. Invoking the provisions of Section 73 of theIncome Tax Act, the Assessing Officer held thatthe speculative loss of Rs. 77,33,061 could not beallowed to be set off against the profit of generalbusiness of the assessee. The order was affirmed by the Commissioner of Income Tax (A)-1,Kanpur. The Income Tax Appellate Tribunal inappeal held that the assessee was entitled to theexception covered by Clause (c) of the proviso toSection 43(5) of the Income Tax Act, which readsas under : by the Commissioner of Income Tax (A)-1,Kanpur. The Income Tax Appellate Tribunal inappeal held that the assessee was entitled to theexception covered by Clause (c) of the proviso toSection 43(5) of the Income Tax Act, which readsas under : "a contract entered into by a member of a forwardmarket or a stock exchange in the course of anytransaction in the nature of jobbing or arbitrage toguard against loss which may arise in the ordinarycourse of his business as such member ; shall not be deemed to be a speculativetransaction ;" 6. The Tribunal found dial the assessee wasentitled to the exception covered by the proviso,Clause (c) to Sub-section (5) of Section 43 of theIncome Tax Act. The onus of proof was on theDepartment to establish that such exception wasnot applicable. It has placed reliance upon thedecision of the Supreme Court in CIT v.RamakrishnaDeoMANU/SC/0059/1958MANU/SC/0059/1958:[1959]35ITR312(SC) . It further found that nomaterial was collected at the appellate stage toshow that the condition was fulfilled. Learnedcounsel for the applicant has not shown that therewas any material to show that the assessee wasnot entitled to the exception, referred to above. Itmay also be noted that the applicant has notsought any question to be referred in regard toproviso, Clause (c) to Sub-section (5) of Section43 of the Income Tax Act.” 6.2. He has relied upon another decision in caseof Commissioner of Income Tax, Bangalore vs.First Securities (P) Ltd. [2015] 370 ITR 72(Karnataka) wherein it has been held as under:- “Therefore, it has no application to a contractentered into by a member of the NSE or BangaloreStock Exchange, whose business is in trading ofshares on behalf of his clients, which is known asjobbing or arbitrage. Any loss which may arise inthe course of such business, shall not be deemed tobe a speculative transaction. If the nature of thetransaction by the assessee is not a speculativetransaction at all, then, the Explanation to section73 of the Act has no application. The loss sustainedby the assessee is a business loss which can be setoff against the income from the other sources.Therefore, the prohibition under section 73 of theAct is attracted only to set off the loss in a speculative business against the profit from otherbusiness, because loss from speculation businessshould be set off only from a profit of speculationbusiness. Therefore, the Tribunal was justified insetting aside the order passed by the authoritiesand allowing the claim of the assessee. Thesubstantial question of law is answered in favour ofthe assessee and against the Revenue. We do notsee any merit in these two appeals. Accordingly, theappeals are dismissed.” 7.We have heard counsel for both the sides. 8.Taking into account, the MCX is only for thepurpose of government and it is doing only job worktherefore, there is no delivery. Even the Tribunal hasadmitted the transaction being of jobbing nature. Inthat view of the matter, the Tribunal has rightlyinvoked the provision of Section 43(5) and Clause(c) in holding that transactions are not speculativetransaction. Hence, the issue is answered in favour of the assessee and against the department. The appeal stands dismissed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J A.Sharma/96