Itxa/2031/2009 Of United Nmotor India Ltd v. Assistant Commissioner Of Income Tax 7 (3)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2031 OF 2009 United Motor (India) Ltd. ..Appellant. V/s. Assistant Commissioner of Income Tax ..Respondent. Mr. Poros Kaka with Dinesh Chawla and P.C. Tripathi i/b. A.K. Jasani for appellant. Ms. Suchitra Kamble with Suresh Kumar for respondent. CORAM : DR. D.Y.CHANDRACHUD AND J.P.DEVADHAR, JJ. DATED : 22ND FEBRUARY, 2010 P.C. :- 1.The following questions of law have been formulated in the appeal filed by the assessee against the order of the ITAT dated 25th March, 2009:- 1) Whether on the facts and the circumstances of the case and in law the Tribunal erred in not treating the loss on sale of shares of Shapoorji Pallonji Finance Ltd. "as Long Term Capital Loss ?Tribunal erred in not treating the loss on sale of shares of Shapoorji Pallonji Finance Ltd. "as Long Term Capital Loss ? 2) Whether on the facts and circumstances of the case and in law the Tribunal failed to consider that undisputedly the gross total income of the appellant was mainly under the head 'Capital Gain' and hence Explanation to Section 73 of the Act would not be applicable to its case ? Tribunal failed to consider that undisputedly the gross total income of the appellant was mainly under the head 'Capital Gain' and hence Explanation to Section 73 of the Act would not be applicable to its case ? 2.The appeal before the ITAT basically involved two questions relating to the additions made on the ground of (i) disallowance of property development expenses which were allowed only in part; and (ii) treating long term capital loss on sale of shares as a speculation loss. Following the decision of the Tribunal dated 25[th] March, 2009, the assessee moved an application under Section 254(2) which has been dismissed on 30[th ]December, 2009. 3.The issue involved in this appeal pertains to assessment year 2000-01. From the record before us, it would appear that the submission of the assessee was that it was not covered by the explanation to Section 73 of the Income Tax Act, 1961 in view of the fact that the assessee was a company whose gross total income consisted mainly of capital gains. The Assessing Officer observed that according to the Explanation to Section 73, a loss on account of the sale of shares will be deemed to be a speculation loss and not a long term capital loss. This was contested by the assessee. The Tribunal, after referring to the provisions of the Explanation to Section 73 in paragraphs 12 & 13 of its decision, came to the conclusion in paragraph 14 that “undisputedly, the above exceptions are not relevant to the instant case as it is not the ground of the assessee that it falls within the scope of any of the exceptions to Section 73”. Counsel for the assessee states that in the submission of the assessee, the applicability of the Explanation to Section 73 was sought to be contested in the proceedings before the Tribunal. According to the assessee, its case fell within the provisions of the exception contained in the Explanation. This has not been dealt with by the Tribunal. interests of justice to remand the proceedings back to the ITAT for dealing with the contentions of the assessee. In order to facilitate an order on remand, we are not expressing any view on the merits of the rival contentions. In the circumstances, the impugned order dated 25[th] March, 2009 is set aside and proceedings shall stand remanded back to the Tribunal for a fresh decision on merits. 4.In view of the aforesaid directions, it is not necessary to answer the questions of law. The appeal is accordingly disposed of. There shall be no order as to costs. (J.P.DEVADHAR, J.) (DR. D.Y.CHANDRACHUD, J.)