Itxa/888/2016 Of Pr. Commissioner Of Income Tax-1 v. M/S. Triforce Infrastructure (India) Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 888 OF 2016 The Pr. Commissioner of Income Tax-1v/s. M/s. Triforce Infrastructure (India) Pvt. Ltd. .. Appellant .. Respondent Mr. Suresh Kumar for the appellant None for the respondent P.C. CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. DATED : 11[th] DECEMBER, 2018. 1.This Appeal under Section 260-A of the Income Tax Act, 1961(the Act) challenges the order dated 12[th] June, 2015 passed by theIncome Tax Appellate Tribunal (the Tribunal). This appeal relates toAssessment Year 2007-08. 2.The Revenue urges the following re-framed question of law forour consideration :- “Whether on the facts and in the circumstances of the case and inlaw, the Tribunal was justified in dismissing the Department'sappeal by allowing assessee's loss from business of Futures andOptions?” 3.The respondent assessee had in its return of income declaring nil income. During scrutiny assessment proceedings, the Assessing Officernoted from the Profit & Loss Account that the respondent was in receiptof speculation gain, dividend income and gain on Options aggregatingto Rs. 6.11 lakhs. Against the above, the expenditure claimed wasRs.42.45 lakhs. Out of the above, expenditure claimed as loss onfutures was Rs.42.40 lakhs. The Assessing Officer in assessmentproceedings under Section 143(3) of the Act dis-allowed the loss onaccount of futures and options on the ground that the object clause ofMemorandum of Association (MOU) did not authorize the company todo business in futures and options. The assessment order dated 24[th]December, 2009 determined income at Rs.6.11 lakhs. 4.Being aggrieved with the order dated 24[th] December, 2009, therespondent filed an appeal to the Commissioner of Income Tax(Appeals) [CIT(A)]. By an order dated 9[th] December, 2013, the CIT(A)while allowing the appeal reproduced clauses 21 and clause 68 of theMOU. In fact, clause 68 was introduced into the MOU w.e.f. 30[th]December, 2005. It was further held that clause 21 could itself permitthe respondent to deal with the shares, futures and options.Nevertheless, on 31[st] December, 2005 clause 68 of the MOU specificallyenabled the respondent to do business in futures and options i.e. before starting the business in futures and options. As the relevant assessmentyear is A.Y. 2007-08, the CIT(A) allowed the respondent's appealholding that loss incurred in futures and options as well as trading inshares is a part of its business loss. 5.Being aggrieved with the order dated 9[th] December, 2013 of theCIT(A), the Revenue filed an appeal to the Tribunal. By the impugnedorder, the Tribunal dismissed the Revenue's appeal upholding the orderof the CIT(A). In fact, it also records the fact that the Assessing Officerwhile disallowing the losses in futures and options, have accepted theincome of Rs.25,520/- shown on account of Futures & Options. Thisitself would be evidence of the fact that the MOU entitles therespondent assessee to carry on business in futures and options. Thus,dismissed the Revenue's appeal. 6.On facts we find that the view taken by the CIT(A) as well as theTribunal, cannot be faulted with. The losses on futures and optionswas incurred post 30[th] December, 2005 i.e. after clause 68 wasintroduced in the MOU by an amendment. This appeal is in respect ofA.Y. 2007-08 when clause 68 of the MOU was in existence. Thisentitled the respondent to do business in Futures and Options. 7.In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained. 8.The appeal is dismissed. No order as to costs. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)