Principal Commissioner Of Income Tax Kolkata – 2, Kolkata v. M/S. K.b. Capital Markets Pvt. Limited

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/37/2018 PRINCIPAL COMMISSIONER OF INCOME TAX KOLKATA – 2,KOLKATAVS. M/S. K.B. CAPITAL MARKETS PVT. LIMITED BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMA N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : February 15, 2022. [Via Video Conference] Appearance :Mr. Debasish Chowdhury, Adv.… for the appellantMr. R.K. Murarka, Sr. Adv.Ms. Sutapa Roy Choudhury, Adv.Ms. Aratrika Roy, Adv.… for the respondent The Court : This appeal by the revenue filed under Section 260Aof the Income Tax Act, 1961 (the Act) is directed against the orderdated 3[rd ]May, 2017 passed by the Income Tax Appellate Tribunal, “B”Bench, Kolkata (Tribunal) in ITA No.1302/Kol/2014 for theassessment year 2009-10. The revenue has raised the following substantial questions oflaw for consideration : a)Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that income ofbrokerage from dealing in shares in client accountwere to be allowed to the set off against speculationloss treated under Section 73 of the Income Tax Act,1961 of Rs.5,12,35,594/- without considering the factthat speculation loss can only be set off againstspeculation profit?case the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that income ofbrokerage from dealing in shares in client accountwere to be allowed to the set off against speculationloss treated under Section 73 of the Income Tax Act,1961 of Rs.5,12,35,594/- without considering the factthat speculation loss can only be set off againstspeculation profit? b)Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that the profitout of sale of shares to be treated as Long Term CapitalGain of Rs.97,51,280/- Short Term Capital Gain ofRs.1,48,40,879/- instead of normal business incomewithout considering the fact that frequency oftransaction, non-maintenance of separate demataccount of investment and for trading suggests thatsale of shares are normal business income in nature?case the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that the profitout of sale of shares to be treated as Long Term CapitalGain of Rs.97,51,280/- Short Term Capital Gain ofRs.1,48,40,879/- instead of normal business incomewithout considering the fact that frequency oftransaction, non-maintenance of separate demataccount of investment and for trading suggests thatsale of shares are normal business income in nature? c)Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that thedisallowance of interest expenditure ought to havecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that thedisallowance of interest expenditure ought to have been made under Rule 8D(2)(ii) of the Income TaxRules, 1962? c)Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that thedisallowance of interest expenditure ought to havecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that thedisallowance of interest expenditure ought to have been made under Rule 8D(2)(ii) of the Income TaxRules, 1962? d)Whether on the facts and in the circumstances of thecase the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that onlydividend yielding investment are to be taken intoaccount while calculating the disallowance underSection 14A of the Income Tax Act, 1961 and thedisallowance made of total Rs.59,30,273/- was notcorrect, without considering the fact that as perprovision of Rule 8D of the Income Tax Rules, 1962 allthe investments as well stock in trade are to beconsidered for computing disallowance?case the Learned Income Tax Appellate Tribunal, “B”Bench Kolkata, erred in law in holding that onlydividend yielding investment are to be taken intoaccount while calculating the disallowance underSection 14A of the Income Tax Act, 1961 and thedisallowance made of total Rs.59,30,273/- was notcorrect, without considering the fact that as perprovision of Rule 8D of the Income Tax Rules, 1962 allthe investments as well stock in trade are to beconsidered for computing disallowance? We have heard Mr. Debasish Chowdhury, learned counsel forthe appellant/revenue and Mr. R. K. Murarka, learned senior counsel,duly assisted by Ms. Sutapa Roy Choudhury and Ms. Aratrika Roy,learned counsel appearing for the respondent/assessee. Learned senior counsel appearing for the respondent/assesseesubmitted that the tax effect for the assessment year underconsideration is below the threshold limit fixed by the CBDT Circular.In this regard, our attention was drawn to the Income TaxComputation Form appended to the assessment order from which wefind that the total income computed is Rs. 1,04,65,829/- and the taxpayable thereon in terms of the order of the assessing officer is nearly Rs. 35 lacs. Therefore, the appeal cannot be pursued by the revenueon the ground of low tax effect. Accordingly, the appeal stands dismissed. Consequently, substantial questions of law are left open. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)