w w w . L a w y e r S e r v i c e s . i n



Commissioner of Income Tax v/s M/s. Ramshree Steels Pvt. Ltd.


Company & Directors' Information:- V S L STEELS LIMITED [Active] CIN = U27109KA2003PLC058185

Company & Directors' Information:- H M STEELS LIMITED [Active] CIN = U27106PB1999PLC022707

Company & Directors' Information:- D S R M STEELS PRIVATE LIMITED [Active] CIN = U27310TZ2005PTC012353

Company & Directors' Information:- P D P STEELS LTD [Active] CIN = U65921WB1996PLC077555

Company & Directors' Information:- R V M STEELS INDIA PRIVATE LIMITED [Active] CIN = U51420HR2004PTC035426

Company & Directors' Information:- S D S STEELS PRIVATE LIMITED [Active] CIN = U51420TN2006PTC060563

Company & Directors' Information:- R K K R STEELS PRIVATE LIMITED [Active] CIN = U27101TN1965PTC006069

Company & Directors' Information:- O P STEELS PRIVATE LIMITED [Active] CIN = U27109DL1987PTC027085

Company & Directors' Information:- M P S STEELS PRIVATE LIMITED [Active] CIN = U27100KL2012PTC038919

Company & Directors' Information:- H R STEELS PRIVATE LIMITED [Active] CIN = U74899DL1995PTC070914

Company & Directors' Information:- B G STEELS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC042560

Company & Directors' Information:- N G A STEELS PRIVATE LIMITED [Active] CIN = U27109TZ1995PTC005908

Company & Directors' Information:- C V S STEELS PRIVATE LIMITED [Active] CIN = U29253DL2009PTC189824

Company & Directors' Information:- P P S. STEELS INDIA PRIVATE LIMITED [Active] CIN = U27106TZ2002PTC010188

Company & Directors' Information:- J P STEELS LTD [Active] CIN = U27107AS1992PLC003736

Company & Directors' Information:- K P STEELS LIMITED [Liquidated] CIN = U27109TG1986PLC006878

Company & Directors' Information:- P L STEELS PRIVATE LIMITED [Active] CIN = U27109UR2004PTC000445

Company & Directors' Information:- RAMSHREE STEELS PRIVATE LIMITED [Active] CIN = U24232UP1996PTC020410

Company & Directors' Information:- Z V STEELS PRIVATE LIMITED [Active] CIN = U51909MH1997PTC109791

Company & Directors' Information:- M Q STEELS PRIVATE LIMITED [Active] CIN = U74899DL1997PTC089231

Company & Directors' Information:- N. STEELS PRIVATE LIMITED [Active] CIN = U27106GJ2009PTC056732

Company & Directors' Information:- C I C STEELS PVT LTD [Active] CIN = U27109WB1988PTC045251

Company & Directors' Information:- M J R STEELS PVT LTD [Active] CIN = U74999WB1996PTC076803

Company & Directors' Information:- H S M STEELS PRIVATE LIMITED [Active] CIN = U27100TG2010PTC067913

Company & Directors' Information:- D C STEELS LIMITED [Active] CIN = U27106PB1990PLC010517

Company & Directors' Information:- G M K STEELS PRIVATE LIMITED [Active] CIN = U74899DL2000PTC108623

Company & Directors' Information:- S I F STEELS LIMITED [Active] CIN = U27310GJ1972PLC002137

Company & Directors' Information:- S S R K STEELS PRIVATE LIMITED [Strike Off] CIN = U27109TG2007PTC055783

Company & Directors' Information:- M U STEELS PRIVATE LIMITED [Active] CIN = U27100DL2011PTC228818

Company & Directors' Information:- M P K STEELS I PRIVATE LIMITED [Active] CIN = U27109AS2005PTC007674

Company & Directors' Information:- L M STEELS PRIVATE LIMITED [Active] CIN = U13209UP1980PTC005064

Company & Directors' Information:- S I STEELS INDIA PRIVATE LIMITED [Strike Off] CIN = U52390PY2009PTC002285

Company & Directors' Information:- P M P STEELS LIMITED [Strike Off] CIN = U93090TN1994PLC026915

Company & Directors' Information:- M A STEELS PRIVATE LIMITED [Active] CIN = U27109KL2002PTC015691

Company & Directors' Information:- M D STEELS PRIVATE LTD. [Active] CIN = U74899DL1987PTC029358

Company & Directors' Information:- D. I. STEELS PRIVATE LIMITED [Active] CIN = U27100MH2005PTC153442

Company & Directors' Information:- A B M STEELS PRIVATE LIMITED [Active] CIN = U27101GJ1986PTC008391

Company & Directors' Information:- T & S STEELS INDIA PRIVATE LIMITED [Strike Off] CIN = U27109KA2007PTC043617

Company & Directors' Information:- T G V STEELS LIMITED [Strike Off] CIN = U27100TG1996PLC023224

Company & Directors' Information:- A TO Z STEELS PRIVATE LIMITED [Active] CIN = U74899DL1988PTC030735

Company & Directors' Information:- S K STEELS PVT LTD [Active] CIN = U27109WB1971PTC027999

Company & Directors' Information:- B. K. STEELS PVT. LTD. [Active] CIN = U27109WB1995PTC068343

Company & Directors' Information:- S M STEELS INDIA PRIVATE LIMITED [Active] CIN = U74899DL1974PTC007190

Company & Directors' Information:- I R C STEELS LTD [Active] CIN = U45208WB1966PLC024114

Company & Directors' Information:- G K M STEELS PRIVATE LIMITED [Active] CIN = U27105DL2012PTC246243

Company & Directors' Information:- R B STEELS PRIVATE LIMITED [Active] CIN = U27106AS1994PTC004200

Company & Directors' Information:- S. A. STEELS PVT LTD [Strike Off] CIN = U27106PB1985PTC006227

Company & Directors' Information:- A H STEELS PRIVATE LIMITED [Active] CIN = U74899DL1995PTC073017

Company & Directors' Information:- J K L STEELS PVT LTD [Active] CIN = U27104DL1997PTC088424

Company & Directors' Information:- E D STEELS PVT LTD [Active] CIN = U27310MH1975PTC018180

Company & Directors' Information:- P AND B STEELS INDIA LIMITED [Active] CIN = U27106KL1995PLC008742

Company & Directors' Information:- V K STEELS PVT LTD [Strike Off] CIN = U27310HP1987PTC007712

Company & Directors' Information:- N E STEELS PRIVATE LIMITED [Strike Off] CIN = U27104WB2002PTC116973

Company & Directors' Information:- U R STEELS PRIVATE LIMITED [Strike Off] CIN = U27100TG2008PTC060899

Company & Directors' Information:- H S STEELS PRIVATE LIMITED [Active] CIN = U27109PB1995PTC016111

Company & Directors' Information:- G S STEELS PRIVATE LIMITED [Active] CIN = U74899DL1988PTC030339

Company & Directors' Information:- P M P STEELS PRIVATE LIMITED [Strike Off] CIN = U27109TZ1990PTC002882

Company & Directors' Information:- W S STEELS PRIVATE LIMITED [Strike Off] CIN = U27106PB1982PTC005084

Company & Directors' Information:- K G K STEELS PRIVATE LIMITED [Strike Off] CIN = U27310TZ1997PTC008228

Company & Directors' Information:- K M S STEELS PRIVATE LIMITED [Strike Off] CIN = U27310TZ1997PTC008161

Company & Directors' Information:- S T STEELS PVT LTD [Active] CIN = U27106PB1990PTC010915

Company & Directors' Information:- K L STEELS PRIVATE LIMITED [Active] CIN = U74899DL1984PTC038783

Company & Directors' Information:- S S A P STEELS PRIVATE LIMITED [Active] CIN = U27106DL1999PTC101645

Company & Directors' Information:- M F STEELS PVT. LTD [Active] CIN = U74899DL1971PTC005517

Company & Directors' Information:- R G STEELS PVT LTD [Active] CIN = U27109WB1987PTC042824

Company & Directors' Information:- C N STEELS PVT LTD [Strike Off] CIN = U27100GJ1994PTC022570

Company & Directors' Information:- K L STEELS P LTD [Strike Off] CIN = U27109PB1984PTC005895

Company & Directors' Information:- J G STEELS PRIVATE LIMITED [Active] CIN = U74899DL1997PTC086865

Company & Directors' Information:- S B STEELS PRIVATE LIMITED [Active] CIN = U74899DL1984PTC017414

Company & Directors' Information:- V I A STEELS PRIVATE LIMITED [Strike Off] CIN = U27109UP1993PTC015933

Company & Directors' Information:- K K STEELS INDIA PVT LTD [Active] CIN = U27109PB1990PTC010714

Company & Directors' Information:- D R J STEELS PRIVATE LIMITED [Active] CIN = U27310PB2007PTC031003

Company & Directors' Information:- S R R STEELS PRIVATE LIMITED [Strike Off] CIN = U27105KL1998PTC012156

Company & Directors' Information:- M. G. STEELS LIMITED [Active] CIN = U74999DL1986PLC025140

Company & Directors' Information:- A B N STEELS PRIVATE LIMITED [Strike Off] CIN = U27106OR1996PTC004473

Company & Directors' Information:- A Y STEELS PRIVATE LIMITED [Active] CIN = U74120UP2014PTC066079

Company & Directors' Information:- I D STEELS PRIVATE LIMITED [Active] CIN = U74899DL2000PTC109048

Company & Directors' Information:- V R STEELS PRIVATE LIMITED [Strike Off] CIN = U74899DL1981PTC011447

Company & Directors' Information:- R D STEELS LIMITED [Active] CIN = U27106PB1999PLC022934

Company & Directors' Information:- P S G STEELS PRIVATE LIMITED [Active] CIN = U27109HR1984PTC018249

Company & Directors' Information:- N D STEELS LTD [Strike Off] CIN = U28111WB1989PLC047025

Company & Directors' Information:- K J STEELS PVT LTD [Strike Off] CIN = U27310GJ1981PTC004392

Company & Directors' Information:- V L STEELS PRIVATE LIMITED [Strike Off] CIN = U27107WB2004PTC100815

Company & Directors' Information:- R K STEELS PRIVATE LIMITED [Strike Off] CIN = U74899DL1985PTC020523

Company & Directors' Information:- S F STEELS PVT LTD [Active] CIN = U51900WB2006PTC107234

Company & Directors' Information:- E R S STEELS PVT LTD [Strike Off] CIN = U27104KL1994PTC008341

Company & Directors' Information:- K K K STEELS PRIVATE LIMITED [Strike Off] CIN = U27106PB1998PTC020961

Company & Directors' Information:- K. N. STEELS PRIVATE LIMITED [Strike Off] CIN = U27107WB2007PTC117868

Company & Directors' Information:- A AND A STEELS PVT LIMITED [Strike Off] CIN = U27104CH1993PTC012992

Company & Directors' Information:- M G INDIA STEELS PRIVATE LIMITED [Strike Off] CIN = U27104TN2005PTC056331

Company & Directors' Information:- N. J. STEELS PRIVATE LIMITED [Amalgamated] CIN = U27108DL1996PTC077190

Company & Directors' Information:- B M STEELS PRIVATE LIMITED [Active] CIN = U51102TN1976PTC007165

Company & Directors' Information:- R T STEELS PVT LTD [Active] CIN = U27109TG1982PTC003556

Company & Directors' Information:- L. R. STEELS PRIVATE LIMITED [Strike Off] CIN = U27106UP2002PTC026946

Company & Directors' Information:- R. S. A. STEELS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U51392DL2011PTC213878

Company & Directors' Information:- K S R STEELS PRIVATE LIMITED [Strike Off] CIN = U99999DL1992PTC049052

Company & Directors' Information:- S R STEELS PVT LTD [Strike Off] CIN = U27104PB1983PTC005586

Company & Directors' Information:- M B STEELS PRIVATE LIMITED [Strike Off] CIN = U99999MH1975PTC018595

Company & Directors' Information:- M R STEELS PVT LTD [Active] CIN = U27108MH1980PTC022743

Company & Directors' Information:- N I STEELS PRIVATE LIMITED [Strike Off] CIN = U27209UP1978PTC004654

Company & Directors' Information:- J M M D STEELS PRIVATE LIMITED [Active] CIN = U74899DL1989PTC035398

Company & Directors' Information:- B C S STEELS PRIVATE LIMITED [Strike Off] CIN = U27100PB2005PTC027831

Company & Directors' Information:- K. A. STEELS PRIVATE LIMITED [Active] CIN = U27100PB2011PTC034822

Company & Directors' Information:- B K STEELS PRIVATE LIMITED [Strike Off] CIN = U27109PB1985PTC006128

Company & Directors' Information:- J M D STEELS PRIVATE LIMITED [Active] CIN = U27300PB2012PTC036293

Company & Directors' Information:- A P R STEELS PRIVATE LIMITED [Strike Off] CIN = U27109DL2000PTC104579

Company & Directors' Information:- H A S STEELS PRIVATE LIMITED [Active] CIN = U27109DL2004PTC125908

Company & Directors' Information:- D N S STEELS PRIVATE LIMITED [Active] CIN = U28991DL2013PTC259964

Company & Directors' Information:- L & T STEELS PRIVATE LIMITED [Active] CIN = U27320PB2021PTC052861

Company & Directors' Information:- A Z STEELS PVT LTD [Strike Off] CIN = U72100NL1993PTC003884

Company & Directors' Information:- A N STEELS PVT LTD [Strike Off] CIN = U72100AS1993PTC003848

Company & Directors' Information:- P S G STEELS PVT LTD [Active] CIN = U99999DL1984PTC018249

    Tax Appeal No. 278 of 2013

    Decided On, 11 October 2017

    At, High Court of Judicature at Allahabad

    By, THE HONOURABLE MR. JUSTICE ABHINAVA UPADHYA & THE HONOURABLE MR. JUSTICE ASHOK KUMAR

    For the Appellant: Krishna Agarwal, Advocate. For the Respondent: None appeared.



Judgment Text

Ashok Kumar, J.

1. Heard Sri Krishna Agarwal, learned counsel appearing on behalf of the appellant. No one is present on behalf of the respondent.

2. The present appeal has been filed against the judgment and order dated 06.06.2013 passed by the Income Tax Appellate Tribunal in ITA No. 114/Lkw/2011 for the assessment year 2005-2006.

3. The brief facts of the case are that the assessee company is in the business of Iron Alloys Steel, MS Ingots as in the past. The assessee company has also shown the interest income and profit from sale of shares during the year of consideration.

4. The assessee company has filed return of the income declaring nil income after setting off business loss of the earlier year of Rs. 2,16,81,488.50 to the extent of available profit has been filed. The assessing authority has completed the assessment under section 143(3) of the Income Tax Act at the total income of Rs. 2,17,46,490/treating the share trading business as speculative profit to the tune of Rs. 3,84,09,932/.

5. The assessee has filed an appeal before the CIT (Appeal), Kanpur. The CIT (Appeal) vide order dated 07.01.2011 has directed that the income of the assessee company is liable to be taxed at Rs. 3,84,09,932/and business loss of Rs. 1,66,63,443/is liable to be carried forward as per law that too after verification by the assessing authority. In fact, CIT (Appeals) has enhanced the income from Rs. 2,17,46,489/to Rs. 3,84,09,932/.

6. Aggrieved by the order of the CIT(Appeal), the assessee filed an appeal before the Income Tax Appellate Tribunal who vide order dated 06.06.2013 has allowed the appeal of the assessee and has directed the Assessing Authority to allow set off from non-speculative business against profit from speculative business.

7. The present appeal has been filed by the Department/the Commissioner of the Income Tax by which the impugned judgment and order of the ITAT dated 06.06.2013 has been challenged.

8. Following substantial questions of law are referred for consideration before this Court:

"I. Whether the ITAT was correct in law and on facts in holding that non-speculative business loss of current year and carry forward non-speculative business loss of earlier years can be set off from the income of speculative business of the current years?

II. Whether the ITAT was in error in allowing loss in non-speculative business to be set off from income of speculative business without appreciating that set off of loss against income is governed by and limited to provisions of Sections 72 and 73 in particular and Sections 70 to 80 in general which do not provide for set off loss of non-speculative business against income from speculative business.

III. Whether the ITAT erred in law and in fact in failing to appreciate that Section 28 provides that a speculative business shall be deemed to be distinct and separate from any other business and this being the case loss from non-speculative business could not be set off against profits of speculative business.

9. The appeal has been admitted on the above-mentioned questions of law by this Court on 10.10.2013. Notices are issued to the assessee. However, even after the service, no one has put appearance on behalf of the assessee.

10. We have heard the learned counsel for the Department and perused the impugned order of the Tribunal. The learned counsel for the appellant has submitted that the impugned order of the Tribunal cannot sustain.

11. Learned counsel for the appellant has submitted that section 72 (1) of the Income Tax Act provides that the non-speculative business loss can be set off against 'profit and gains, if any, of any business or profession' carried on by assessee and assessable in that assessment year, and when it cannot be so set off, it shall be carried forward to the following assessment year.

12. The Tribunal has dealt with the aforesaid submission of the department and has categorically held that the expression ''any'' business clearly includes of business without making distinct in between the speculative and non-speculative business, and therefore, going by the plain language of the statutory provision loss in a business, other than non-speculative business, cannot be set off against profit of speculative business as also non-speculative business.

13. The Tribunal has also considered and has held that the CIT (A) was right in appreciating that speculative business and non-speculative business are treated as distinct business but what he clearly missed out was that the purpose and impact of this distinction reflects only set off loss in speculation business against the profit of non-speculation business.

14. The Tribunal has dealt with the issue in detail while allowing the claim of the assessee as also the appeal filed by the assessee. For the ready reference the relevant extract of the order of the Tribunal is quoted here-in-below:

"8. To understand the scope of these restrictions, it will be appropriate to take a look at the purpose and the backdrop in which the restrictions on set off of speculation losses was brought in the statute. Until assessment year 1953-54, income tax law did not recognize any such distinction between losses in speculation and non-speculation business. It was only with effect from 1st April, 1953 that the distinction between speculation business and non-speculation business was introduce by introducing a proviso to section 24(1) of Income Tax Act, 1922, which is broadly in pari material with the provisions of section 73(1) and 73(2) of the present Income Tax Act, which stated that "provided further that in computing the profits and gains chargeable under the head 'profits and gains of business, profession or vacation', any loss sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transaction". Elaborating upon the scope of this statutory provision Hon'ble Supreme Court, in the case of Commissioner of Income Tax v. Jagannath Mahadeo Prasad (1969) 71 ITR 296 (SC) observed as follows:

"The answer to the question referred to the High Court obviously depends on the interpretation of the second proviso 24(1) of the Act in interpreting this provision, the purpose of Section 24(1) and (2) has to be kept in view. Under the Act, the Income Tax Officer has to determine the total income of an assessee under Section 23(1), (3) or (4) of the Act. In determining this total income, income under all the various heads enumerated in section 6 has to be taken into account. Sections 7 to 10 and 12 lay down the principles on which the income under these various heads is to be computed. In the case of income from business, profession or vocation, the income has to be computed under Section 10(1) of the Act. Section 10(2) of the Act lays down certain deductions which have to be made in computing the profits and gains from business, profession or vacation. It is during this computation to be made by the Income-tax Officer under Section 23 of the income from business, profession or vacation in accordance with section 10(1) of the Act that the Income-tax officer is further required the apply the provisions of section 24. Section 24 is, thus, a provision laying down the manner of computation of total income. The principal clause of section 24(1) lays down that, if there be a loss of profits or gains in any year under any of the heads mentioned in section 6, that loss has to be set off against the income, profits or gains of the assessee under any other head in that year. If this provision had stood by itself without any provisos, the result would have been that all losses incurred by an assessee under any of the heads mentioned in section 6 would be adjusted against profits under all other heads, and then the total income of the assessee would be worked out on the basis. The first proviso to this subsection, however, lays down an exception to this general rule contained in the principal clause. The exception relates to income from business consisting of speculative transactions, and places the limitation that losses sustained in speculative transactions are not to be taken into account in computing the profits and gains chargeable under the head "Profits and Gains of business, profession or vocation", except to the extent that they will be set off against profits and gains in any other business which itself consists of speculative transaction. The effect of the proviso is that if there are profits in speculative business, those profits are added to income under the other heads mentioned in section 6 for purpose of computing the total income of the assessee in order to determine the tax under Section 23 of the Act on the other hand losses in speculative business are not to be taken into account when computing the total income, except to the extent to which they can be set off against profits from other speculative business. The first proviso thus, clearly limits the applicability of the principal clause of section 24(1); and, when applied, it governs the manner in which the total income of the assessee is to be computed. In the case before us, the Income-tax Officer was clearly right in the assessment years 1958-59 and 1959-60 in not setting off the losses in the speculative business against the income earned in those years either from

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property or from ready business in kappas. 15. In view of the aforesaid finding, the Tribunal came to the conclusion that there was differentiation in approach towards profits and loss of the speculation business, in as much as, while its profits were taken into account for computation of overall income or loss, its losses were to be examined for the said purpose. The Tribunal while come to the said conclusion, has considered the judgment of the Hon'ble Supreme Court laid down in the case of Commissioner of Income Tax v. Jagannath Mahadeo Prasad (1969) 71 ITR 296 (SC) as also the similar principles set out by the Bombay High Court in the case of A.R. Mahadevia v. Commissioner of Income Tax (1967) 65 ITR 308(Bom). 16. Learned counsel for the appellant is not able to provide any contrary decisions. In our opinion, the impugned order of the Tribunal is based on material facts and is supported by the decisions aforesaid, hence need no interference by this Court. 17. The appeal filed by the department is, accordingly, dismissed.
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