The Tax Publishers2021 TaxPub(DT) 0267 (Mum-Trib)

INCOME TAX ACT, 1961

Section 254

Where there was no evidence furnished by assessee as to what part of the assets on which depreciation was claimed were used for speculation activity and non-speculation activity and Tribunal had only taken the total expenditure in the P & L Account including depreciation for purpose of apportionment of expenses attributable to speculation and non-speculation activity, thus, Miscellaneous Application filed by assessee was dismissed.

Appeal (Tribunal) - Profitability of speculation activity and non-speculation activity - Mistake apparent -

Assessee carried on composite business of derivative trading and share trading. By virtue of this Miscellaneous Application, assessee sought to recall the order passed by this Tribunal on the ground that Tribunal directed AO for allocation of composite expenses towards the speculation activities of assessee. However, Tribunal inadvertently missed out a contention made during the hearing that under the statute there is no provision to such effect. Tribunal also missed out one more contention of assessee that scope of Explanation to section 73 was confined to the business consisting of only purchase and sale of shares of other companies and not beyond activities of purchase and sale of shares. Tribunal erred in not appreciating the fact that the amount consists of depreciation which was an allowance and not expense. Held: Assessee made an alternative plea on without prejudice basis that even if apportionment of expenditure needed to be carried out, depreciation shall not form part of said apportionment as same was not an expenditure but only an allowance. There was no evidence furnished by assessee as to what part of the assets on which depreciation was claimed were used for speculation activity and non-speculation activity. Tribunal had only taken the total expenditure debited in P & L Account, including the depreciation for the purpose of apportionment of expenses attributable to speculation and non-speculation activity. It was not the case of assessee that depreciation claimed on assets were never used for speculation activity carried out by assessee. Thus, mistakes pointed out by assessee in Miscellaneous Application did not fall under the ambit of mistake apparent from record within the meaning of section 254(2).

REFERRED : Snowtex Investment Ltd. v. Principal CIT (2019) 265 Taxman 3 (SC) : 2019 TaxPub(DT) 3760 (SC), Rajasthan State Warehousing Corporation v. CIT (2000) 242 ITR 450 (SC) : 2000 TaxPub(DT) 1258 (SC)/i> and Urja Investments Pvt. Ltd. v. Dy. CIT 2019 TaxPub(DT) 7166 (Mum-Trib).

FAVOUR : Against the assessee.

A.Y. : 2012-13



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