COMMISSIONER OF INCOME TAX Vs. HOTZ HOTEL LIMITED

JUDGEMENT

(1.) THIS appeal by the Revenue under s. 260A of the IT Act, 1961 (for short the Act), is directed against the order dt. 31st Oct., 2001, passed by the Tribunal, Delhi Bench-B, New Delhi, in ITA No. 5326/Del/94, pertaining to the asst. yr. 1988-89. The following questions, stated to be substantial questions of law, have been proposed in the appeal memo :

(2.) THE respondent, hereinafter referred to as the assessee, a private limited company, is engaged in the business of running a hotel. It also derives income from some other sources as well, including interest and dividend from shares. For the asst. yr. 1988-89, the assessee filed its return declaring an income of Rs. 27,86,630, but was assessed on a total income of Rs. 39,60,615. THE main reason for the difference between the returned income and the assessed income was the addition of Rs. 10,05,740, representing the disallowance of the amount claimed by the assessee as hedging loss. In this appeal we are concerned with this addition.

(3.) BEING dissatisfied with the said order, the Revenue carried the matter in further appeal to the Tribunal but without success. While affirming the view taken by the CIT(A), the Tribunal concluded that on the facts of the present case, contract did exist between the parties and out of a substantial stock of shares of the said company only 77,000 shares were sold for guarding against future loss and, further, sales and purchases were made in a depressed market with the same intention as also to boost the market so that the share value would not go down further. Rejecting the contention of the Revenue that the assessee's claim could not be accepted as distinctive numbers had not been mentioned and there was no physical delivery, the Tribunal observed that if these two things would have been there, then there was no need to refer to s. 43(5) and its exceptions, since the said section deals with speculative transactions and the three exceptions pertain to those transactions which at first look will fall under the same category but are deemed not to be so. Hence, the present appeal.