V. NAGESH, MUMBAI V. ACIT CIR 21(3), MUMBAI

CO 206/MUM/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4953 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 15-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 26-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.3236/MUM/2009 : ASST.YEAR 2006-2007 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 21(3) MUMBAI. VS. SHRI V.NAGESH 706-706-A BLUE HEAVEN, RAJEHA VIHAR POWAI, MUMBAI 400 076. PA NO.ACAPV1015E. (APPELLANT) (RESPONDENT) CO NO.206/MUM/2009 : ASST.YEAR 2006-2007 SHRI V.NAGESH 706-706-A BLUE HEAVEN, RAJEHA VIHAR POWAI, MUMBAI 400 076. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 21(3) MUMBAI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI VIRENDRA OJHA ASSESSEE BY : SHRI MANISH SANGHAVI O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 19.3.2009 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD SHOWN INCOME MAINLY FROM CAPITAL GAINS BY WAY OF DEALING IN SHAR ES AND SECURITIES BESIDES SOME NOMINAL INCOME FROM OTHER SOURCES. SHORT TERM CAPIT AL GAIN OF RS.90,17,334 AND LONG TERM CAPITAL GAIN OF RS.28,95,512 WAS DECLARED ALONG WITH SPECULATION BUSINESS LOSS OF RS.1,230. AFTER MAKING THOROUGH A NALYSIS OF THE SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE ALONG WITH THE VIEW TA KEN BY HIM IN THE EARLIER YEAR, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT T HE SHARE TRANSACTIONS WERE IN THE NATURE OF BUSINESS AND HENCE INCOME THERE FROM WAS LIABLE TO BE TREATED AS `BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAI N CLAIMED BY THE ASSESSEE. THE DELIVERY OR NON-DELIVERY OF SHARES, THE METHOD OF P AYMENT AND SETTLEMENT ETC. WERE FOUND TO BE NOT RELEVANT. HE, THEREFORE, HELD THAT THE ASSESSEES SHARE TRANSACTIONS RESULTING INTO SHORT TERM CAPITAL GAIN WERE BUSINES S IN NATURE AND TAX WAS LEVIED ITA NO.3236 & CO 206/MUM/2009 SHRI V.NAGESH. 2 ACCORDINGLY. THE TREATMENT GIVEN BY THE ASSESSEE TO LONG TERM CAPITAL GAIN WAS NOT DISTURBED BY THE ASSESSING OFFICER. WHEN THE MATTER CAME UP BEFORE THE LEARNED CIT(A), HE FOLLOWING HIS OWN ORDER PASSED IN ASSESS MENT YEAR 2005-2006, HELD THAT THE ASSESSEE WAS BOTH INVESTOR AS WELL AS TRADER. H E DIRECTED THE ASSESSING OFFICER TO TREAT THE SURPLUS / LOSS ON SALE OF SHARES HELD FOR LESS THAN 30 DAYS AS BUSINESS INCOME / LOSS AND TO TREAT THE SURPLUS / LOSS ON SA LE OF SHARES HELD FOR MORE THAN 30 DAYS AS CAPITAL GAIN / LOSS. BOTH SIDES ARE IN APPE AL AGAINST THEIR RESPECTIVE STANDS. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT BOTH THE AUTHORITIES BELOW H AVE RELIED ON THEIR RESPECTIVE ACTION IN ASSESSMENT YEAR 2005-2006. ASSESSEE AS W ELL AS REVENUE CAME UP IN APPEAL BEFORE THE TRIBUNAL FOR THE SAID ASSESSMENT YEAR 2005-2006 IN ITA NO.5410/MUM/2008 AND CO NO.151/MUM/2009. THE TRIBUN AL VIDE ITS ORDER DATED 24.9.2009 HELD THAT THE ASSESSEE WAS ONLY TRADING I N SHARES AND INCOME THERE FROM WAS TO BE TAX AS BUSINESS INCOME ONLY. THE FINDING GIVEN BY THE LEARNED CIT(A) FOR CONSIDERING HOLDING OF SHARES FOR A PERIOD OF MORE THAN 30 DAYS AS `INVESTMENT WAS VACATED. RESULTANTLY THE APPEAL OF THE REVENUE WAS ALLOWED AND THE ASSESSEES CROSS OBJECTION WAS DISMISSED. NOW THE LEARNED COUN SEL FOR THE ASSESSEE BEFORE US ALBEIT FAIRLY CONCEDED THAT THE FACTS AND CIRCUMST ANCES OF THIS YEAR WERE SIMILAR TO THOSE OF THE PRECEDING YEAR BUT IMPRESSED UPON THE BENCH TO EITHER TREAT INCOME FROM SALE OF SHARE TRANSACTION AS SHORT TERM CAPITA L GAIN OR REFER THE MATTER FOR THE CONSTITUTION OF SPECIAL BENCH DUE TO DIFFERING VIEW TAKEN BY VARIOUS BENCHES OF THE TRIBUNAL. WE ARE UNABLE TO ACCEPT EITHER OF THE CON TENTIONS PUT FORTH ON BEHALF OF THE ASSESSEE FOR THE REASON THAT THE QUESTION WHETHER T HE SHARE TRANSACTIONS GIVE BUSINESS INCOME OR CAPITAL GAIN IS BASICALLY A MATT ER OF FACT, WHICH HAS TO BE DECIDED BY CONSIDERING THE CUMULATIVE EFFECT OF VAR IOUS FACTORS HAVING BEARING ON THE ISSUE. NO SINGLE DECISIVE TEST OR STRAITJACKET FORMULA CAN BE DEVISED FOR GETTING QUICK ANSWER TO SUCH QUESTION. IN FACT, IT IS A QUE STION OF FACT WHICH HAS TO BE DECIDED ON THE FACTS OF EACH CASE DISTINCTLY FOR I DENTIFYING WHETHER INCOME / LOSS ITA NO.3236 & CO 206/MUM/2009 SHRI V.NAGESH. 3 FROM SALE OF SHARE TRANSACTIONS IS BUSINESS INCOME OR CAPITAL GAIN. AS THE TRIBUNAL IN ASSESSEES OWN CASE HAS EXAMINED THE FACTS OF TH E IMMEDIATELY PRECEDING YEAR, WHICH ARE ADMITTEDLY MUTATIS MUTANDIS SIMILAR TO THOSE OF THE INSTANT YEAR, AND HAS COME TO A POSITIVE CONCLUSION THAT THE SHARE TRANSA CTIONS WERE IN THE NATURE OF BUSINESS TRANSACTIONS, WE ARE OF THE CONSIDERED OPI NION THAT THERE IS NO QUESTION OF DEVIATING FROM THE VIEW TAKEN BY THE CO-ORDINATE BE NCH. RESPECTFULLY FOLLOWING THE PRECEDENT WE HOLD THAT THE DISPUTED INCOME FROM SHARE TRANSACTIONS BE HELD AS BUSINESS INCOME IN ENTIRETY AND NOT AS SHORT TERM C APITAL GAIN AS CLAIMED BY THE ASSESSEE OR A COMBINATION OF SHORT TERM CAPITAL GAI N /BUSINESS INCOME AS HELD BY THE LD. CIT(A). THE ASSESSMENT ORDER IS, THEREFORE , RESTORED ON THIS ISSUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 18 TH DAY OF JUNE, 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 18 TH JUNE, 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XXI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.