Jay Investments Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-4(2), Ahmedabad

CO 208/AHD/2013

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2273 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 29-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA. NOS. 1672 & 1673/AHD/2013 (ASSESSMENT YEARS:2004-05 & 2006-07) THE INCOME TAX OFFICER, WARD-4(2), AHMEDABAD APPELLANT VS. JAY INVESTMENT PVT. LTD., SAGAR, NR. SAHJANAD COLLEGE, OPP. KAMDHENU COMPLEX, AMBAWADI, AHMEDABAD 380015 RESPONDENT & C.O. NO.208/AHD/2013 (IN ITA NO.1672/AHD/2013) ASSESSMENT YEAR: 2004-05 JAY INVESTMENT PVT. LTD., SAGAR, NR. SAHJANAD COLLEGE, OPP. KAMDHENU COMPLEX, AMBAWADI, AHMEDABAD 380015 AP PELLANT VS. THE INCOME TAX OFFICER, WARD-4(2), AHMEDABAD RESPONDENT PAN: AAACJ3627P ITA NOS. 1672 & 1673/AHD/13 & C.O. NO.208/A/13 A.Y. 04-05 & 06-07 (ITO VS. JAY INVESTMENT PVT. LT D.) PAGE 2 / BY REVENUE : SHRI DILEEP KUMAR, SR. D.R. / BY ASSESSEE : SHRI PARIN SHAH, A.R. /DATE OF HEARING :12.05.2016 /DATE OF PRONOUNCEMENT :16.05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE THREE APPEALS OF WHICH TWO ARE FILED BY REVEN UE AND THE OTHER I.E. CROSS OBJECTION BY ASSESSEE ARE AGAI NST THE ORDER OF CIT(A)-VIII, AHMEDABAD, DATED 25.03.2013 FOR A.Y . 2004-05 AND 22.03.2013 FOR THE ASSESSMENT YEAR 2006-07. 2. FOR ASSESSMENT YEAR 2004-2005, THE REVENUE HAS T AKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO RECALCULATE THE INCOME FRO M TRANSACTIONS IN SECURITIES AS 'INCOME FROM CAPITAL GAINS' IF THE SECURITIES WERE HELD FOR A PERIOD OF MORE THAN 30 DAYS OR AS INCOME FROM BUSINESS OF PROFESSI ON IN CASE THE SECURITIES WERE HELD FOR LESS THAN 30 D AYS, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIALS BROUGHT ON RECORD. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THAT AS PER THE DETAILED REASONS GIVEN BY THE ASSESSING OFFICER IN ASSESSMENT ORDER, THE SHARES/UNITS WERE PURCHASED AND SOLD BY THE ASSESSE E WITH THE MOTIVE OF EARNING OF PROFITS AND NOT BY WA Y OF INVESTMENT AND THEREFORE, THE PROFIT ON THE SAID TRANSACTIONS WERE RIGHTLY TREATED AS 'BUSINESS INCO ME' OF THE ASSESSEE BY THE ASSESSING OFFICER. ITA NOS. 1672 & 1673/AHD/13 & C.O. NO.208/A/13 A.Y. 04-05 & 06-07 (ITO VS. JAY INVESTMENT PVT. LT D.) PAGE 3 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THAT KEEPING IN VIEW THE VOLUME AND FREQUENCY OF TRANSACTIONS, A SYSTEMATIC BUSINESS ACTIVITY WAS CARRIED OUT BY THE ASSESSEE IN THE PURCHASE AND SALE OF SHARES/UNITS AND THE INCOME ARISING FROM THESE TRANSACTIONS WAS ASSESSABLE AS T HE 'BUSINESS INCOME' OF THE ASSESSEE. 2.1 FOR ASSESSMENT YEAR 2006-2007, THE REVENUE HAS RAISED SIMILAR GROUNDS AS ABOVE. 3. BEFORE US, AT THE OUTSET, LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT THE PRESENT APPEALS OF THE REVENUE N EED TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF T HE CBDT CIRCULAR NO.21 OF 2015 DATED 10.12.2015. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE GR OUNDS OF APPEAL RAISED BY THE REVENUE, WE PRIMA-FACIE FIND T HAT THE TAX EFFECT IN EACH OF THESE APPEALS IS BELOW RS.10 LACS . AS PER THE ANNOUNCEMENT OF CENTRAL BOARD OF DIRECT TAXES (CBDT ) DATED 10.12.2015 (CIRCULAR NO.21 OF 2015), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX APPELLATE TRIBUNAL UNLESS THE TAX EFFECT , EXCLUDING INTEREST, EXCEEDS RS.10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PEND ING APPEALS. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (8) OF THE ITA NOS. 1672 & 1673/AHD/13 & C.O. NO.208/A/13 A.Y. 04-05 & 06-07 (ITO VS. JAY INVESTMENT PVT. LT D.) PAGE 4 INSTRUCTIONS WHEREIN IT HAS BEEN PROVIDED THAT THES E INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF AN Y PROVISIONS HAS BEEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UN DISCLOSED FOREIGN ASSETS/BANK ACCOUNTS, ETC. WE PRIMA-FACIE F IND THAT THE PRESENT CASES DO NOT FALL WITHIN THE EXEMPTION CLAU SE AND THE TAX EFFECT OF EACH OF THESE APPEALS IS BELOW RS. 10 LAKHS. IT IS FURTHER OBSERVED THAT SINCE, WHILE HEARING THE APPE AL, SUCH FACTORS WERE NOT CONSIDERED, THEREFORE, IN CASE, ON RE- VERIFICATION AT THE END OF THE ASSESSING OFFICER, I T CAME TO THE NOTICE THAT THE TAX EFFECT IS MORE OR IT FALLS WITH IN THE AMBIT OF EXCEPTIONS PROVIDED IN THE INSTRUCTION, THEN THE DE PARTMENT WILL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR REC ALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHIN FOU R YEARS OF THIS ORDER. IN VIEW OF THE ABOVE, THE APPEALS OF T HE REVENUE ARE DISMISSED. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. 6. FOR ASSESSMENT YEAR 2004-2005, THE ASSESSEE HAS FILED CROSS OBJECTION I.E. C.O. NO.208/AHD/2013 WHEREIN A SSESSEE HAS TAKEN FOLLOWING GROUND OF APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE A CTION OF ISSUING NOTICE U/S.148 AFTER EXPIRY OF FOUR YEARS F ROM THE END OF THE ASSESSMENT YEAR THOUGH THE ORIGINAL ASSESSMENT WAS MADE U/S.143(3). THEREFORE RE- ASSESSMENT ITSELF IS BAD IN LAW. ITA NOS. 1672 & 1673/AHD/13 & C.O. NO.208/A/13 A.Y. 04-05 & 06-07 (ITO VS. JAY INVESTMENT PVT. LT D.) PAGE 5 6.1 LD. A.R. HAS NOT PRESSED THE CROSS OBJECTION. THUS, THE C.O. FILED BY ASSESSEE IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, BOTH THE REVENUES APPEALS AND AS SESSEES C.O. ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 16 TH DAY OF MAY, 2016. SD/- SD/- (MANISH BORAD) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD: DATED 16/05/2016 TRUE COPY / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0