SATISHCHANDRA S DOSHI, MUMBAI V. ASST CIT 21(3), MUMBAI

CO 251/MUM/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0260 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 5572/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) DY. CIT, CIRCLE-21(3), ROOM NO. 501, BLDG., 5 TH FLOOR, C-11, PRATYAKSH KAR BHAVAN, BKC, BANDRA (E), MUMBAI-51 / VS. SATISHCHANDRA S. DOSHI ETERNIA-A/1602, HIRANANDANI GARDENS, MAIN STREET, POWAI, MUMBAI-400 076 ./! ./PAN/GIR NO. AACPD 7600 F ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) #$ ./ CROSS OBJECTION NO. 251/MUM/2014 (ARISING OUT OF ITA NO.5572/MUM/2013) ( / ASSESSMENT YEAR: 2009-10) SATISHCHANDRA S. DOSHI ETERNIA-A/1602, HIRANANDANI GARDENS, MAIN STREET, POWAI, MUMBAI-400 076 / VS. DY. CIT, CIRCLE-21(3), ROOM NO. 501, BLDG., 5 TH FLOOR, C-11, PRATYAKSH KAR BHAVAN, BKC, BANDRA (E), MUMBAI-51 ./! ./PAN/GIR NO. AACPD 7600 F (#$/ CROSS OBJECTOR ) : ( #$ ' / RESPONDENT ) ' ( ) / REVENUE BY : SHRI NEIL PHILIP *+,-. ( ) / ASSESSEE BY : SHRI DEEPAK SHAH & SHRI TEJ SHAH / *'0 ( .1 / DATE OF HEARING : 05.01.2015 234 ( .1 / DATE OF PRONOUNCEMENT : 08.01.2015 2 ITA NO. 5572/M/13 & CO NO.251/M/14 (A.Y. 2009-10) SATISHCHANDRA S. DOSHI 5 / O R D E R PER SANJAY ARORA, A. M.: THESE ARE CROSS APPEALS, I.E., BY THE REVENUE AND T HE ASSESSEE, ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2 2, MUMBAI (CIT(A) FOR SHORT) DATED 03.06.2013, ALLOWING THE ASSESSEES APPEAL CO NTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FO R THE ASSESSMENT YEAR (A.Y.) 2009-10 VIDE ORDER DATED 26.12.2011. REVENUES APPEAL (IN ITA NO. 5572/MUM/2013) 2. THE ISSUE ARISING IN THE INSTANT CASE IS THE VAL IDITY OR OTHERWISE IN LAW, AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF THE DIRECTI ON QUA THE LOSS AND GAIN AT RS.33,15,383/- AND RS.77,56,256/-, RETURNED BY THE ASSESSEE AS SHORT TERM CAPITAL LOSS (STCL) AND LONG TERM CAPITAL GAIN (LTCG) RESPECTIVE LY, ON THE PURCHASE AND SALE OF SHARES, FOR BEING ACCEPTED AS SUCH, AS AGAINST BUSI NESS INCOME BY THE ASSESSING AUTHORITY. THE ASSESSEE, ALSO ENGAGED IN DEALING OF FUTURES AN D OPTIONS IN SHARES, I.E., TRADING IN DERIVATIVES, MAINTAINS SEPARATE BOOKS OF ACCOUNTS O F HIS SAID BUSINESS ACTIVITY, THE RESULTS OF WHICH WERE RETURNED AND ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. HOWEVER, NOTWITHSTANDING THE SHARES BE ING REFLECTED AS AN INVESTMENT IN HIS ACCOUNTS, THE SAME WERE CONSIDERED AS A PART OF THE ASSESSEES TRADING STOCK, SO THAT THE ENTIRE INCOME, WHETHER SPECULATIVE OR DELIVERY BASE D, CONSIDERED AS PART OF THE ASSESSEES BUSINESS INCOME FROM TRADING IN SHARES BY THE ASSES SING OFFICER (A.O.). IN APPEAL, THE LD. CIT(A) NOTED THAT BOTH IN THE CA SE OF THE ASSESSEE AS WELL AS HIS SON, SHRI HITESH SATISHCHANDRA DOSHI, THE TRIBUNAL HAD FOR EARLIER YEARS, BEING A.YS 2003-04, 2004-05 AND 2006-07, HELD THAT THE SHARES WERE HELD BY THEM AS INVESTMENTS, EVEN AS REFLECTED BY THEM IN THEIR RESPECTIVE ACCOU NTS AND, THEREFORE, THE SAME CANNOT BE TREATED AS BUSINESS INCOME. THE A.O. HAVING NOT BRO UGHT OUT ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, HE WAS BOUND BY THE ORDE R OF THE TRIBUNAL AND, THEREFORE, DIRECTED FOR THE PROFIT OR LOSS, AS THE CASE MAY BE , ON THE SALE OF THE SHARES, TO BE ASSESSED U/S.45 UNDER THE HEAD CAPITAL GAINS. 3 ITA NO. 5572/M/13 & CO NO.251/M/14 (A.Y. 2009-10) SATISHCHANDRA S. DOSHI 3. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE (AR ) WOULD TAKE US THROUGH THE RELEVANT PART OF THE ORDER BY THE TRIBUNAL IN THE A SSESSEES OWN CASE FOR EARLIER YEARS, I.E., FOR A.YS. 2004-05 AND 2006-07 (IN ITA NOS. 6496, 66 04/MUM/2009 AND OTHERS DATED 30.03.2012/PB PGS. 47-61). THE TRIBUNAL HAD IN FACT FOLLOWED THE DECISION BY THE TRIBUNAL IN THE CASE OF THE ASSESSEES SON IN-AS-MUCH AS THE SAME IS PARI MATERIA , DISCUSSING THE MATTER AT CONSIDERABLE LENGTH. THE FIRST APPELLATE AUTHORITY, ACCEPTING THE ASSESSEES CASE IN PRINCIPLE, HOWEVER, HELD THAT THE GAIN ARISING O N THE SHARES SOLD WITHIN A PERIOD OF 30 DAYS WOULD BE BUSINESS INCOME. THE SAME DID NOT FIN D FAVOUR WITH THE TRIBUNAL, WHICH REMOVED THIS ARTIFICIAL BARRIER OF 30 DAYS, SO THAT THE ENTIRE GAIN, WHETHER ARISING WITHIN A PERIOD OF 12 MONTHS OR THEREAFTER, WOULD BE CAPITAL GAINS. NO DIFFERENCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE HAVING BEEN BROUGHT OUT, THE A.O. WAS BOUND TO FOLLOW THE ORDER BY THE TRIBUNAL, AND THE PLEA THAT THE REVENU E HAD APPEALED AGAINST THE SAME BEFORE THE HONBLE JURISDICTIONAL HIGH COURT COULD NOT BE A GROUND FOR MAKING THE ASSESSMENT IN THE MANNER DONE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHER HAND, RELY ON THE ASSESSMENT ORDER. AS CLARIFIED THEREIN, RELYING ON THE DECISION BY THE TRIBUNAL IN THE CASE OF STAR INDIA LTD. (IN ITA NO. 7476/MUM/2007 AND 3201/MUM/2010 DATED 3 0.11.2011), THE REVENUE, WHERE IT HAD APPEALED AGAINST THE ORDE R BY THE TRIBUNAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, COULD CONTINUE TO FRAME ASSESSMENTS IN CONFORMITY WITH ITS STAND, NOTWITHSTANDING THE ORDER BY THE TRIBUNAL TO THE CONTRARY. THIS WOULD IN FACT BE NECESSARY FOR IT TO KEEP THE MATTER ALIVE. HOWEVER, ON MERITS, THE STCG AND LTCG ARISING ON A TOTAL OF 26 TRANSACTIONS ONLY, HE COUL D NOT HOWEVER RENDER ANY SATISFACTORY EXPLANATION ON BEING QUESTIONED IN THE MATTER BY TH E BENCH. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE ARE, TO BEGIN WITH, APPRECIATIVE OF THE REVENUE S CONCERN TO KEEP AN ISSUE, DECIDED AGAINST IT BY THE TRIBUNAL, ALIVE, HAVING A PPEALED AGAINST THE SAME BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. THAT, HOWEVER, E VEN AS OBSERVED BY THE BENCH DURING 4 ITA NO. 5572/M/13 & CO NO.251/M/14 (A.Y. 2009-10) SATISHCHANDRA S. DOSHI HEARING, CANNOT BE A GROUND FOR SUSTAINING ITS ACTI ON BY THE FIRST APPELLATE AUTHORITY, OR BY THE TRIBUNAL FOR THAT MATTER, WHICH COULD ONLY BE O N THE BASIS OF THE DECISION BY A HIGHER APPELLATE FORUM, I.E., THE HONBLE HIGH COURT OR TH E HONBLE SUPREME COURT. ACCORDINGLY, WE SEE NO REASON FOR NOT FOLLOWING THE ORDER BY THE TRIBUNAL IN THE ASSESSEES CASE FOR EARLIER YEARS IN THE ABSENCE OF ANY DIFFERENCE IN T HE FACTS AND CIRCUMSTANCES OF THE CASE WITH REFERENCE TO THE PREVIOUS YEARS, FOR WHICH THE TRIBUNAL HAS HELD IN ASSESSEES FAVOUR. FURTHER, THE VERY FACT THAT THERE HAVE BEEN ONLY 36 TRANSACTIONS DURING THE WHOLE YEAR WOULD ITSELF WEIGH CONSIDERABLY IN FAVOUR OF THE SA ID DECISION, I.E., FOR TREATING THE GAIN AS ARISING ON INVESTMENTS. NO DOUBT, AS CLARIFIED BY T HE TRIBUNAL IN THE CASE OF ASST. CIT VS. V. NAGESH (IN ITA NO.5410/MUM/2008 DATED 24.09.2009), THAT T HE TREATMENT BY THE ASSESSEE IN ITS BOOKS IS NOT DETERMINATIVE OF THE M ATTER, BUT THEN IT IS INCUMBENT ON THE REVENUE TO SHOW AS TO HOW THE SAID TREATMENT IN THE BOOKS IS NOT PROPER OR REFLECTIVE OF THE CORRECT AND TRUE STATE OF AFFAIRS, AND WHICH IT HAS FAILED TO IN THE INSTANT CASE. WE DECIDE ACCORDINGLY. ASSESSEES CO NO. 251/MUM/2014 WE HAVING UPHELD THE IMPUGNED ORDER ON MERITS, DO N OT THEREFORE CONSIDER IT NECESSARY TO DECIDE THE ASSESSEES CROSS OBJECTION (C.O.) CHALLENGING THE MAINTAINABILITY OF THE REVENUES APPEAL IN VIEW OF INSTRUCTION NO.3 OF 2011 DATED 09.12.2011 ISSUED U/S.268A OF THE ACT. NEEDLESS TO ADD THOUGH, IF AND WHERE, OUR ORDER BEING APPEALABLE AND, THEREFORE, LIABLE TO BE REVERSED, IN FULL OR I N PART IN APPEAL, THE ASSESSEE SHALL IN THAT CASE BE AT LIBERTY TO SEEK RESTITUTION AND ADJUDICA TION OF ITS C.O., THUS PRECLUDING ANY PREJUDICE BEING CAUSED TO IT. THE ASSESSEES C.O. I S ACCORDINGLY DISMISSED AS INFRUCTUOUS. 5. IN THE RESULT, BOTH THE REVENUES APPEAL AND THE ASSESSEES C.O. ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 08, 2 015 SD/- SD/- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / 60 MUMBAI; 7* DATED : 08.01.2015 5 ITA NO. 5572/M/13 & CO NO.251/M/14 (A.Y. 2009-10) SATISHCHANDRA S. DOSHI '.*. ./ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. / 8. ( ) / THE CIT(A) 4. / 8. / CIT - CONCERNED 5. 9': #.*+ , 1 +4 , / 60 / DR, ITAT, MUMBAI 6. <, =0 / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , / 60 / ITAT, MUMBAI