ATUL M. RAMAIYA, MUMBAI V. ACIT 24(1), MUMBAI

CO 92/MUM/2013

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3280 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: B V JHAVERI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER CO NO. 92/MUM/2013 (IN ITA NO. 3053/MUM/2012) : A.Y : 2008 - 09 ATUL M. RAMAIYA 403, SANJAR ENCLAVE, OPP. MILAP CINEMA, S.V. ROAD, KANDIVALI (W), MUMBAI 400 067 PAN : AAAPR8012P (CROSS OBJECTOR/ORIG. RESPONDENT) VS. ACIT 24(1), MUMBAI (RESPONDENT/ORIG. APPELLANT) ASSESSEE BY : SHRI B.V. JHAVERI REVENUE BY : SHRI RAJESH KUMAR YADAV DATE OF HEARING : 27/11/2017 DATE OF PRONOUNCEMENT : 30 /11/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED CROSS - OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 34, MUMBAI DATED 17 .0 2 .201 2 PERTAINING TO THE ASSESSMENT Y EAR 200 8 - 0 9 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 1 3 .0 9 .201 0 U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 CO NO. 92/MUM/2013 ATUL M. RAMAIYA 2. INITIALLY, THIS CROSS - OBJECTION WAS DISPOSED OFF BY THE TRIBUNAL ALONGWITH THE CORRESPONDING APPEAL OF THE REVENUE VIDE ORDER DATED 28.10.2015, BUT SUBSEQUENTLY, ON A MISCELLANEOUS APPLICATION MOVED BY THE ASSESSEE U/S 254(2) OF THE ACT, THE TRIBUNAL VIDE ITS ORDER IN MA NO. 20/MUM/2016 DATED 13.10.2017 RECALLED ITS ORDER PASSED IN THE CROSS - OBJECTION AND ACCORDINGLY, THE CAPTIONED PROCEEDINGS HAVE BEEN LISTED FOR HEARING. IN THIS BACKGROUND, THE RIVAL PARTIES HAVE BEEN HEARD. 3. IN BRIEF, THE RELEVANT FA CTS ARE THAT THE ASSESSEE IS , INTER - ALIA , ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND IS ALSO CARRYING OUT THE ACTIVITY OF MAKING INVESTMENTS IN SHARES AND SECURITIES. IN ITS RETURN OF INCOME FILED FOR THE INSTANT ASSESSMENT YEAR, ASSE SSEE DECLARED INCOME FROM TRADING IN SHARES AND SECURITIES AS BUSINESS INCOME ; AND, I NSOFAR AS THE ACTIVITY OF INVESTMENT IN SHARES/SECURITIES WAS CONCERNED, ASSESSEE DECLARED LONG TERM CAPITAL LOSS OF RS.13,87,244/ - AS WELL AS SHORT TERM CAPITAL GAIN ON SALE OF SHARES OF RS.17,10,229/ - . IN AN ASSESSMENT COMPLETED U/S 143(3) OF THE ACT DATED 13.09.2010 , THE ASSESSING OFFICER TREATED THE LONG TERM CAPITAL LOSS AND THE SHORT TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES AS FORMING PART OF THE BUSINESS INCOME. WHEN THE MATTER TRAVELLED TO THE CIT(A), HE NOTED THAT ASSESSEE HAD DEALT WITH TWELVE DIFFERENT SCRIPS ; AND , SO FAR AS THE ACTIVITY OF PURCHASE AND SALE OF TEN SCRIPS WAS CONCERNED, CIT(A) HAD ACCEPTED THAT THE SAME WAS ON INVESTMENT ACCOUNT AND T HEREBY ACCEPTED THE STAND OF THE ASSESSEE OF RETURNING THE SHORT TERM CAPITAL GAIN OR LOSS ON SUCH TRANSACTIONS. IN RELATION TO THE OTHER TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. L ARSEN & T OUBRO LTD., THE CIT(A) AFFIRMED THE STAND OF THE ASSESSING OFFICER THAT SUCH TRANSACTIONS WERE TO BE 3 CO NO. 92/MUM/2013 ATUL M. RAMAIYA ASSESSED UNDER THE HEAD BUSINESS. THE REVENUE HAD CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE DECISION OF THE CIT(A) WITH RESPECT TO THE TRANSACTIONS IN TEN SCRIPS WHEREAS IN ITS CROSS - OBJECTION, ASSESSEE HAS ASSAILED THE STAND OF THE CIT(A) WITH RESPECT TO THE OTHER TWO SCRIPS . NOTABLY, THE APPEAL OF THE REVENUE ALREADY LIES DISPOSED OFF VIDE ORDER OF THE TRIBUNAL DATED 28.10.2015 WHEREIN THE DECISIO N OF THE CIT(A) HAS BEEN AFFIRMED. 4. IN THIS BACKGROUND, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE TRANSACTIONS IN THE TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. LARSEN & TOUBRO LTD. WERE ON THE SAME FOOTING AS THE TRANSACTION IN OTHER TEN SCRIPS AND, THEREFORE, THE CIT(A) WAS WRONG IN MAKING A DISTINCTION AND TREATING THE TRANSACTIONS IN THE TWO SCRIPS TO BE IN THE NATURE OF BUSINESS. IN THIS CONTEXT, OUR ATTENTION WAS DRAWN TO THE RELEVANT DISCUSSION MADE BY THE CIT(A) IN PARAGRAPHS 11 AND 12 OF HIS ORDER. A PERUSAL OF THE RELEVANT DISCUSSION BY THE CIT(A) REVEALS THAT THE PRIMARY REASON WEIGHING WITH HIM TO TREAT THE TRANSACTIONS IN THE TWO SCRIPS AS OF BUSINESS NATURE WAS THE SHORT PERIOD OF HOLDING OF SHARES P RIOR TO THEIR SALE. THE RELEVANT TABULATION HAS BEEN ENUMERATED BY THE CIT(A) IN PARA GRAPH 12 OF HIS ORDER , WHOSE PERUSAL SHOWS THE PERIOD OF HOLDING OF THE SHARES IN SOME OF THE TRANSACTIONS IS LESS THAN THREE MONTHS OR JUST ABOUT THREE MONTHS PLUS. IN THIS CONTEXT, WE HAVE ALSO PERUSED THE TABULATION ENUMERATED BY CIT(A) IN PARAGRAPH 3 OF HIS ORDER, WHICH CONTAINS THE DETAILS OF THE TRANSACTIONS MADE BY THE ASSESSEE IN ALL THE TWELVE SCRIPS DURING THE YEAR. INSOFAR AS THE PERIOD OF HOLDING OF THE OTHER TEN SCRIPS IS CONCERNED, THE SAME IS PARI MATERIA TO THE PERIOD OF HOLDING REFLECTED IN THE TRANSACTIONS OF THE TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND 4 CO NO. 92/MUM/2013 ATUL M. RAMAIYA M/S. LARSEN & TOUBRO LTD. RATHER, IN THE CASE OF SOME OF THE OTHER SCRIPS , THE PERIOD O F HOLDING IS EVEN LESS THAN THREE MONTHS AND YET CIT(A) HAS TREATED SUCH TRANSACTIONS AS INVESTMENT TRANSACTION S , AN ASPECT WHICH HAS BEEN APPROVED BY THE TRIBUNAL IN ITS ORDER DATED 28.10.2015 (SUPRA). AT THE TIME OF HEARING, IT WAS PUT ACROSS TO THE LD. DR AS TO WHAT IS THE DISTINCTIVE FEATURE S RELATABLE TO THE TRANSACTIONS IN THE TWO SCRIPS OF M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. LARSEN & TOUBRO LTD. WHICH JUSTIF Y PUTTING THEM ON A DIFFERENT FOOTING THAN THE OTHER TEN SCRIPS . APART FROM REITERATING THAT NO SPECIFIC REASONS HAVE BEEN ASSIGNED AS TO WHY THE SCRIPS WERE DISPOSED - OFF WITHIN A SHORT PERIOD OF HOLDING, THE LD. DR HAS MERELY REITERATED THE STAND OF THE CIT(A). HOWEVER, WE FIND THAT THE PERIOD OF HOLDING EVEN WITH REG ARD TO THE OTHER TEN SCRIPS IS OF THE SAME PATTERN AS IN THE CASE OF THE INSTANT TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. LARSEN & TOUBRO LTD. AND, THEREFORE, IN OUR VIEW, IT WOULD BE INAPPROPRIATE TO TREAT THE TRANSACTIONS IN THE TWO SC RIPS ON A DIFFERENT PEDESTAL THAN THE TRANSACTIONS IN THE OTHER TEN SCRIPS . THEREFORE, ON THIS POINT, AND CONSIDERING THAT THE TRIBUNAL IN ITS ORDER DATED 28.10.2015 (SUPRA) HAS ALREADY APPROVED THE DECISION OF THE CIT(A) QUA THE TRANSACTIONS IN THE OTHER TEN SCRIPS , WE FIND NO JUSTIFIABLE REASONS FOR THE CIT(A) TO HAVE TREATED THE TRANSACTIONS IN THE TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. LARSEN & TOUBRO LTD. DIFFERENTLY. THUS, WE SET - ASIDE THE ORDER OF CIT(A) ON THIS POINT AND DIREC T THE ASSESSING OFFICER TO TREAT THE TRANSACTIONS OF THE ASSESSEE IN THE OTHER TWO SCRIPS , NAMELY, M/S. INFOSYS TECHNOLOGIES LTD. AND M/S. LARSEN & TOUBRO LTD. ALSO AS THAT OF A INVESTOR AND NOT AS A TRADER. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. 5 CO NO. 92/MUM/2013 ATUL M. RAMAIYA 5. RES ULTANTLY, THE CROSS - OBJECTION FILED BY THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H NOVEMBER, 2017 SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H NOVEMBER , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI