COMMISSIONER OF INCOME TAX AHMEDABAD III V. NITA M PATEL

TAXAP/71/2013

AI Insights

The case revolves around the classification of income from the sale of shares by Nita M Patel during the Assessment Year 2005-06. The Assessing Officer initially treated this income as business income, but the CIT(A) and subsequently the ITAT reclassified it as long-term capital gains, following the precedent set in the previous assessment year where the same shares were treated as investments. The Commissioner of Income Tax, dissatisfied with this reclassification, appealed to the Gujarat High Court, which upheld the lower authorities' decisions.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 728751 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 19-08-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: PAURAMI SHETH
• Keywords: Assessing Officer; Business income; CIT(A); Income tax appellate tribunal; Long Term Capital Gain
• Section: 143(3)

Judgement Text

"O/TAXAP/71/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 71 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== COMMISSIONER OF INCOME TAX AHMEDABAD III....Appellant(s) Versus NITA M PATEL....Opponent(s) ====================================== Appearance: MS PAURAMI B SHETH, ADVOCATE for the Appellant(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI Date : 19/08/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. The present Tax Appeal has been preferred by the appellant-revenue challenging the impugned judgment and order dated 15/05/2012 passed by the Income Tax Appellate Page 1 of 3 O/TAXAP/71/2013 JUDGMENT tribunal in ITA No.937/AHD/2009 for the Assessment Year 2005-06. 2. With respect to the Assessment Year 2005-06, the assessee filed the return of the income showing the total taxable income at Rs.19,71,150/-. At the end of the assessment proceedings, the Assessing Officer passed an order of assessment dated 26/12/2007 directing to treat the income of Rs.2,75,44,976/- as long term capital gain instead of business income. Being aggrieved and dissatisfied with the order of assessment passed by the Assessing Officer treating the income of Rs.2,75,44,976/- as long term capital gain instead of business income, the assessee preferred appeal before the CIT(A) and considering the fact that in the immediate earlier Assessment Year 2004-05 the Assessing Officer accepted the very shares as investment and in the subsequent years the very shares were sold, the CIT(A) directed to delete the said additions by observing that the Assessing Officer was not justified to treat it as short term capital gain and long term capital gain as trading receipts. Being aggrieved and dissatisfied with the order passed by the CIT(A) in deleting the aforesaid additions, the revenue preferred appeal before the Income Tax Appellate Tribunal and by impugned judgment and order, the Income Tax Appellate Tribunal has dismissed the said appeal confirming the order passed by the CIT(A). Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT the revenue has preferred the present Tax Appeal. 3. Heard Ms. Paurami Sheth, learned Counsel appearing on behalf of the appellant-revenue and considered the impugned Page 2 of 3 O/TAXAP/71/2013 JUDGMENT judgment and order passed by the Income Tax Appellate Tribunal, CIT(A) as well as the Assessing Officer. It is not in dispute that with respect to the very shares, which were sold during the assessment year in question, in the Assessment Year 2004-05, the same were treated as investment in shares. Under the circumstances, when in the immediate earlier year i.e. Assessment Year 2004-05 and with respect to the very shares, the Assessing Officer had accepted the same as investments in shares and when these very shares came to be sold by the assessee during the year under consideration, no error and/or illegality has been committed by the CIT(A) as well as Income Tax Appellate Tribunal in deleting the additions made by the Assessing Officer and treating it as business income for the purpose of short term capital gain and long term capital gain. It is not disputed by Ms. Sheth, learned Counsel appearing on behalf of the appellant that with respect to the Assessment Year 2004-05, the very shares, which were sold during the Assessment Year in question were treated as investment. 4. Considering the aforesaid facts and circumstances of the case, we see no reason to interfere with the impugned judgment and order passed by the Income Tax Appellate Tribunal. No question of law, much less, substantial question of law arises in the present appeal and the same requires to be dismissed and is accordingly dismissed. (M.R.SHAH, J.) (MS SONIA GOKANI, J.) Siji Page 3 of 3 "