The DCIT, Circle-5, Ahmedabad V. Shri Balkrishna F.Shah, Ahmedabad

ITA 101/AHD/2011

• Counselvise Citation: 10120514 RSA 2011
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI MUKUL KR. SHRAWAR JM & SHRI B P JAIN ACCOUNTANT MEMBER ITA NO.101/AHD/2011 (ASSESSMENT YEAR:-2006-07) THE DEPUTY COMMISSIONER OF INCOME- TAX, CIRCLE-5, AHMEDABAD V/S SHRI BALKRISHNA F SHAH, 51, SAHJANAND SHOPPING CENTRE, SHAHIBAG ROAD, SHAHIBAG, AHMEDABAD PAN: ACEPS 6165 J [APPELLANT] [RESPONDENT] ITA NO.102/AHD/2011 (ASSESSMENT YEAR:-2006-07) THE DEPUTY COMMISSIONER OF INCOME- TAX, CIRCLE-5, AHMEDABAD V/S SHRI OMPRAKASH F SHAH, 51, SAHJANAND SHOPPING CENTRE, SHAHIBAG ROAD, SHAHIBAG, AHMEDABAD PAN: ACEPS 6164 K [APPELLANT] [RESPONDENT] APPELLANTS BY :- SHRI AWIJIT RAKSHIT, SR. DR RESPONDENT BY:- SHRI S N DIVATIA, AR DATE OF HEARING:- 30-12-2011 DATE OF PRONOUNCEMENT:- 30-12-2011 O R D E R PER B P JAIN (AM) :- THESE TWO APPEALS OF THE REVENUE ARISE FROM TWO DIFFERENT ORDERS OF LEARNED CIT(A)-XI, AHM EDABAD EACH DATED 01-11-2010. SINCE THE ISSUE IN BOTH THE APPEA LS IS IDENTICAL, AND THEREFORE, BOTH THE APPEALS ARE TAKEN UP BY THI S CONSOLIDATED ORDER. 2 2 FIRST OF ALL, WE TAKE UP THE APPEAL OF THE REVENU E IN ITA NO.101/AHD/2011. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS:- [1] THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14,58,931/- BY DIRECTING THE AO TO ASSESS THE PR OFIT EARNED BY ASSESSEE FROM PURCHASE & SALE TRANSACTIONS OF SH ARES AS STCG AND NOT AS BUSINESS INCOME. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [3] IT IS THEREFORE, PRAYED THAT THE ORDER OF THE C OMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD MAY BE SET ASIDE AND T HAT OF THE AO BE RESTORED. 3 THE BRIEF FACTS ARE THAT THE ASSESSEE HAS ENTERED INTO TRANSACTIONS OF PURCHASE AND SALE OF EQUITY. THE AO OBSERVED FROM THE CHART SUBMITTED BY THE ASSESSEE THAT THE M AGNITUDE OF SOME OF THE TRANSACTIONS IS VERY HIGH E.G. IN THE C ASE OF SHARES OF AIA ENGG. LTD. ON 7-12-2005 THERE ARE PURCHASE TRAN SACTIONS OF MORE THAN 6250 NUMBER OF SHARES INVOLVING INVESTMEN T OF RS.20,13,250/-. THE ASSESSEE HAS EARNED SHORT TERM CAPITAL GAINS OF RS.14,58,931/- AND LONG TERM CAPITAL GAINS OF RS.27,764/- HAS BEEN SUBMITTED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS REGULARLY MAKING INV ESTMENT IN SHARES AND HAVING SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS. THE ASSESSEE IS NOT ENGAGED IN DEALI NG IN SHARES AND SECURITIES. THE AO, IN VIEW OF THE CIRCULAR NO. 4 OF 2007 DATED 15-06-2007 AND IN VIEW OF THE DECISIONS OF VA RIOUS COURTS OF LAW, VIDE PARA 3.6 AND 3.7 OF HIS ORDER, OBSERVE D THAT THE 3 ASSESSEE IS BUYING AND SELLING THE SHARES AS IF THE Y WERE HIS STOCK IN TRADE FOR THE PURPOSE OF EARNING PROFIT. THE PRO FIT SO EARNED NEEDS TO BE TAXED AS INCOME FROM BUSINESS. ACCORDIN GLY, THE SAID SHORT TERM CAPITAL GAINS WAS TREATED AS BUSINESS IN COME VIDE PARA 3 OF HIS ORDER. 4 THE LEARNED CIT(A) ACCEPTED THE EXPLANATION OF TH E ASSESSEE THAT THE ASSESSEE HAS SOLD SCRIPS OF 13 CO MPANIES. NUMBER OF SALE TRANSACTIONS IS 20 AND OUT OF WHICH, 8 ARE SCRIPS OF AIA ENGG. LTD. THE PURCHASE OF SHARES WAS NOT OU T OF BORROWED FUNDS. ACCORDINGLY, THE AO WAS DIRECTED TO ASSESS THE IMPUGNED AMOUNT AS SHORT TERM CAPITAL GAINS AND NOT AS BUSINESS INCOME. 5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNE D CIT(A) THAT THE ASSESSEE HAS SOLD SCRIPS OF 13 COMPANIES HAVING TOTAL TRANSACTIONS AT 20. THE PURCHASE OF SHARES WAS NOT OUT OF BORROWED FUNDS. THEREFORE, CIRCULAR NO.4 OF 2007 DA TED 15-06- 2007 OF CBDT CANNOT BE MADE APPLICABLE, SINCE THE A O HAS NOT POINTED OUT ANY MOTIVE OF PURCHASE AND SALE OF SHAR ES FOR EARNING THE PROFIT. NOTHING HAS BEEN MENTIONED ABOUT THE MA NNER OF MAINTAINING OF THE BOOKS OF ACCOUNT OR HAVE BEEN HE LD AS STOCK IN TRADE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CASES RELIED UPON BY THE AO CANNOT BE MADE APPLICABLE IN THE PRE SENT FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, WE FIND N O INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THUS, ALL THE GROU NDS OF THE REVENUE ARE DISMISSED. 4 6 NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.102/AHD/2011. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN REVENUES APPEAL IN THE CASE OF DCIT V S. SHRI BALKRISHNA F SHAH WHICH HAS BEEN DECIDED BY US HERE INABOVE IN ITA NO.101/AHD/2011. FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE REVENUE. 7 IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-12-2011 SD/- SD/- (MUKUL KR.SHRAWAT) JUDICIAL MEMBER (B P JAIN) ACCOUNTNAT MEMBER DATE : 30-12-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI BALKRISHNA F SHAH, 51, SAHJANAND SHOPPING C ENTRE, SHAHIBAG ROAD, SHAHIBAG, AHMEDABAD 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XI, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR