The ITO, Ward-3(1), Surat V. Shri Rajendra S.Shah L/R. of late Sugamchand C.Shah, Surat

ITA 1041/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0050 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 10-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: R B SHAH
• Keywords: Business income
• Section: 260A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1041/AHD/2013 / ASSTT. YEAR: 2009-2010 ITO, WARD - 3(1) SURAT. VS SHRI RAJENDRA S. SHAH L/R. OF LATE SHRI SUGAMCHAND CHIMANLAL SHAH M-12, MEGH MAYUR PLAZA PARLE POINT SURAT 395 003. PAN : ADQPS 3606 J ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI ANTONY PARIATH, SR.DR ASSESSEE BY : SHRI R.B. SHAH, AR / DATE OF HEARING : 10/11/2016 / DATE OF PRONOUNCEMENT: 11 /11/2016 $%/ O R D E R REVENUE IS APPEAL BEFORE THE TRIBUNAL AGAINST THE O RDER OF LD.CIT(A)- IV, SURAT DATED 28.1.2013 PASSED FOR THE ASSTT.YEAR 2009-10. 2. THOUGH REVENUE HAS TAKEN THREE GROUNDS OF APPEAL , BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE LD.CIT(A) H AS ERRED IN TREATING THE GAIN ARISING TO THE ASSESSEE ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME ASSESSED BY THE AO. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. SHRI RAJENDRA S. SHAH IS THE LEG AL HEIRS OF SHRI SUGANCHAND ITA NO.1041/AHD/2013 2 CHIMANLAL SHAH. SHRI SUGANCHAND CHIMANLAL SHAH WA S ENGAGED IN THE TRADING OF SHARES. HE HAS MADE INVESTMENT ALSO. H E HAS SHOWN SHORT-TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN IN HIS RETURN O F INCOME. THE LD.AO WITHOUT RECORDING ANY INDEPENDENT FINDING OBSERVED THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09 HIS CLAIM FOR INVESTMENT WAS NOT ACCEPT ED, HE WAS TREATED AS A TRADER. THE GAIN/LOSS FROM PURCHASE AND SALES OF S HARES WAS ASSESSED AS BUSINESS INCOME. ACCORDINGLY, IN THIS YEAR ALSO, T HE LD.AO HAS MADE SIMILAR TREATMENT. 4. I HAVE BEEN APPRAISED THAT SIMILAR ISSUE WAS TRA VELLED UPTO THE TRIBUNAL IN THE ASSTT.YEAR 2007-08 AND 2008-09 AND IN BOTH T HE YEARS, THE TRIBUNAL HAS TREATED THE ASSESSEE AS INVESTOR AND HAS ACCEPTED H IS CLAIM FOR SHORT-TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN/LOSS. THE FIND ING OF THE TRIBUNAL IN THE ASSTT.YEAR 2007-08 READS AS UNDER: 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT. WE FIND THAT IN THE AFORESAID DECISION DATED 29.1.2010 IN ITA NOS.3554/ AHD/2008, 4024/AHD/2008, 2219/AHD/2009 AND 1932/AHD/2009,FOR THE AYS 2005- 06 & 2006-07,NOW REPORTED IN 37DTR(AHD.)(TRIB)345, IN THE ASSESSEES OWN CASE, THE TRIBUNAL FOUND THAT THE AS SESSEE HAD SHOWN THE TRANSACTIONS IN SHARES AS INVESTMENT AND NOT AS STOCK-IN-TRADE CONSISTENTLY FOR SEVERAL YEARS IN THE PAST AND THE DEPARTMENT DID NOT CHALLENGE THE BOOKKEEPING OR ACCOUNTING OF SHARES A S INVESTMENT. THE ENTIRE PORTFOLIO HAD BEEN VALUED AT COST AS AT THE END OF THE ACCOUNTING YEAR. ACCORDINGLY, THE TRIBUNAL CONCLUDED THAT IF I N THE PAST, THE DEPARTMENT HAD ACCEPTED THE SALE OF SHARES OF HOLDI NG OF MORE THAN A YEAR AS INVESTMENT AND PROFITS THEREON HAS BEEN ASS ESSED UNDER THE HEAD CAPITAL GAINS, THEN THERE WAS NO REASON TO H OLD DIFFERENTLY THIS YEAR.AS REGARDS SHORT-TERM CAPITAL GAINS, THE ITAT OBSERVED THAT THE ASSESSEE DISCHARGED THE ONUS OF SHOWING THAT HE WAS MAKING INVESTMENT, BUT THE REVENUE WAS ABLE TO SHOW THAT T HERE WERE HIGH FREQUENCIES AND LOW HOLDINGS IN MANY TRANSACTIONS O F SHARES, INDICATING THAT THE ASSESSEE HAD SOME INTENTION OF PURCHASING AND SELLING SHARES AS A TRADER. CONSIDERING THE TOTALIT Y AND PECULIARITY OF ITA NO.1041/AHD/2013 3 THE FACTS OF THE CASE, IT WAS HELD THAT THE ASSESSE E WAS NEITHER FULLY ACTING AS A TRADER NOR AS AN INVESTOR. THEREFORE, A CRITERION WAS FIXED FOR DETERMINING AS TO WHEN HE IS ACTING AS TRADER A ND WHEN AS INVESTOR. ACCORDINGLY, THE TRIBUNAL DIRECTED THAT WHERE SHARE S WERE HELD FOR MORE THAN A MONTH, THESE SHOULD BE TREATED AS INVES TMENT AND ON THEIR SALE SHORT-TERM CAPITAL GAINS SHOULD BE CHARGED. WH EN SHARES WERE HELD FOR LESS THAN A MONTH, GAIN ON THEM SHOULD BE TREATED AS PROFIT FROM BUSINESS, THE ITAT CONCLUDED. INDISPUTABLY, FA CTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE S IMILAR TO THE FACTS AND CIRCUMSTANCES OBTAINING IN THE PRECEDING YEARS. SINCE THE LD. CIT(A) MERELY FOLLOWED THE DECISION DATED 29-01-201 0 OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE AYS 2005-06 AND 200 6-07 IN ITA NOS.3554/AHD/2008, 4024/AHD/2008, 2219/AHD/2009 AND 1932/AHD/2009, IN THE ABSENCE OF ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). CONSEQUENTLY, FOLLO WING THE VIEW TAKEN BY A CO-ORDINATE BENCH IN THEIR AFORESAID DECISION, WE HAVE NO ALTERNATIVE BUT TO REJECT GROUND NOS. 1 & 2 IN THE APPEAL. SIMILARLY, IN THE ASSTT.YEAR 2008-09 THE FINDING O F THE TRIBUNAL READS AS UNDER: 5. WE HAVE HEARD THE REVENUE AND PERUSED THE CASE FILE. NONE HAS COME PRESENT AT ASSESSEES BEHEST DESPITE SERVICE O F NOTICE. WE PROCEED EX-PARTE. IT TRANSPIRES THAT THE COMMISS IONER OF INCOME TAX(A) HAS FOLLOWED THE TRIBUNALS ORDER IN DECEASE D ASSESSEES OWN CASE RELATING TO PRECEDING ASSESSMENT YEARS IN DIRE CTING THE ASSESSING OFFICER TO TREAT PROFITS ARISING FROM SHARES HELD L ESS THAN 30 DAYS ONLY AS BUSINESS INCOME AND EXCEEDING THE SAID PERIOD TO BE CAPITAL GAINS. THERE IS NO DISTINCTION ON FACTS FORTHCOMING. THE R EVENUE MERELY PLEADS THAT ITS APPEAL U/S. 260A OF THE ACT IS PEND ING BEFORE THE HONBLE HIGH COURT. WE DO NOT SEE THE SAME TO BE A PLAUSIBL E EXPLANATION FOR ADOPTING A DIFFERENT VIEW. MORE SO, WHEN THE SAME H AS ARISEN IN ASSESSEES OWN CASE IN PRECEDING ASSESSMENT YEARS W ITHOUT THESE BEING ANY CHANGE IN FACTS AND CIRCUMSTANCES. WE ADOPT CON SISTENCY IN THESE FACTS AND REJECT THE REVENUES SOLE SUBSTANTIVE GRO UND. ITA NO.1041/AHD/2013 4 5. IN VIEW OF THE ABOVE FACTS, I FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A). APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 11/11/2016