DCIT, Circle - 33, Kolkata, Kolkata V. Mrs. Namita Agarwal, Kolkata

ITA 1043/KOL/2011

• Counselvise Citation: 104323514 RSA 2011
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: S M SURANA
• Keywords: Business income; Question of law

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A, KOL KATA [ , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SRI N.VIJAYAKUMARAN, JUDICIAL MEMBER & SRI C.D. RAO, AC COUNTANT MEMBER $ $ $ $ / ITA NO. 1043 (KOL) OF 2011 %& '( / ASSESSMENT YEAR 2008-09 DY. COMMISSIONER OF INCOME-TAX CIRCLE-33, KOLKATA. MRS. NAMITA AGARWAL, KOLKATA, (PAN-ACNPA0722G) (+, / APPELLANT ) - - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI S.K. ROY /0+, 1 2 ' / FOR THE RESPONDENT: / SRI S.M. SURANA 3 1 !# / DATE OF HEARING : 14/11/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 29/12/2011 '5 / ORDER ( . .. . ! ! ! !. .. . ), '# (C.D. RAO), ACCOUNTANT MEMBER : THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE ORDER DATED 23.05.2011 OF LD. C.I.T.(A)-XX, KOLKATA PERTAINING TO ASSESSMENT YEAR 2008-09. THE ONLY GROUND RAISED IN THIS APPEAL BY THE DEPARTMENT READS AS UNDER :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE , WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING TO A.O. TO TREAT THE PROFIT & LOSS FROM SHARE TRADING AS CAPITAL GAINS/LOSS INSTEAD OF BUSINESS INCOME/LOSS WHEN THE ASSESSEE BEING A FULL TIME EMPLOYEE OF A SHARE BROKING COMPANY WAS USING HER PLACE OF WORK FOR DAY TRADING IN SHARES; FUTURES AND OPTIONS; MUTUAL FUND S AND SHARE TRADING BOTH BY HERSELF AND THROUGH PORTFOLIO MANAGER IN GOOD FREQU ENCY, VOLUME AND NUMBER OF SCRIPS AND HAD ALSO BORROWED FUND. 2. THE LD. A.O. OBSERVED THAT THE ASSESSEE WAS ENG AGED IN SHARE TRADING OF NON- DELIVERY BASED SHARES, FUTURE & OPTIONS AND CAR REN TAL. THE ASSESSEE HAS SHOWN SHORT- TERM AND LONG-TERM CAPITAL GAINS DEPENDING ON THE P ERIOD OF HOLDING FOR WHICH SHE HAS UTILIZED THE SERVICES OF PORTFOLIO MANAGER M/S. DSP MERILL LYNCH WEALTH MANAGEMENT. BESIDES, THE ASSESSEE WAS ALSO EARNING SALARY INCOM E FROM M/S. VOGUE COMMERCIAL (P) LTD. AND INCOME FROM OTHER SOURCES. THE LD. A.O. FU RTHER OBSERVED THAT THE ASSESSEE AS 2 AN EMPLOYEE OF M/S. VOGUE COMMERCIAL (P) LTD. HAS E NTERED INTO SHARES AND FUTURE & OPTIONS FROM HER PLACE OF EMPLOYMENT THROUGH HER EM PLOYER AND ENGAGED PMS COMPANY M/S. DSP MERILL LYNCH WEALTH MANAGEMENT TO DO SHARE TRADING ON HER BEHALF. THE ASSESSEE HAD DECLARED THE PROFIT EARNE D ON DAY TRADING AND FUTURE & OPTIONS AS BUSINESS INCOME, BUT THE PROFIT EARNED ON SHARE DEALINGS THROUGH THE PORTFOLIO MANAGER WAS SHOWN AS CAPITAL GAINS, ALTHO UGH THE FREQUENCY AND VOLUME OF TRANSACTIONS WERE QUITE LARGE AND SALE PROCEEDS FRO M SHARES HAVE BEEN REINTRODUCED FOR PURCHASE OF SHARES/MUTUAL FUNDS. THE ASSESSEE HAS A LSO TAKEN LOAN FOR THE SAID PURPOSE. ON THE ABOVE FACTS, THE LD. A.O. HELD THAT THE ASSE SSEE WAS A TRADER IN SHARES AND NOT AN INVESTOR AND HENCE THE ENTIRE SHORT-TERM AND LONG-T ERM CAPITAL GAINS DECLARED BY THE ASSESSEE AGGREGATING TO RS.39,80,319/- WAS BROUGHT TO TAX AS BUSINESS INCOME. 3. ON APPEAL BEFORE THE LD. C.I.TD.(A), THE ASSESS EE BY RELYING ON SEVERAL JUDICIAL PRONOUNCEMENTS MENTIONED AT PAGE-5 OF THE APPELLATE ORDER OBJECTED TO THE CONCLUSION ARRIVED AT BY THE LD. A.O. AND REQUESTED FOR ACCEPT ANCE OF HER CLAIM OF CAPITAL GAINS. THE LD. C.I.T.(A) AFTER DISCUSSING AND ANALYZING IN DET AIL THE SUBMISSIONS OF THE ASSESSEE AND TAKING INTO CONSIDERATION THE RATIO LAID DOWN IN VA RIOUS CASE LAWS RELIED UPON HELD THAT THE LD. A.O. WAS NOT JUSTIFIED IN HOLDING THE CAPIT AL GAINS AS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. HE, THEREFORE, DIRECTED TH E A.O. TO TREAT THE PROFIT ON SALE OF INVESTMENT AS LONG-TERM CAPITAL GAIN AND SHORT-TERM CAPITAL GAIN, AS DECLARED BY THE ASSESSEE. HENCE THIS APPEAL BY THE DEPARTMENT. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LD. A.O., WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. C.I.T.(A). HE ALSO FILED A COPY OF ORDE R OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GOPAL PUROHIT DATED 15/11/2010 BEFORE US AND SUBMITTED THAT THE HONBLE SUPREME COURT DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE SAID C ASE, REPORTED IN (188 TAXMAN 140 (BOM)/ 228 CTR 582 (BOM)]. HE SUBMITTED THAT ON TH E FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, THE RATIO OF THE DECISION OF HONB LE BOMBAY HIGH COURT, DULY UPHELD BY THE HONBLE SUPREME COURT, IS SQUARELY APPLICABL E TO THE ASSESSEES CASE. HE, 3 THEREFORE, REQUESTED TO UPHOLD THE ORDER OF THE LD. C.I.T.(A) AND DISMISS THE REVENUES APPEAL. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHO RITIES BELOW. IN THIS REGARD WE CONSIDER IT PRUDENT TO REFER THE DECISION OF HONBL E BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT VS. JCIT (SUPRA), CONFIRMED BY HONBL E SUPREME COURT VIDE ORDER DATED 15/11/2010, DISMISSING THE SLP FILED BY THE DEPARTM ENT, WHEREIN ON SIMILAR FACTS OF THE CASE, THE HONBLE BOMBAY HIGH COURT HAS AFFIRMED TH E CONCLUSION ARRIVED BY THE I.T.A.T., MUMBAI BY OBSERVING AS UNDER :- THE TRIBUNAL HAS ENTERED A PURE FINDING OF FACT THA T THE ASSESSEE WAS ENGAGED IN TWO DIFFERENT TYPES OF TRANSACTIONS. THE FIRST SET OF TRANSACTIONS INVOLVED INVESTMENT IN SHARES. THE SECOND SET OF TRANSACTIONS INVOLVED DEALING IN SHARES FOR THE PURPOSES OF BUSINESS. THE TRIBUNAL HAS CORRECTLY AP PLIED THE PRINCIPLE OF LAW IN ACCEPTING THE POSITION THAT IT IS OPEN TO AN ASSESS EE TO MAINTAIN TWO SEPARATE PORTFOLIOS, ONE RELATING TO INVESTMENT IN SHARES AN D ANOTHER RELATING TO BUSINESS ACTIVITIES INVOLVING DEALING IN SHARES. THE TRIBUNA L HELD THAT THE DELIVERY BASED TRANSACTIONS IN THE PRESENT CASE, SHOULD BE TREATED AS THOSE IN THE NATURE OF INVESTMENT TRANSACTIONS AND THE PROFIT RECEIVED THE REFROM SHOULD BE TREATED EITHER AS SHORT-TERM OR, AS THE CASE MAY BE, LONG-TERM CAP ITAL GAIN, DEPENDING UPON THE PERIOD OF THE HOLDING. THE TRIBUNAL HAS OBSERVED IN ITS JUDGMENT THAT THE ASSESSEE HAS FOLLOWED A CONSISTENT PRACTICE IN REGARD TO THE NATURE OF THE ACTIVITIES, THE MANNER OF KEEPING RECORDS AND THE PRESENTATION OF S HARES AS INVESTMENT AT THE END OF THE YEAR, IN ALL THE YEARS. THE TRIBUNAL CORRECT LY ACCEPTED THE POSITION THAT THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED SINCE EA CH ASSESSMENT YEAR IS SEPARATE IN ITSELF. THE TRIBUNAL HELD THAT THERE OUGHT TO BE UN IFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE ID ENTICAL, PARTICULARLY IN THE CASE OF THE ASSESSEE. THIS APPROACH OF THE TRIBUNAL CANN OT BE FAULTED. THE REVENUE DID NOT FURNISH ANY JUSTIFICATION FOR ADOPTING A DIVERG ENT APPROACH FOR THE ASSESSMENT YEAR IN QUESTION. THERE CANNOT BE ANY DISPUTE ABOUT THE BASIC PROPOSITION THAT ENTRIES IN THE BOOKS OF ACCOUNT ALONE ARE NOT CONCL USIVE IN DETERMINING THE NATURE OF INCOME. THE TRIBUNAL HAS APPLIED THE CORRECT PRI NCIPLE IN ARRIVING AT THE DECISION IN THE FACTS OF THE PRESENT CASE. THE FIND ING OF FACT DOES NOT CALL FOR INTERFERENCE IN AN APPEAL UNDER S. 260A. NO SUBSTAN TIAL QUESTION OF LAW IS RAISED. 6. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO OF DECISION OF HON BLE BOMBAY HIGH COURT DULY CONFIRMED BY THE HONBLE SUPREME COURT, CITED SUPRA , WE HOLD THAT THE LD. C.I.T.(A) WAS JUSTIFIED IN DIRECTING THE A.O. TO ACCEPT THE S HORT-TERM CAPITAL GAIN OF RS.38,47,373/- AND LONG-TERM CAPITAL GAIN OF RS.1,32,946/-, AGGREG ATING TO RS.39,80,319/-. THE ORDER OF 4 LD. C.I.T.(A) ON THIS ISSUE IS, THEREFORE, UPHELD A ND THE GROUND OF APPEAL OF THE DEPARTMENT RAISED IN THIS REGARD IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. SD/- SD/- ( ) ( . .. . ! ! ! !. .. . ) '# (N.VIJAYAKUMARAN) JUDICIAL MEMBER (C.D. RAO), ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 29-12-2011 '5 1 /%% 6''7- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : D.C.I.T., CIRCLE-33, KOLKATA. 2 /0+, / THE RESPONDENT : MRS. NAMITA AGARWAL, 5/1, LORD SIN HA ROAD, KOL-700071 3. %5 () : THE CIT(A)-XX34, KOLKATA. 4. %5/ THE CIT, KOL- 5 . ;%< /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 . GUARD FILE . 0 /%/ TRUE COPY, '5/ BY ORDER, (DKP) ASSTT. REGISTRAR .