Sh. Anmol Bansal, Patiala V. JCIT, Patiala

ITA 1113/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80923 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K P BAJAJ
• Keywords: Business income

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 1113/CHD/2012 ASSESSMENT YEAR: 2008-09 SH. ANMOL BANSAL, VS. THE JCIT C/O BARANAL SILK STORE RANGE PATIALA PATIALA, PAN NO. AEHPB5581J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P. BAJAJ RESPONDENT BY : SHRI MAHAVIR SINGH DATE OF HEARING : 16/09/2014 DATE OF PRONOUNCEMENT : 29/09/2014 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), PATIALA DATED 09.08.2012. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L:- 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT WAS NOT JUSTIFIED IN UPHOLDING THE TREATMENT OF LON G TERM AND SHORT TERM CAPITAL GAIN/ LOSS AS BUSINESS INCOME IN THE HANDS OF THE ASSESSEE. 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ALLOWI NG SET OFF OF CARRIED FORWARD LONG AND SHORT TERM CAPI TAL LOSS INCURRED IN THE EARLIER YEARS. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSE SSEE HAS CLAIMED SET OFF OF 2 LOSS AMOUNTING TO RS. 8,26,181/- FROM THE SHORT TE RM CAPITAL GAIN. ACCORDING TO ASSESSEE IN THE PRESENT YEAR THERE WAS PROFIT ON ACCOUNT SHORTAGE OF SHORT TERM CAPITAL GAIN AND TO THAT EXTENT THE BROUGHT FO RWARD CAPITAL LOSS SHOULD BE ADJUSTED AGAINST THE SAME. IN RESPONSE TO THE QUER Y IT WAS MAINLY STATED THAT ASSESSEE WAS DOING BUSINESS OF SHARE TRADING AS WEL L AS BUSINESS OF INVESTMENTS AND IN CASE OF CAPITAL GAIN, STT PAID ON SALE AND P URCHASE OF SHARES WAS NOT CLAIMED, THEREFORE, THE SAME SHOULD BE CONSTRUED IN COME FROM CAPITAL GAIN. THE ASSESSING OFFICER DID NOT FIND FORCE IN THESE SUBMI SSIONS AND EXTRACTED THE TRANSACTIONS CLAIMED UNDER THE HEAD CAPITAL GAIN AS UNDER:- DATE SCRIP NAME SETT NO. QTY PURCHASE PRICE SALE PRICE 08/01/2008 RNRL NSE2008006 1,000 242,791.76 10/01/2008 RNRL NSE2008008 1,000 210,903.31 03/09/2007 RNRL NSEN2007167 30,000 1,466,793.40 04/09/2007 RNRL NSEN2007168 25,000 1,221,731.39 06/09/2007 RNRL NSEN2007170 5,000 243,146.34 30/10/2007 RNRL NSEN2007207 10,000 1,153,218.00 30/10/2007 RPL NSEN2007207 5,000 1,152,518.50 01/11/2007 RPL NSEN2007209 8,000 2,204,045.03 06/11/2007 RNRL NSEN2007212 10,000 1,832,472.00 06/11/2007 RNRL NSEN2007212 25,000 4,566,152.00 27/08/2007 RPL NSE2007162 15,000 1,672,783.64 31/08/2007 RPL NSE2007166 14,000 1,581,682.15 03/09/2007 RNRL NSE2007167 34,000 1,655,094.86 10/09/2007 RNRL NSE2007172 14,000 670,553.90 11/09/2007 RNRL NSE2007173 20,000 987,711.34 10/10/2007 RNRL NSE2007193 10,000 923,149.33 12/10/2007 RNRL NSE2007195 35,000 3,375,706.53 17/10/2007 RNRL NSE2007198 35,000 3,294,723.84 30/10/2007 RPL NSE2007207 11,000 2,533,513.98 30/10/2007 RPL NSE2007207 5,000 1,137,388.87 01/11/2007 RNRL NSE2007209 21,000 2,872,130.30 02/11/2007 RNRL NSE2007210 20,000 3,754,423.49 3 4. THE ASSESSING OFFICER HELD THAT THERE IS NO JUST IFICATION IN SHOWING THE ABOVE TRANSACTION UNDER THE HEAD CAPITAL GAIN AND THEY WERE ALSO PART OF THE BUSINESS TRANSACTIONS AND INCOME WAS ASSESSA BLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND THEREFORE , THE BROUGHT FORWARD CAPITAL LOSS COULD NOT BE SET OFF. 5. ON APPEAL, SUBMISSIONS MADE BEFORE ASSESSING OFF ICER WERE REITERATED AND LD. CIT(A) DID NOT FIND FORCE IN THE SAME AND DECIDED THE ISSUE AGAINST THE ASSESSEE. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND EMPHASIZED TH AT IN CASE OF CAPITAL TRANSACTIONS, STT PAID WAS NOT CLAIMED AS EXPENDITU RE. HE CONTENDED THAT EARLIER ASSESSEE WAS DOING ONLY INVESTMENT BUSINESS BUT THIS YEAR THE ASSESSEE HAS STARTED SHARE TRADING BUSINESS ALSO. THEN HE REFERRED TO THE DETAILS OF TRANSACTIONS AND SUBMITTED THAT TRANSACT IONS RECORDED AT PAGE 25 OF THE PAPER BOOK WERE OF INVESTMENT NATURE AND CLA IMED UNDER THE HEAD CAPITAL GAIN WHEREAS TRANSACTIONS FROM PAGE 26 TO 31 WERE IN THE NATURE OF BUSINESS TRANSACTIONS AND, THEREFORE, THE SAME W ERE SHOWN AS INCOME OF THE ASSESSEE. ACCORIDNG TO HIM THE ASSESSING OFFICE R HAS NOT BEEN ABLE TO SHOW HOW TRANSACTION CLAIMED UNDER THE HEAD CAPITAL GAIN WAS NOT CORRECT. 7. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A),. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE DO NO T FIND ANY FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. T HE LD. CIT(A) HAS DECIDED THE ISSUE VIDE PARA 4.5 WHICH IS AS UNDER:- 4.5 I HAVE GONE THROUGH THE SUBMISSION MADE BEFORE ME AS CONTENDED BY THE APPELLANT THIS IS THE FIRST YEAR OF TRADING IN SHARES. GOING THROUGH THE DETAILS SUBMIT TED IT IS NOTED THAT THE APPELLANT HAS SHOWN SHORT TERM CA PITAL GAIN IN THE CURRENT YEAR OUT OF SALE OF SHARES OF 4 IBREALEST, RPL, RNRL, GV GILMS LT ETC. THE BULK OF THE CAPITAL GAIN SHOWN IS OUT OF SHARES OF RPL AND RNRL. AS REGARDS TRADING OF SHARES AS PER DETAILS APPEARI NG ON PAGE 5 OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE APPELLANT HAS TRADED ONLY IN THE SHARES OF RPL AND RNRL. THUS SUBSTANTIAL PART OF SHORT TERM CAPITAL GAIN AS WELL AS INCOME FROM TRADING IN SHARES ARISE OUT OF SHARE OF RPL & RNRL. IN CASE OF STCG, THE RPL SHARES WERE SHOWN AS PURCHASED ON 24.10.2007 AND SOLD ON 30.10.2007, 01.11.2007, & 02.11.2007. THE RNRL SHARES WERE PURCHASED ON 12.11.2007 AND SOLD ON 14.11.2007. IN CASE OF TRADING OF SHARE, RPL SHARES WERE PURCHASED ON 30.10.2007, 27.08.2007 AND 30.12.2007 AND SOLD ON 01.11.2007, 31.08.2007 AND 30.10.2007 RESPECTIVELY, SIMILARLY THE APPELLANT HAS TRADED SUBSTANTIALLY IN THE SHARE OF RNRL. THERE CANNOT BE AN ARTIFICIAL DEMARC ATION OF SHARE AS INVESTMENT OR STOCK IN TRADE WHERE THE MODALITY OF BUSINESS AND METHOD OF EARNING INCOME I S SAME. E.G. THE RPL SHARES PURCHASED ON 24.10.2007 I S TREATED AS INVESTMENT WHILE THOSE PURCHASED ON 30.1 0.2007 IS TREATED AS STOCK IN TRADE. ALL THE SHARES ARE HE LD FOR SHORT TERM. THE A.O. HAS CONTENDED THAT THE APPELLA NT HAS CATEGORIZED PART OF SHARE INCOME AS SHORT TERM CAPI TAL GAIN JUST TO SUIT THE FIGURE OF CAPITAL LOSS INCURR ED BY HIM IN PRESENT YEAR. LOOKING INTO ENTIRELY OF THE FACTS OF THE CASE, I AM IN AGREEMENT WITH THE A.O. AND HOLD THAT THE ENTIRE INCOME OF RS. 57,56,177/- SHOWN BY THE APPEL LANT IS HIS INCOME FROM BUSINESS AND THEREFORE SET OFF OF BROUGHT FORWARD CAPITAL LOSS CANNOT BE ALLOWED. 9. PERUSALS OF THE TRANSACTIONS CLAIMED AS INVESTME NT SHOWN UNDER THE HEAD CAPITAL GAIN SHOWS THAT MAINLY THREE TRANSAC TIONS ON ACCOUNT OF G.V. FILMS, RPL AND RNRL HAVE BEEN SHOWN UNDER THE HEAD CAPITAL GAINS. THE DETAILS OF THESE TRANSACTIONS ARE GIVEN AT PAGE 25 WHICH IS AS UNDER:- 5 ANMOL 2007-2008 INVESTMENT QUT PURCHASE STT PRICE Q UT SALE STT PRICE 10/12/2007 BSER0708178 G V FILMS LT 25,000 202,353. 75 252.00 202,101.75 13/12/2007 BSER0708181 G V FILMS LT 25,000 268,538. 72 334.00 268,204.72 17/12/2007 BSER0708183 G V FILMS LT 50,000 560, 585.30 704.00 561,289.30 24/10/2007 NSE2007203 RPL 10,000 1,888,921.17 2,353 .00 1,886,568.17 30/10/2007 NSE2007207 RPL 5,000 1,126,261.60 1, 412.94 1,127,674.54 01/11/2007 NSE2007209 RPL 2,000 549,082.97 689. 00 549,771.97 02/11/2007 NSE2007210 RPL 3,000 802,120.00 1,00 6.00 803,126.00 12/11/2007 NSE2007216 RNRL 4,000 578,301.00 720.50 577,580.50 14/11/2007 NSE2007218 RNRL 4,000 689,434.40 866 .20 690,300.60 FEB-2007 IBREALEST FREE 40 - - - 23/03/2007 IBREALEST NSE2007056 100 36,828.00 - 36, 828.00 23/08/2007 IBREALEST NSE2007160 140 65,219.82 8 2.00 65,301.82 64,140 2,974,943 3,660 2,971,283 64,140 3,792,70 4 4,760 3,797,464 826,181 16/09/2005 LCCINFOTEC NSE2005178 3,150 8,413 - 8,41 3 19/06/2007 LCCINFOTEC NSE2007114 150 72.11 0.10 72.21 21/06/2007 LCCINFOTEC NSE2007116 3,000 1,613.22 2.10 1,615.32 3,150 8,413.00 - 8,413.00 3150 1685.33 2.2 1687. 53 (6,725.47) CLOSING BALANCE OF INVESTMENTS 16/09/2005 LCCINFOTEC NSE2005178 850 2,270.33 02/09/2005 LCCINFOTEC NSE2005169 1301 2,915.00 6 10. THE ABOVE CLEARLY SHOWS THAT SHARES OF M/S G.V. FILMS HAVE BEEN SOLD WITHIN 7 TO 10 DAYS. SIMILARLY SHARES OF RPL HAVE B EEN SHOWN WITHIN 6 TO 8 DAYS AND SHARES OF RNRL HAVE BEEN SOLD WITHIN TWO DAYS. THE TRADING TRANSACTIONS SHOWN BY THE ASSESSEE ARE INCORPORATED AT PAGES 26 TO 35 OF THE PAPER BOOK AND THE PERUSAL OF THE SAME SHOWS THAT GENERALLY IN THE TRADING TRANSACTIONS SHARES HAVE BEEN SOLD WITHIN SHORT SPAN OF 15 DAYS. WE FA IL TO UNDERSTAND THAT IS THE BASIS OF SHOWING SOME TRANSACTIONS UNDER THE HEAD BUSINESS TRANSACTIONS AND SOME TRANSACTIONS UNDER THE HEAD CAPITAL GAINS WH EN IN ALL CASES SHARES HAVE BEEN PURCHASED AND THEN SOLD WITHIN 15 DAYS. MERELY NON CLAIM OF STT WILL NOT MAKE ANY TRANSACTION AS INVESTMENT TRANSACTION TO BE CLAIMED UNDER THE HEAD CAPITAL GAIN. NORMALLY WHEN SOMEBODY MAKES AN INVE STMENT IT IS GENERALLY FOR AS LONGER PERIOD OF AS LEAST SIX MONTHS TO FEW YEAR S. WHEN THE SHARES ARE SOLD WITHIN FEW DAYS SUCH TRANSACTIONS CANNOT BE TREATED AS CAPITAL GAIN TRANSACTIONS. THEREFORE, IN OUR OPINION THE LD. CIT (A) HAS CORRECTLY HELD THAT TRANSACTIONS OF SALE / PURCHASE WERE IN THE NATURE OF BUSINESS TRANSACTION. FURTHER, AS PER PROVISIONS OF SECTION 71, LOSS UNDE R THE HEAD IN THE CAPITAL GAIN CAN BE SET OFF ONLY AGAINST THE HEAD CAPITAL, GAIN AND THEREFORE, AUTHORITIES BELOW ARE RIGHT IN REFUSING THE SET OFF OF THE LOSS UNDER THE HEAD CAPITAL GAINS BECAUSE THE INCOME HAS BEEN TREATED AS INCOME FROM BUSINESS. 11. IN VIEW OF THE ABOVE DISCUSSION WE FIND NOTHING WRONG WITH THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. 12. IN THE RESULT, APPEAL IS DISMISSED. 7 ORDER PRONOUNCED IN THE OPEN COURT ON 29/09/2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH SEPTEMBER, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 8