SMT. SHANKUNTALA GUPTA, Jaipur V. DCIT, Jaipur

ITA 1154/JPR/2010

• Counselvise Citation: 115423114 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S L PODDAR
• Keywords: Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.1154/JP/2010 (A.Y. 2006-07) SMT. SHAKUNTALA GUPTA, VS. DCIT, CIRCLE5, B-271, JANTA COLONY, JAIPUR. JAIPUR. PAN NO. ADGPG 7274 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR. DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 27/01/2014. DATE OF PRONOUNCEMENT : 11/03/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 12/08/2010 OF LD. CIT (A)-II, JAIPUR. THE FOLLOWIN G GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE ORDER OF THE LEARNED AO UNDER SECTION 143(3 ) AND ORDER OF THE CIT(A) ARE BAD IN LAW AND AGAINST FACTS OF THE CASE . 2. THE LEARNED AO HAS ERRED IN TREATING SHORT TERM CAPITAL GAIN RS. 17,02,814/- AND LONG TERM CAPITAL GAIN RS. 4,80,960 /- IN SHARE 2 DEALINGS AS INCOME OF THE ASSESSEE FROM BUSINESS AN D PROFESSION AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAM E. 3. THE LEARNED AO HAS ERRED IN NOT GIVING REBATE UN DER SECTION 88E RS. 43,687/- BEING AMOUNT OF SECURITY TRANSACTION TAX P AID BY THE ASSESSEE EVEN THOUGH HE HAS ASSESSED THE ENTIRE INC OME OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS & PRO FESSION AND THE LEARNED CIT(A) HAS ERRED IN NOT DECIDING THIS GROU ND OF APPEAL. 4. THE ASSESSEE CRAVES HIS RIGHT TO ADD, ALTER, AME ND OR DELETE ANY GROUNDS OF APPEAL AT THE TIME HEARING OR EARLIER. 2 GROUNDS NO. 1 & 4 ARE GENERAL IN NATURE, SO, ON TH ESE GROUNDS NO COMMENTS ARE REQUIRED ON OUR PART WHILE GROUND NO.3 WAS NOT PRESSED, THEREFORE, IT IS DISMISSED AS NOT PRESSED. NOW THE ONLY ISSUE RELATING TO THE CONFIRMATION OF THE ACTION OF THE ASSESSING OFF ICER IN TREATING THE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN IN SHARE DEALINGS AS INCOME FROM BUSINESS AND PROFESSION, REMAINS TO B E ADJUDICATED. 3. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN ON THE SALE OF SHARES TO TH E EXTENT OF RS. 17,02,814/- AFTER ADJUSTING THE SHORT TERM CAPI TAL LOSS AND LONG TERM CAPITAL GAIN WAS SHOWN AT RS. 4,80,960/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH SCRIPT WISE QUANTITATIVE DETAILS ALONG WITH THE VALUE OF ALL THE SHARES PURCHASED AND SOLD. THE DETAILS FURNISHED B Y THE ASSESSEE HAD BEEN REPRODUCED BY THE ASSESSING OFFICER AT PAGE 2 OF THE ASSESSMENT 3 ORDER, FOR THE COST OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE ASSESSEE ALSO SUBMITTED VIDE REPLY DATED 05/11/2008 TO THE ASSESSING OFFICER AS UNDER:- TRANSACTIONS IN SHARES IS AS PER NATURE OF INVEST MENT ONLY. AT THE TIME OF PURCHASE OF SHARES THE ASSESSEE ALWAYS INTEND TO IN VEST AND NOT TO TRADE. HOWEVER, DURING THE YEAR MARKET HAD GOOD BULL RUN. THEREFORE, THE ASSESSEE BOOKED GAIN IN SOME CASES ON SHORT TERM. THEREFORE, THE TRANSACTIONS IN SHARES IS FOR INVESTMENT ONLY. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE S UBMISSIONS OF THE ASSESSEE AND TREATED THE SHARE DEALINGS OF THE ASSE SSEE AS BUSINESS AND NOT INVESTMENT. ACCORDINGLY, THE SHORT TERM CAPITA L GAIN AMOUNTING TO RS. 17,02,814/- AND LONG TERM CAPITAL GAIN OF RS. 4 ,80,960/-, TOTALING TO RS. 21,83,774/- WAS TREATED AS BUSINESS INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT MOST OF THE INCOME FROM SHORT TE RM CAPITAL GAIN HAD ARISEN FROM SINGLE SCRIPT OF GUJARAT NRE COKE LTD. AND THE ASSESSEE WAS HAVING 4-5 SALE TRANSACTIONS IN THIS SCRIPT EARNING INCOME OF RS. 22,30,520/-. IT WAS FURTHER STATED THAT THE AS SESSEE HAD SHOWN DIVIDEND INCOME OF RS. 57,656/- WHICH SHOWS THAT TH E INVESTMENT WAS MADE IN SHARES WITH A VIEW TO EARN DIVIDEND INCOME. IN THE BALANCE SHEET, THE ASSESSEE HAD SHOWN SHARES-IN-HAND AMOUNT ING TO 4 RS. 53,56,687/- WHICH PROVED THE FACT THAT SHARES W ERE HELD AS INVESTMENT AND NOT AS STOCK IN TRADE. THE ASSESSEE RELIED UPON CBDT CIRCULAR NO. 4/2007 DATED 15/06/2007 AND DECISION O F THE ITAT, JAIPUR BENCH IN I.T.A.NO. 1229/JP/2008 IN THE CASE OF SHRI SURESH KUMAR SHAH VS. DCIT, CIRCLE-5, JAIPUR . IT WAS FURTHER STATED THAT THE TRANSACTION IN SHARES WERE DELIVERY BASED THROUGH BROKER, SO, THOS E WERE TO BE TREATED AS INVESTMENT. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT REPORTED AT 228 CTR 582 . 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE WAS HAVING DIV IDEND INCOME OF RS. 57,656/- WHICH WAS INSIGNIFICANT CONSIDERING TH E FACT THAT EVEN AFTER MAJOR SALES OF THE SHARE HOLDING OF THE ASSESSEE, T HE REMAINING SHARES AS ON 31/03/2006 WERE OF RS. 53,56,786/- WHICH SHOWS T HAT THE INTENTION OF THE ASSESSEE AT THE TIME OF MAKING INVESTMENT WAS N OT TO HOLD THE SAME AS INVESTMENT. HE FURTHER OBSERVED THAT EVEN OUT O F 58100 SHARES OF GUJARAT NRE COKE SOLD, THE ASSESSEE HAD PURCHASED 2 0000 SHARES DURING THE YEAR WHICH SHOWS THAT THE INTENTION AT THE TIME OF PURCHASE WAS TO HAVE THE TRADING ACTIVITY INSTEAD OF INVESTMENT. T HE LD. CIT(A) BY CONSIDERING THE VOLUME OF PURCHASE AND SALES, PERIO DICITY OF THE TRANSACTIONS AND INSIGNIFICANT DIVIDEND INCOME, WAS OF THE VIEW THAT THE 5 ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE GAI N ON SALE OF SHARES AS INCOME FROM BUSINESS AND PROFESSION. NOW THE ASS ESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT IN ALL THE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO IN THE SUBSEQUENT ASSESSMENT YEARS, THE ASSESS EE HAD BEEN SHOWING INCOME FROM SHARES UNDER THE HEAD CAPITAL GAIN BO TH SHORT TERM AND LONG TERM. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD ALSO BEEN DISCLOSING THE SUBSTANTIAL DIVIDEND INCOME WHICH HA S BEEN ACCEPTED BY THE DEPARTMENT IN ALL THE YEARS EXCEPT THE YEAR UND ER CONSIDERATION, WHEREIN THE ASSESSING OFFICER DEVIATED FROM THE PAS T HISTORY OF THE CASE AND ERRONEOUSLY HELD THAT THE INCOME DERIVED BY THE ASSESSEE FROM THE DEALINGS IN SHARES WAS BUSINESS INCOME AND NOT FR OM CAPITAL GAINS. IT WAS FURTHER STATED THAT THE ASSESSEE IS AN OLD LADY AND NOT CAPABLE OF CONDUCTING ANY BUSINESS HERSELF AND SHE WAS NOT EMP LOYING ANY SERVANT AND ALSO NOT MAINTAINING ANY OFFICE FOR CONDUCTING ANY BUSINESS AND THE TRANSACTIONS IN SHARES WERE NOT IN FAST ROTATION. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE AS BUSINESS INCOME AND THE LD. CIT(A) WAS ALSO NOT JUSTIFIED 6 IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT THE ASSESSEE HAD DEALT IN THE LIMITED SCRIPTS, WHICH COULD NOT BE TERMED AS VOLUMINOUS OF MAGNITUDE. IT WAS ARGUED T HAT HOLDING IN SHARES AS ON 31/03/2006 WAS AT RS. 53,56,786/- AS AGAINST TOTAL SALES OF RS. 2,10,98,972/- WHICH SHOWS THAT THE INVESTMENT HAD B EEN ROTATED HARDLY 04 TIMES WHICH ESTABLISHES THAT THE SHARES WERE HEL D FOR MONTHS TOGETHER AND THAT THE DETAILS OF HOLDING IN VARIOUS ASSESSME NT YEARS STRENGTHENED THE SUBMISSIONS OF THE ASSESSEE THAT SHE WAS AN INV ESTOR NOT A TRADER. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPAN Y PVT. LTD. 82 ITR 586. 2. CIT VS. AMIT MODI (2011) 334 ITR 192 (P & H) 3. COMPUCOM TECHNOLOGIES PVT. LTD. VS. DCIT IN ITA NO. 141/JP/2008. 4. BHARAT SANCHAR NIGAM LTD. VS. UNION OF INDIA (2 006) 201 CTR 346 (SC) 5. MAHENDRA C. SHAH VS. ACIT (2011) 58 DTR 242 (MU M-TRIB.) 6. HITESH SATISH CHANDRA DOSHI VS. JCIT (2011) 58 DTR 258 (MUM-TRIB) 7. ACIT VS. JAGDISH MASTER (2011) 47 SOT 45 (MUM) 8. CIT VS. ROHIT ANAND (2010) 327 ITR 445 (DEL) 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. REITERATED THE OBSERVATIONS OF THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IM PUGNED ORDER PASSED BY THE LD. CIT(A). 7 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSMENT ORDERS IN A SSESSEES CASE FOR THE A.Y. 2005-06 I.E. IMMEDIATELY PRECEDING YEAR AND TH E A.Y. 2008-09 I.E. SUCCEEDING YEAR WERE PASSED FRAMED UNDER SECTION 14 3(3) OF THE ACT, COPY OF THE SAID ORDERS ARE PLACED AT PAGES 1 TO 3 OF THE ASSESSEES PAPER BOOK. IN THOSE ASSESSMENT ORDERS, INCOME FROM CAPI TAL GAIN EARNED BY THE ASSESSEE HAS BEEN ACCEPTED AND NOTHING IS BROUG HT ON RECORD THAT THERE WAS ANY CHANGE IN HOLDING OF THE SCRIPTS BY T HE ASSESSEE IN THE YEAR UNDER CONSIDERATION VIS-A-VIS THE PRECEDING AND SUB SEQUENT YEARS. IT IS ALSO NOTICED THAT THE ASSESSEE WAS SHOWING THE SHAR ES AND THE DEBENTURES UNDER THE HEAD INVESTMENT IN HER BALANCE SHEET IN DIFFERENT YEARS, COPIES OF WHICH ARE PLACED AT PAGE NOS. 12,15, 18, 19, 27 & 31 OF THE ASSESSEES PAPER BOOK WHICH CLEARLY ESTABLISH THAT THE INTENTION OF THE ASSESSEE WAS TO HOLD THE SHARES AND NOT FOR TRADING WITH THOSE SHARES. IN THE INSTANT CASE, IT IS AN ADMITTED FACT THAT THE D EPARTMENT HAS ACCEPTED THE INCOME EARNED BY THE ASSESSEE FROM SALE OF SHAR ES AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN, AS THE CAS E MAY BE, IN ALL THE ASSESSMENT YEARS EXCEPT THE YEAR UNDER CONSIDERATIO N. THEREFORE, BY KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY ALSO T HERE WAS NO OCCASION TO 8 DEVIATE FROM THE EARLIER STAND, PARTICULARLY WHEN T HERE IS NO CHANGE IN THE FACTS DURING THE YEAR UNDER CONSIDERATION VIS- -VIS FACTS INVOLVED IN THE PRECEDING AS WELL AS SUCCEEDING YEARS. WE, THE REFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE PRESENT CASE, SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO A CCEPT THE INCOME SHOWN BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN AMOUNTIN G TO RS. 17.02,814/- AND LONG TERM CAPITAL GAIN AT RS.4,80,960/- INSTEAD OF ,INCOME FROM BUSINESS AND PROFESSION,. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 11 TH MARCH, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH MARCH, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.