ACIT CIR 13(3), MUMBAI V. MUKESH K. KENIA, MUMBAI

ITA 1194/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83522 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: CHETAN KARIA
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , . . , ! '# $ BEFORE SHRI H.L.KARWA, PRESIDENT AND SHRI N.K.BILLA IYA, AM ./ I.T.A. NO. 1194/MUM/2011 ( %& ' / ASSESSMENT YEAR: 2007-08) ASST. COMMISSIONER OF INCOME-TAX-13(3), ROOM NO.430, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, NEW MARINE LINES, MUMBAI-400020 & / VS. MUKESH K.KENIA, C/O.S.K.OIL TRADING CO., 208/210, NARSHI NATHA STREET, MUMBAI-400009 ./ PAN : AABCG0505E ( / APPELLANT) .. ( ! / RESPONDENT ) ' # / ASSESSEE BY: SHRI A.K.NAYAK ! ' # / RESPONDENT BY : SMT. CHETAN KARIA $ % ' &' / DATE OF HEARING : 21/08/2014 ()*+ ' &' / DATE OF PRONOUNCEMENT : 21/08/2014 ,- / O R D E R PER N.K.BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-24, MUMBAI DATED 30/11/2010 PERTAINING TO AS SESSMENT YEAR 2007-08. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE CI T(A) ERRED IN DIRECTING THE AO TO TREAT THE INCOME OF ` .17,25,878/- ON SALE OF SHARES AS SHORT TERM CAPITAL GAINS AS AGAINST BUSINESS INCOME TREAT ED BY THE AO. 3. THE ASSESSEE IS A PARTNER IN S.K. OIL & PULSES, RETURN FOR THE YEAR WAS FILED ON 31/07/2007 DECLARING TOTAL INCOME AT ` .9,42,765/-. ASSESSEES TOTAL INCOME COMPRISES OF BUSINESS INCOM E BEING SHARE OF PROFIT ITA NO.1194/MUM/2011 2 FROM PARTNERSHIP FIRM AND CAPITAL GAINS AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE AO NOTICED THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN S FROM SALE OF SHARES AT ` .17,25,878/-. THE AO OBSERVED THAT THE ASSESSEE HA S CARRIED OUT 43 TRANSACTIONS OF PURCHASE AND SALE OF SHARES. THE A O NOTICED THAT ON IDENTICAL FACTS IN THE CASE OF ASSESSEES RELATIVE SHRI BHARAT KUNVERJI KENIA, IN THE A.Y. 2005-06 AND 2006-07, THE ASSESSEE WAS TREATED AS A TRADER AND THE CAPITAL GAIN WAS BROUGHT TO TAX AS BUSINESS INCOME, WHICH WAS CONFIRMED BY THE CIT(A). WITH THIS BACKGROUND THE AO PROCEEDED TO TREAT THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A). AFTER CONSIDERING THE FA CTS AND THE SUBMISSIONS AND CERTAIN JUDICIAL DECISIONS, THE CIT(A) WAS OF T HE OPINION THAT OUT OF TOTAL 43 TRANSACTIONS, 20 TRANSACTIONS RELATED TO T HE PERIOD OF HOLDING BETWEEN 6 TO 12 MONTHS. THE CIT(A) WAS CONVINCED T HAT THE ASSESSEE WAS ONLY AN INVESTOR AND ACCORDINGLY DIRECTED THE AO TO TREAT THE SHORT TERM CAPITAL GAINS AS SHOWN BY THE ASSESSEE. 4. AGGRIEVED BY THIS REVENUE IS BEFORE US. THE DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. THE COUNSEL FOR THE ASSESS EE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS ENTERED IN TO 43 TRANSACTIONS DURING THE YEAR, WHICH MAKES 3.5 TRANSACTIONS PER M ONTH. BY ANY STRETCH OF IMAGINATION, THIS CANNOT BE CONSIDERED TO BE HIG H FREQUENCY OF TRANSACTIONS. WE FIND THAT THE AO HAS DRAWN SUPPOR T FROM THE FINDINGS GIVEN IN THE CASE OF BHARAT KUNVERJI KENIA. WE FIN D THAT THE TRIBUNAL IN THE CASE OF BHARAT KUNVERJI KENIA IN ITA NO.6544/MU M/ 2008 HAS DIRECTED THE AO TO TREAT THE GAINS AS SHORT TERM CA PITAL GAIN/LONG TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME. WE FURTHE R FIND THAT IN ASSESSEES OWN CASE FOR A.Y. 2009-10, THE AO HAS AC CEPTED THE CAPITAL GAINS AS SHOWN BY THE ASSESSEE. CONSIDERING THE FA CTS IN TOTALITY AND ITA NO.1194/MUM/2011 3 DRAWING SUPPORT FROM THE DECISION OF THE CO-ORDINAT E BENCH IN ITA NO.6544/MUM/2008, WE DO NOT FIND ANY INFIRMITY IN T HE FINDINGS OF THE CIT(A), APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/08/2014 ,- ' ()*+ $ . / 0 1, 21 /08/2014 , ) ' 2% 3 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDENT ACCOUNTANT MEMBER / $ % MUMBAI; 1, /DATED : 21 ST AUGUST, 2014. F{X~{TA F{X~{TA F{X~{TA F{X~{TA P.S. P.S. P.S. P.S. ' ( ) *%+,- . -'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. $ 4& ( ) / THE CIT- , MUMBAI. 4. $ 4& / CIT(A)- , MUMBAI 5. 562 7&789 , ' 89+ , / $ % / DR, ITAT, MUMBAI 6. 2: ;% / GUARD FILE. ' (& / BY ORDER, ! 5& 7& //TRUE COPY// / / 0 1 (DY./ASSTT. REGISTRAR) , / $ % / ITAT, MUMBAI