DCIT, CIR-6, KOLKATA, Kolkata V. M/s GKK Capital Markets Pvt. Ltd., Kolkata

ITA 1305/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1635 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTEN HANGSHING
• Assessee Lawyers: A K TIBREWAL
• Keywords: Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI S.S. VISWANETHRA RAVI, J.M.) ITA NO. 1305/KOL/2014 ASSESSMENT YEAR : 2009-10 M/S. GKK CAPITAL MARKETS PVT. LTD. KOLKATA PAN NO. AAACG9906E VS D.C.I.T. CIR-6, KOLKATA (APPELLANT) (RESPONDENT) C.O. NO. 91/KOL/2014 (ARISING OUT OF ITA NO. 1305/KOL/2014) ASSESSMENT YEAR : 2009-10 D.C.I.T. CIR-6, KOLKATA VS M/S. GKK CAPITAL MARKETS PVT. LTD. KOLKATA PAN NO. AAACG9906E (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI A.K. TIBREWAL, FCA DEPARTMENT BY : SHRI GOUTEN HANGSHING, CIT, DR DATE OF HEARING : 10.04.2017 DATE OF PRONOUNCEMENT : 08.06.2017 ORDER SHRI P.M.JAGTAP, A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) 6 KOLKATA DATED 24.03.2014 WHEREBY HE C.O. NO. 91/KOL/2014 2 RESTRICTED THE ADDITION OF RS. 36,66,43,727/- MADE BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL GAINS TO RS. 3,58,47,051/- AND TREATED THE SAME AS THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX AS BUSINESS INCOME. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND SHARE BROKING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 24.09.2009 DECLARING A LOSS OF RS. 22,28,02,682/- . IN THE BALANCE SHEET FILED ALONG WITH THE SAID RETURN, A SUM OF RS. 36,66,43,727/- WAS SHOWN BY THE ASSESSEE AS LIABILITY ON ACCOUNT OF SECURITY DEPOSIT RECEIPT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE AO TO EXPLAIN THE SAID LIABILITY. IN REPLY, IT WAS EXPLAINED BY THE ASSESSEE THAT IT HAD TAKEN CERTAIN SHARES ON LOAN FROM 4 DIFFERENT PARTIES OF MUMBAI VIZ. S. CHOUGULE, JUDITH INVESTMENT (P) LTD., EVERLONE TRADING (P) LTD. AND ARUN BABULAL SHAH. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID SHARES TAKEN ON LOAN HAD BEEN DULY CREDITED TO ITS DE-MAT ACCOUNT AND DUE TO DEEP FINANCIAL CRISES, THE SAME WERE SOLD IN THE MARKET THROUGH STOCK-EXCHANGE. IT WAS SUBMITTED THAT PROCEEDS OF SUCH SAME WERE CREDITED TO THE ACCOUNTS OF THE 4 PARTIES TO WHOM THE SHARES BELONGED AND THE SAME WAS SHOWN AS SECURITY DEPOSIT RECEIVED FROM THE SAID PARTIES AS UNDER SINCE THE SHARES TAKEN ON LOAN FROM THEM WERE TO BE RETURNED BACK IN THE EXACT QUANTITIES. C.O. NO. 91/KOL/2014 3 S. CHOUGLE RS. 12,16,37,420/- JUDITH INVESTMENT (P) LTD RS. 10,92,01,724/- EVERLONE TRADING (P) LTD RS. 11,35,74,102/- ARUN BABULAL SHAH RS. 2,22,30,480/- 3. IN ORDER TO VERIFY THE EXPLANATION OF THE ASSESSEE, ENQUIRY WAS CONDUCTED BY THE AO FROM THE CONCERNED FOUR PARTIES WHICH REVEALED THAT ALTHOUGH THE SHARES WERE GIVEN BY THE SAID PARTIES TO THE ASSESSEE ON LOAN BASIS AS CLAIMED BY THE ASSESSEE, NO FINANCIAL VALUE FOR THE SAID TRANSACTIONS WAS ASSIGNED BY THE SAID PARTIES AND NO CORRESPONDING ENTRIES THEREFORE WERE MADE BY THEM IN THEIR BOOKS OF ACCOUNTS. THE ASSESSING OFFICER ALSO NOTED THAT THE TRANSACTIONS OF SUCH BORROWINGS OF SHARES WERE NOT IN ACCORDANCE WITH THE SECURITIES LENDING SCHEME, 1997. HE ALSO NOTED THAT THE SHARES RECEIVED BY THE ASSESSEE ON LOAN WERE KEPT IN ITS OWN DE-MAT ACCOUNT AND THERE WAS NO AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE CONCERNED PARTIES FROM WHOM SHARES WERE CLAIMED TO BE TAKEN ON LOAN. ACCORDING TO THE AO, THE ASSESSEE THUS WAS A BENEFICIAL OWNER OF THE SAID SHARES AND IT WAS LIABLE TO PAY CAPITAL GAIN TAX ON THE TRANSFER OF SAID SHARES IN PURSUANCE OF SECTION 2(47) OF THE ACT. SINCE THE ASSESSEE COMPANY HAD NOT INCURRED ANY COST FOR ACQUIRING THE SAID SHARES, THE ENTIRE SALE CONSIDERATION WAS TREATED BY THE AO AS CAPITAL GAIN AND THE SAME WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN SINCE THE SHARES SOLD WERE HELD BY THE ASSESSEE FOR A PERIOD OF LESS THAN 12 MONTHS. SINCE THE ASSESSEE COMPANY HAD PAID STT ON THE TRANSFER OF THE SAID SHARES, SHORT TERM CAPITAL GAIN OF RS. 36,66,43,727/- WAS ASSESSED OF TAX BY THE AO IN THE HANDS OF THE ASSESSEE @ 15%. C.O. NO. 91/KOL/2014 4 4. AGAINST THE ORDER PASSED BY THE AO UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A).DURING THE COURSE OF APPELLATE PROCEEDINGS, ELABORATE SUBMISSIONS WERE MADE BY THE ASSESSEE OFFERING ITS EXPLANATION AS REGARDS THE NATURE OF THE RELEVANT TRANSACTIONS, ACCOUNTING TREATMENT GIVEN AS WELL AS TAX IMPLICATION. THE SAID SUBMISSIONS WERE FORWARDED BY THE LD. CIT(A) TO THE AO FOR HIS COMMENTS AND WHEN THE COMMENTS MADE BY THE AO IN HIS REMAND REPORT WERE CONFRONTED TO THE LD.CIT(A) TO THE ASSESSEE, COUNTER COMMITS THEREON WERE OFFERED BY THE ASSESSEE. ON THE BASIS OF THIS ENTIRE MATERIAL AVAILABLE ON THE RECORD, THE LD. CIT(A) DISCUSSED AND ANALYSED THE NATURE OF RELEVANT TRANSACTIONS IN SHARES IN THE LIGHT OF THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE AS WELL AS ITS TAX IMPLICATIONS AS UNDER: WHEN IT BORROWED THE SHARES FROM 4 PERSONS, IT DID NOT PASS ANY ENTRIES IN THE BOOKS OF ACCOUNTS AS THERE WAS NO FINANCIAL TRANSACTION. HOWEVER, WHEN THE BORROWED SHARES HAD TO BE SOLD DUE TO FINANCIAL CONDITION, THE AMOUNT REALIZED FROM THE BORROWED SHARES WAS SHOWN AS LIABILITY IN THE NAME OF THE LENDERS. THEIR ACCOUNTS WERE FINALLY SETTLED IN F.Y. 2011-12 EITHER BY WAY OF RETURNING THE SHARES PURCHASED FROM MARKET OR BY OUTRIGHT PAYMENT. IN THE FORMER CASE, THE APPELLANT HAD ACTUALLY EARNED SOME PROFIT, AS THE PRICE OF THE SHARES, WHICH WERE BORROWED, HAD FURTHER FALLEN IN MARKET AND THERE, THE APPELLANT WAS ABLE TO BUY THE EQUIVALENT NUMBER OF SHARES AT A LOWER PRICE. THE PROFIT REALIZED FROM SUCH TRANSACTION WAS OFFERED AS BUSINESS PROFIT IN THE RETURN FOR A.Y. 2012-13 AS THE SAME IS STATED TO BE CRYSTALLIZED IN THAT YEAR. THE EXPLANATION OFFERED BY THE APPELLANT IS WELL SUPPORTED BY THE DOCUMENTARY EVIDENCE SUCH AS CONFIRMATION OF LENDERS, DEMAT ACCOUNT STATEMENT, BROKERS NOTES, ENTRIES IN BOOKS OF ACCOUNT, RETURN FILED FOR THE A.Y. 2012-13 ETC. NO SPECIFIC DEFECT OR DISCREPANCY HAS BEEN FOUND BY THE ASSESSING OFFICER IN THE SAME. THE ASSESSING OFFICERS ACTION OF DISBELIEVING THE ENTIRE EXPLANATION IN THE FACE OF CLEAR SUPPORTING EVIDENCE CANNOT BE UPHELD. MERELY BECAUSE LENDING OF SHARES WAS NOT IN ACCORDANCE WITH SECURITIES LENDING SCHEME 1997 DOES NOT MEAN, THAT THE APPELLANTS CLAIM OF RECEIVING SHARES ON LOAN BASIS CAN BE REJECTED IN A SUMMARY MANNER, AS THE CLAIM IS BACKED BY SUPPORTING EVIDENCE. THE LENDERS HAD DULY CONFIRMED LENDING OF SHARES IN COURSE OF ENQUIRIES CONDUCTED BY THE DEPARTMENT. THE FACT, THAT C.O. NO. 91/KOL/2014 5 THERE WAS NO ENTRY IN THE LEDGERS OF LENDERS HOLDS HARDLY ANY SIGNIFICANCE, AS LENDING OF SHARES AVAILABLE IN THEIR STOCK DID NOT INVOLVE ANY FINANCIAL TRANSACTION AS SUCH TO BE ENTERED IN LEDGER. 5. ON THE BASIS OF THE ABOVE ANALYSIS AND DISCUSSION, THE LD. CIT(A) HELD THAT THE VIEW TAKEN BY THE AO THAT THE ASSESSEE COMPANY EARNED SHORT TERM CAPITAL GAIN FROM THE RELEVANT TRANSACTION OF SHARES WAS ERRONEOUS ON SEVERAL ACCOUNTS. HE HELD THAT THE INCOME EARNED BY THE ASSESSEE FROM THE SAID TRANSACTIONS WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE COMPANY AS BUSINESS INCOME SINCE IT WAS REGULARLY DEALING IN SHARES AND THE RELEVANT SHARE TRANSACTIONS HAD TAKEN PLACE IN THE NORMAL COURSE OF THE SAID BUSINESS. HE ALSO HELD THAT WHILE TAXING SUCH INCOME, DUE CREDIT FOR THE COST OF SHARES WAS REQUIRED TO BE GIVEN AGAINST THE SALE PROCEEDS. HE ALSO NOTED THAT THE ASSESSEE COMPANY HAS RECOGNISED INCOME FROM THE SAID TRANSACTIONS IN SHARES AS ITS BUSINESS INCOME ALBEIT IN A.Y. 2012-13 ON THE BASIS OF THAT THE INCOME WAS CRYSTALLISED IN THE F.Y. 2011-12 WHEN THE ACCOUNTS WERE FINALLY SETTLED WITH THE CREDITORS AND FOUND MERIT IN THIS STAND OF THE ASSESSEE. HE ALSO FOUND MERIT IN THE ALTERNATIVE CONTENTION RAISED BY THE ASSESSEE THAT THE RELEVANT SHARES HAVING BEEN BORROWED BY THE ASSESSEE FROM 2 PARTIES NAMELY JUDITH INVESTMENT (P) LTD. AND S. CHOUGLE IN THE PREVIOUS YEAR RELEVANT OF A.Y. 2008-09 AND ALSO THE SAME HAVING BEEN SOLD IN A.Y. 2008-09, 2010-11, NO ADDITION ON ACCOUNT OF INCOME ARISING FROM THE SAID TRANSACTIONS COULD BE MADE IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE OBSERVATIONS RECORDED BY THE LD. CIT(A) IN THIS CONTEXT IN PARA NO. 11 OF HIS ORDER ARE EXTRACTED BELOW: AS PER THE MATERIAL PRODUCED, OUT OF SHARES BORROWED, THE BORROWINGS FROM TWO PERSONS VIZ JUDITH INVESTMENT PVT. LTD. AND S. CHOUGULE HAD BEEN MADE DURING THE F.Y. 2007-08 RELEVANT TO A.Y. 2008-09. NOT ONLY THAT, EVEN THE SALE C.O. NO. 91/KOL/2014 6 OF THE SHARES BORROWED BY THEM WAS ALSO COMPLETED DURING THE F.Y. 2007-08 AND TO SOME EXTENT IN F.Y. 2009-10. THE APPELLANT HAS PRODUCED SUPPORTING DOCUMENT SUCH AS COPY OF DEMAT ACCOUNT WHERE THE BORROWED SHARES HAD BEEN RECEIVED, CONFIRMATION FROM THE LENDER AND THE BROKERSS BILL FOR SALE AS EVIDENCE TO ESTABLISH THAT BORROWING AS WELL AS SALE HAD TAKEN PLACE DURING THE PERIOD NOT RELEVANT TO THE YEAR UNDER APPEAL. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO FIND ANY DISCREPANCY OR DEFECT IN THE AFORESAID EVIDENCES. THE ONLY POINT OF OBJECTION RAISED BY HIM IS THAT IN THE BALANCE SHEET AS ON 31.03.2008, NO SUCH BALANCE UNDER THE HEAD SECURITY DEPOSIT WAS APPEARING. HOWEVER, IT HAS BEEN EXPLAINED BY THE APPELLANT THAT IN THE BALANCE SHEET AS ON 31.03.2008, THE CONCERNED AMOUNT HAD BEEN INCLUDED IN THE GROUPING SUNDRY CREDITORS INSTEAD OF BEING SEPARATELY SHOWN AS SECURITY DEPOSITS. HOWEVER, THE FACT THAT THE CONCERNED TRANSACTION HAD TAKEN PLACE DURING THE F.Y. 2007-08 (AND PARTLY IN F.Y. 2009-10) WAS VERY MUCH EVIDENT FROM THE DOCUMENTARY EVIDENCE SUCH AS DEMAT ACCOUNT, BROKERS NOTE, CONFIRMATION ETC. AS STATED EARLIER, NO SPECIFIC DEFECT IN SUCH DOCUMENTARY EVIDENCE HAS BEEN FOUND BY THE ASSESSING OFFICER THOUGH HE HAD MADE INDEPENDENT VERIFICATION FROM DEPOSITORY ALSO. THEREFORE, NO ADDITION IN THE YEAR UNDER APPEAL CAN BE MADE, IN ANY CASE, IN RESPECT OF TRANSACTIONS WITH JUDITH INVESTMENT PVT. LTD. AND S. CHOUGULE. 6. HAVING ACCEPTED THE STAND OF THE ASSESSEE AS ABOVE AND GIVING RELIEF TO THAT EXTENT, THE LD. CIT(A) HOWEVER FOUND THAT THE ACCOUNT OF M/S. EVERLONE TRADING (P) LTD. WAS SETTLED BY THE ASSESSEE IN TWO STAGES. HE NOTED THAT EVEN THOUGH 3 LAKHS SHARES OF M/S. ORBIT CORPORATION LTD. RECEIVED BY THE ASSESSEE COMPANY ON LOAN FROM M/S. EVERLONE TRADING (P) LTD. WERE SOLD IN THE YEAR UNDER CONSIDERATION FOR RS. 15,54,54,102/-, THE ASSESSEE COMPANY HAD BOUGHT AND RETURNED 1,50,000 SHARES TO THE SAID PARTY DURING THE YEAR UNDER CONSIDERATION WHILE THE REMAINING 1,50,000 SHARES WERE BROUGHT AND RETURNED IN A.Y. 2012-13. THOUGH THE ASSESSEE COMPANY HAD COMPUTED PROFIT FOR THE ENTIRE 3,00,000 SHARES BOUGHT AND RETURNED TO M/S. EVERLONE TRADING (P) LTD. IN A.Y. 2012-13, THE LD. CIT(A) HELD THAT 1,50,000 SHARES HAVING BEEN BOUGHT AND RETURNED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, THE PROPORTIONATE PROFIT OF RS. 3,58,47,051/- WAS CRYSTALLISED IN THE YEAR UNDER CONSIDERATION AND C.O. NO. 91/KOL/2014 7 THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSEE OF POSTPONE THE SAME TO A.Y. 2012-13. HE ACCORDINGLY RESTRICTED THE ADDITION OF RS. 36,66,44,722/- MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAIN TO RS. 3,58,47,051/- AND DIRECTED THE AO TO ASSESS THE SAME AS BUSINESS INCOME OF THE ASSESSEE. AGGRIEVED BY THE SAME, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL WHILE THE ASSESSEE HAS FILED IN CROSS OBJECTION PROJECTING THEIR REPRODUCTIVE GRIEVANCE IN THE FORM OF THE FOLLOWING GROUNDS. GROUNDS RAISED IN THE REVENUES APPEAL I. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED ON LAW IN HOLDING THAT INCOME UNDER THE HEAD CAPITAL GAIN OF RS. 36,66,43,727/- TREATED IN THE HANDS OF THE ASSESSEE WAS NOT WARRANTED AS IT WAS CRYSTALLIZED ONLY AT THE POINT OF FINAL SETTLEMENT OF TRANSACTION BETWEEN THE ASSESSEE AND ITS LENDERS, IGNORING THE FACTS THAT ALL THE TRANSACTIONS OF PURCHASE AND SELL OF SHARES WAS DONE BY THE ASSESSEE THROUGH ITS OWN DEMAT ACCOUNT. II. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A0 ERRED IN LAW IN HOLDING THAT INCOME WILL NOT BE RECOGNISED AS AND WHEN THE SHARES ARE SOLD IN THE DEMAT ACCOUNT OF THE ASSESSEE THROUGH STOCK EXCHANGE, IGNORING THE FACT THAT ALL THE TRANSACTIONS OF SHARES WERE DONE BY THE ASSESSEE THROUGH ITS DEMAT ACCOUNT AND SELL PROCEED WERE ALSO RECEIVED IN ITS ACCOUNT. II. THAT OB THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN LAW IN HOLDING THAT PROFIT FROM SALE OF SHARES WAS TO BE CONSIDERED AS BUSINESS INCOME INSTEAD OF CAPITAL GAIN, IGNORING THE FACT THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF TRADING OF SHARES AND AS SUCH THE ALLEGED INCOME WAS RIGHTLY TREATED AS CAPITAL GAIN. IV. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN HOLDING THAT THE BORROWING OF SECURITIES BY THE ASSESSEE WAS NOT IMPROPER, IGNORING THE FACT THAT IT WAS NOT IN ACCORDANCE WITH THE SECURITIES LENDING SCHEME, 1997. GROUND RAISED IN THE ASSESSEES CROSS-OBJECTION I. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO MAKE ADDITION OF RS. 3,58,47,051/- AS C.O. NO. 91/KOL/2014 8 BUSINESS INCOME OF THE RESPONDENT COMPANY FOR THE ASSESSMENT YEAR 2009-10. 7. IN SUPPORT OF THE ISSUES RAISED IN THE REVENUES APPEAL, THE LD. DR STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER TO POINT OUT THE REASONS GIVEN THEREIN FOR TREATING THE PROFIT ON SALE OF SHARES CLAIMED TO BE TAKEN BY THE ASSESSEE ON LOAN FROM OTHER PARTIES AS SHORT TERM CAPITAL GAIN. HE CONTENDED THAT THE LD. CIT(A), HOWEVER, TREATED THE SAID PROFIT AS BUSINESS INCOME WITHOUT PROPERLY APPRECIATING THE CASE MADE OUT BY THE AO. HE ALSO CONTENDED THAT THE LD. CIT(A) HAS ACCEPTED THE CASE OF THE ASSESSEE THAT MOST OF THE SHARES HAVING BEEN SOLD IN A.Y. 2008-09 OR 2010-11, THE PROFIT ARISING FROM THE SAID SALE WAS NOT CHARGEABLE TO TAX IN THE YEAR UNDER CONSIDERATION BY RELYING ON THE DETAILS AND DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM FOR THE FIRST TIME. HE CONTENDED THAT THE SAID DETAILS AND DOCUMENTS WERE NOT AVAILABLE BEFORE THE AO AND THE AO, THEREFORE, DID NOT GET ANY OPPORTUNITY TO VERIFY THE SAME. 8. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND STRONGLY RELIED ON THE ORDER OF THE LD. CIT(A) IN SUPPORT OF THE ASSESSEES CASE ON THE ISSUES INVOLVED IN REVENUES APPEAL. HE SUBMITTED THAT ALL THE RELEVANT DETAILS AND DOCUMENTS SHOWING THAT MOST OF THE SHARES HAD BEEN SOLD BY THE ASSESSEE IN A.Y. 2008-09 OR 2010-11 WERE VERY MUCH THERE BEFORE THE AO AND IT IS NOT A CASE THAT THE SAME WERE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(A) AS ALLEGED BY THE LD. DR. HE CONTENDED THAT THE SPECIFIC FINDING IN THIS REGARD HAS BEEN RECORDED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER AFTER VERIFYING THE RELEVANT DETAILS C.O. NO. 91/KOL/2014 9 AND DOCUMENTS AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO REBUT OR CONTROVERT THE SAME. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED THE RELEVANT SHARES ON LOAN WAS DULY CONFIRMED BY ALL THE CONCERNED FOUR PARTIES AND SINCE THE SAID SHARES TAKEN ON LOAN WERE FINALLY RETURNED BACK BY THE ASSESSEE AFTER PURCHASING THE SAME FROM THE OPEN MARKET IN A.Y. 2012-13, THE PROFIT WAS CRYSTALLISED IN THAT YEAR ON THE SETTLEMENT OF THE ACCOUNTS OF ALL THE FOUR CONCERNED PARTIES AND THE SAME WAS ACCORDINGLY OFFERED TO TAX BY THE ASSESSEE. HE ALSO SUBMITTED THAT ALL THESE TRANSACTIONS WERE ENTERED INTO BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS OF TRADING IN SHARES AND THEREFORE, THE PROFIT ARISING THEREFROM WAS CHARGEABLE TO TAX IN THE IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME AS RIGHTLY HELD BY THE LD. CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT ALTHOUGH THE SHARES IN QUESTIONS SOLD BY THE ASSESSEE WERE CLAIMED BE RECEIVED BY IT ON LOAN BASIS FROM THE CONCERNED FOUR PARTIES, THE ASSESSING OFFICER TREATED THE ASSESSEE AS BENEFICIAL OWNER OF THE SAID SHARES ON THE BASIS OF THE CREDIT OF THE SAID SHARES APPEARING IN THE DEMAT ACCOUNT OF THE ASSESSEE COMPANY. ACCORDINGLY THE PROFIT ARISING FROM THE SALE OF THE SAID SHARES WAS BROUGHT TO TAX BY HIM IN THE HANDS OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN IN THE YEAR UNDER CONSIDERATION I.E. IN A.Y. 2009- 10. AS FOUND BY THE LD. CIT(A) ON VERIFICATION OF THE RELEVANT DOCUMENTARY EVIDENCE, WHICH WAS ALREADY FILED BY THE ASSESSEE BEFORE THE AO, SHARES CLAIMED TO BE BORROWED BY THE ASSESSEE FROM TWO PARTIES VIZ. JUDITH INVESTMENTS PVT. LTD. AND S. CHOUGLE WERE NOT SOLD IN THE YEAR UNDER CONSIDERATION AND ON THE BASIS OF THIS FINDING OF FACT RECORDED BY C.O. NO. 91/KOL/2014 10 HIM, THE LD. CIT(A) HELD THAT THE INCOME ARISING FROM SALE OF THESE SHARES COULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. AT THE TIME OF HEARING BEFORE US, THE LD. DR HAS NOT BEEN ABLE TO BRING ANYTHING ON THE RECORD TO REBUT OR CONTROVERT THIS FINDING OF FACT RECORDED BY THE LD. CIT(A) AND WE THEREFORE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ASPECT OF THE MATTER. 10. IT IS ALSO OBSERVED THAT THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED THE SHARES IN QUESTION FROM THE CONCERNED 4 PARTIES ON LOAN BASIS WAS DULY SUPPORTED BY THE FACT THAT IN THE ENQUIRY CONDUCTED DIRECTLY BY THE AO WITH THEM, ALL THE CONCERNED PARTIES HAD CONFIRMED OF HAVING GIVEN THE RELEVANT SHARES TO THE ASSESSEE ON LOAN BASIS. THE RELEVANT DOCUMENTARY EVIDENCE WAS ALSO BROUGHT ON THE RECORD BY THE ASSESSEE TO SHOW THAT ALL THOSE SHARES CLAIMED TO BE TAKEN ON LOAN BASIS WERE FINALLY RETURNED BACK BY IT TO THE CONCERNED FOUR PARTIES IN A.Y. 2012-13 AFTER PURCHASING THE SAME FROM THE OPEN MARKET. AS RIGHTLY CLAIMED BY THE ASSESSEE AND ACCEPTED BY THE LD. CIT(A), THE ACCOUNTS OF THE CONCERNED FOUR PARTIES IN RESPECT OF TRANSACTIONS INVOLVING BORROWING OF THE SHARES AND RETURNING BACK THE SAME THUS WAS FINALLY SETTLED IN A.Y. 2012-13 AND THE PROFIT ARISING FROM THE SAID TRANSACTIONS WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR HAVING BEEN FINALLY CRYSTALLISED. SINCE THE SAID TRANSACTIONS WERE CARRIED ON BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS OF TRADING IN SHARES, THE PROFIT ARISING FROM THE SAID TRANSACTIONS AS FINALLY CRYSTALLISED IN A.Y. 2012-13 WAS CHARGEABLE TO TAX IN THAT YEAR AS THE BUSINESS INCOME OF THE ASSESSEE AS RIGHTLY HELD BY THE LD. CIT(A) EXCEPT 1,50,000 SHARES WHICH WERE BOUGHT AND RETURNED BACK BY THE ASSESSEE TO M/S. EVERLONE TRADING PVT. LTD. C.O. NO. 91/KOL/2014 11 DURING THE YEAR UNDER CONSIDERATION. WE, THEREFORE, FIND NO MERIT IN THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL AND DISMISS THE SAME. 11. AS REGARDS THE ISSUE RAISED BY THE ASSESSEE COMPANY IN ITS CROSS OBJECTION REGARDING THE ASSESSIBILITY OF INCOME FROM THE TRANSACTIONS INVOLVING RETURNING BACK OF 1,50,000 SHARES BORROWED FROM M/S. EVERLONE TRADING PVT. LTD. IN THE YEAR UNDER CONSIDERATION, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT TOTAL 3,00,000 SHARES BORROWED FROM M/S. EVERLONE TRADING PVT. LTD. WERE RETURNED BACK BY THE ASSESSEE IN TWO LOTS OF 1,50,000 SHARES EACH. ONE LOT WAS RETURNED BACK DURING THE YEAR UNDER CONSIDERATION WHILE THE SECOND LOT WAS RETURNED BACK IN A.Y. 2012-13. HE HAS CONTENDED THAT THE ACCOUNT OF M/S. EVERLONE TRADING PVT. LTD. IN RESPECT OF THESE TRANSACTIONS THUS WAS SETTLED IN A.Y. 2012-13 AND THE PROFIT ARISING FROM THE SAME WAS ENTIRELY TAXABLE IN THE HANDS OF THE ASSESSEE IN A.Y. 2012-13 AS OFFERED BY IT. WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. IN OUR OPINION WHEN 1,50,000 SHARES OUT OF THE TOTAL 3,00,000 SHARES BORROWED FROM M/S. EVERLONE TRADING PVT. LTD. WERE RETURNED BACK BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, THE TRANSACTION TO THAT EXTENT WAS COMPLETED IN THE YEAR UNDER CONSIDERATION AND THE ACCOUNT OF THE SAID PARTY WAS ALSO SETTLED TO THAT EXTENT. THE PROFIT ARISING FROM THE SAID TRANSACTION THUS WAS CRYSTALLISED IN THE YEAR UNDER CONSIDERATION AND THE SAME WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME IN THE YEAR UNDER CONSIDERATION HAS RIGHTLY HELD BY THE LD. CIT(A). WE THEREFORE FIND NO MERIT IN THE CROSS OBJECTION FILED BY THE ASSESSEE AND DISMISS THE SAME. C.O. NO. 91/KOL/2014 12 12. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) ( P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08/06/2017 BISWAJIT COPY OF ORDER FORWARDED TO: 1 M/S. GKK CAPITAL MARKETS PVT. LTD., KOLKATA 2 D.C.I.T., CIR-6, KOLKATA 3 THE CIT(A), 4 THE CIT 5 DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA