The ACIT,B.K.Circle, Palanpur V. Smt. Alkaben Vasantlal Vora, Deesa

ITA 1539/AHD/2011

• Counselvise Citation: 153920514 RSA 2011
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 01-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Business income; Opportunity of being heard

Judgement Text

, , , , , , ! !! !' '' ' ! ! ! !. .. .! !! !. .. .$%& $%& $%& $%& , ' ' ' ' ( ( ( ( IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI BHAVNESH SAINI, J.M. & HON BLE SHRI A.L.GEHLOT, A.M.) ' '' '. ITA NO. 1539/AHD./2011 : )*- 2008-09 ACIT, B.K.CIRCLE, PALANPUR (-. /APPELLANT) -VS- SMT.ALKABEN VASANTLAL VORA, DEESA ( /0-. /RESPONDENT ) (PAN :ABGPV 5376F) -. 1 2 / APPELLANT BY : SHRI B.L.YADAV, D.R. /0-. 1 2 / RESPONDENT BY : NONE 34 1 &' / DATE OF HEARING : 21/10/2011 5%) 1 &' / DATE OF PRONOUNCEMENT : 04/11/2011 / ORDER PER SHRI A.L.GEHLOT, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE. THE ASSESSMEN T YEAR INVOLVED IS 2008-09. THE APPEAL IS INSTITUTED AGAINST THE ORDER OF THE L D. CIT(A)-IV, SURAT DATED 24.03.2011. THE GROUND IS REPRODUCED AS UNDER: ( 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XX, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO BIFURCATE AND R ECALCULATE THE INCOME FROM BUSINESS AND INCOME FROM CAPITAL GAINS, THOUGH ADMITTING IN PARA 3.3 OF APPEAL ORDER THAT LOOKING TO THE NATURE AND VOLUME OF TRANSACTION, THE APPELLANT IS NOT AN INVESTOR IN SHARES BUT A TR ADER IN SHARES . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN TRADING OF DIAMONDS. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED T HAT THE ASSESSEE HAS TRANSACTED IN SALE AND PURCHASE OF SHARES. THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN OF RS.39,95,535/- AND LONG TERM CAPITAL GAIN OF RS.36, 00,950/- FROM TRANSACTIONS IN SHARES. THE AO TREATED THE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AS BUSINESS INCOME. ITA NO. 1539-AHD-11 2 3. AT THE TIME OF HEARING, NONE WAS PRESENT FROM TH E SIDE OF THE ASSESSEE. WE HEARD THE LD. D.R. AND PROCEED TO DECIDE THE APPEAL ON MERIT. 4. THE CIT(A), AFTER CONSIDERING THE AOS ORDER, AS SESSEES SUBMISSION AND VARIOUS DECISIONS ON THE ISSUE, DIRECTED THE AO TO RECALCULATE THE INCOME FROM BUSINESS AND INCOME FROM CAPITAL GAIN AND FROM SHAR E TRANSACTION. THE CIT(A) HELD THAT WHENEVER THE ASSESSEE HAS HELD SHARES FOR A PE RIOD OF MORE THAN 30 DAYS, THE SAME SHALL BE TREATED AS INVESTMENT AND WHENEVER SHARES ARE HELD FOR LESS THAN 30 DAYS, INCOME ARISING THEREFROM SHOULD BE HELD AS BUSINESS INCOME. WE NOTICE THAT THE CIT(A), AFTER DETAILED DISCUSSIONS ON THE ISSUE, ON ONE HAND, FOUND THAT THE ASSESSEE HAS PURCHASED AND SOLD A LARGE NUMBER OF SHARES DUR ING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE MADE TRANSACTION IN SHARES OF SEVERAL COMPANIES. THE ASSESSEE IS NOT BUYING AND SELLING THESE SHARES ONLY ON A MOTIVE OF SECURING HIS CAPITAL. LOOKING TO THE NATURE AND VOLUME OF TRANSACTION, IT IS CLEAR T HAT IN SOME OF THE CASES, MOTIVE OF THE ASSESSEE SHOULD BE TO EARN PROFIT FROM THE TRANSACT ION. THE ASSESSEE HAS ALSO MADE SIMILAR TRANSACTION IN EARLIER YEARS. THE CIT(A) HA S ALSO NOTICED THAT IN SOME OF THE CASES, SHARES HAVE BEEN PURCHASED ONLY A FEW DAYS P RIOR TO THE DATE OF SALE, WHICH CLEARLY SHOW THAT THERE WAS NO INTENTION OF INVESTM ENT IN SHARES BUT TRADING IN SHARES. HOWEVER, ON THE OTHER HAND, THE CIT(A) HAS ALSO EXA MINED THE OTHER SIDE AND FOUND THAT IN SOME OF THE TRANSACTION OF SHARES, THERE IS INCOME FROM CAPITAL GAIN. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE RECOR DS. WE FIND THAT THE FINDING OF CIT(A) IS CONTRADICTORY. ON THE ONE HAND, THE CIT(A ) HELD THAT THE ASSESSEE IS NOT AN INVESTOR IN SHARES AND ON THE OTHER HAND, THE CIT(A ) HELD THAT THE ASSESSEE IS TRADING IN SHARES. THE CIT(A) HAS TAKEN THE HOLDING PERIOD OF 30 DAYS FOR THE PURPOSE OF BIFURCATION IN BETWEEN INCOME FROM BUSINESS AND INC OME FROM CAPITAL GAIN, IN THIS REGARD, WE ARE OF THE VIEW THAT THE FINDING SHOULD BE CLEAR AND BASED ON FACTS WHETHER THE ASSESSEE IS AN INVESTOR AND ACCORDINGLY INCOME IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND IN CASE, THE ASSESSEE IS A TRAD ER, THE INCOME IS LIABLE AS BUSINESS INCOME. IN THE LIGHT OF THE CONTRADICTORY FINDING O F THE LD. CIT(A), WE FIND IT APPROPRIATE TO SEND BACK THIS MATTER TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO GIVE ITA NO. 1539-AHD-11 3 THE CLEAR FINDING AND DECIDE THE ISSUE, IN ACCORDAN CE WITH LAW, AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. 6 1 5%) 7'* 04/11 /2011 % 8 1 $4 9 THIS ORDER PRONOUNCED IN THE OPEN COURT ON 04/11/2011. SD/- SD/- (BHAVNESH SAINI) (A.L.GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04/11/2011 1 11 1 /&: /&: /&: /&: ;:)&* ;:)&* ;:)&* ;:)&*- -- - 1. -. 2. /0-. 3. '' & 3? 4. 3?- - 5. :$ /& , , 9 6. $ C6 , D/ 'F , 9 TALUKDAR/ SR. P.S.