RAMESH C. SHAH, MUMBAI V. ADDL CIT RG 19(2), MUMBAI

ITA 1553/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78990 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND DR. S. T. M.PAVALAN (JM) ./I.T.A.NO.1553/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) RAMESH C SHAH C/O SANJAY C SHAH B-3, OM JOSHI APARTMENT LALLUBHAI PARK ROAD, ANDHERI(W) MUMBAI-400058 / VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 19(2), PIRAMAL CHAMBERS, MUMBAI. ( / APPELLANT) ( / RESPONDENT) ./ ./PAN/GIR NO. : AAFPS8772A / APPELLANT BY : SHRI SANJAY C SHAH /RESPONDENT BY SHRI P K SINGH $ / DATE OF HEARING : 22.5.2014 $ /DATE OF PRONOUNCEMENT : 28. 5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)- 30, MUMBAI, DATED 20.11.2012 AND THE SOLITARY IS SUE ARISING OUT OF THE SAME RELATES TO THE ADDITION OF RS.228477/- MADE BY THE AO U/S 94(7) OF THE INCOME TAX ACT (THE ACT) WHICH IS CONFIRMED BY THE LD. CIT(A). 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDU AL WHO IS ENGAGED IN THE PROFESSION AS DOCTOR WITH SPECIALIZING IN CATARAC T SURGERY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 6.9. 2009 DECLARING TOTAL INCOME OF RS.2,63,23,400/- WHICH WAS COMPRISING OF SHORT TERM CAPITAL GAIN, INCOME FROM FUTURES TRADING AND INCOME FROM OTHER SOURCES BESID ES HIS INCOME FROM THE REGULAR PROFESSION AS DOCTOR. THE ASSESSEE HAD ALSO EARNED LONG TERM CAPITAL GAIN ON SALE OF SHARES WHICH WAS CLAIMED TO BE EXEMPT FROM TAX ALO NG WITH DIVIDEND INCOME EARNED DURING THE YEAR UNDER CONSIDERATION. IN THE ASSES SMENT COMPLETED U/S 143(3) VIDE ORDER DATED 27.20.2011, THE SHORT TERM CAPITAL GAI N EARNED BY THE ASSESSEE ON SALE OF SHARES HELD FOR A PERIOD OF LESS THAN SIX MONTHS AM OUNTING TO RS.20,96,968/- WAS I.T.A.NO.1553/MUM/2013 2 TREATED BY THE AO AS THE BUSINESS INCOME OF THE AS SESSEE WHEREAS THE LOSS ARISING ON SALE OF SHARES HELD FOR A PERIOD OF MORE THAN SIX M ONTHS AND LESS THAN ONE YEAR AMOUNTING TO RS.75,11,241/- WAS TREATED BY HIM AS SHORT TERM CAPITAL LOSS. THE DIVIDEND INCOME EARNED BY THE ASSESSEE ON THE SHAR ES ACQUIRED WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE AND SOLD WI THIN A PERIOD OF THREE MONTH AFTER SUCH DATE AMOUNTING TO RS.2,28,417/- WAS ADDED BY THE AO TO THE BUSINESS INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 94(7) OF THE ACT. ON APPEAL, THE LD. CIT(A) HELD THAT THE PROFIT ON SALE OF SHARES HELD BY THE ASSESSEE FOR A PERIOD OF LESS THAN SIX MONTHS AMOUNTING RS.20,96,968/- WAS CHARGE ABLE TO TAX IN THE CASE OF ASSESSEE AS SHORT TERM CAPITAL GAIN AND NOT THE BU SINESS INCOME AS HELD BY THE AO. HE, HOWEVER, UPHELD THE ACTION OF THE AO IN MAKING THE ADDITION OF RS.2,28,417/- U/S 94(7) OF THE ACT TO THE BUSINESS INCOME OF THE AS SESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFO RE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE PRO FIT EARNED BY THE ASSESSEE FROM THE SALE OF SHARES HELD FOR A PERIOD OF LESS THAN SIX MONTHS HAS BEEN TREATED BY THE LD. CIT(A) AS SHORT TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSE E AND AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DEPARTMENT HAS NOT FILED AN A PPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) ON THIS ISSUE. IT THEREF ORE, FOLLOWS THAT THE ENTIRE PROFIT/LOSS ARISING TO THE ASSESSEE ON SALE OF SHARES HAS BEEN FINALLY TAXED IN THE HANDS OF THE ASSESSEE UNDER THE HEAD CAPITAL GAINS AND CONSE QUENTLY IN ADDITION/DISALLOWANCE U/S 94(7) OF THE ACT IS LIABLE TO BE MADE UNDER THE HEAD CAPITAL GAINS AS RIGHTLY CLAIMED BY THE ASSESSEE AND NOT UNDER THE HEAD PRO FIT AND GAINS OF THE BUSINESS OR PROFESSION AS HELD BY THE AO AND LD. CIT(A). WE, T HEREFORE, SET ASIDE THE IMPUGNED OF THE LD. CIT(A) AND DIRECT THE AO TO MAKE ADDITION/D ISALLOWANCE U/S 94(7) OF THE ACT UNDER THE HEAD CAPITAL GAINS. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28T H MAY, 2014 ) + , 28TH MAY, 2014 SD SD ( DR. S. T. M.PAVALAN) (P .M.JAGTAP) ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 28TH DAY OF MAY, 2014 I.T.A.NO.1553/MUM/2013 3 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT /APPLICANT 2. / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. 2 4 , $ 4 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ 4 , /ITAT, MUMBAI