ITO 19(1)(2), MUMBAI V. SURESH CHANDRA MATHUR, MUMBAI

ITA 1620/MUM/2011

• Counselvise Citation: 162019914 RSA 2011
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 21-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Business income
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H , BENCH , , BEFORE S/SH. JOGINDER S INGH ,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 1620 /MUM/20 1 1 , / ASSESSMENT YEAR - 20 0 7 - 08 INCOME TAX OFFICER - 19(1)(2) 313, 3RD FLOOR, PIRAMAL CHAMBER PAREL, MUMBAI - 400 012. VS SHRI SURESH CHANDRA MATHUR 6, MANS HA, 11 UNION PARK KHAR (W) , MUMBAI - 400 052. PAN: AADPM 3783 H ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI DILIP J. THAKKAR WITH SHRI RAJESH P. SH AH / REVENUE BY :SHRI JEETENDRA KUMAR - DR / DATE OF HEARING : 25 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 25 - 0 6 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 2/11/20 10 OF CIT(A) - 12, MUMBAI, THE ASSE SSING OFFICER(AO) , HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO TREAT THE SHORT TERM CAPITAL GAIN OF RS.10,09,265/ AND LONG TERM CAPITAL GAIN OF RS.74,16,521/ AS A SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME MADE BY AO IN HIS ASSESSMENT ORDER, IGNORING THE FACT THAT (A) THE ASSESSEE HAS DEPLOYED BORROWED FUND WITH AN INTENTION OF EARNING PROFIT OF SUCH FUND S AND THERE WAS NO INTENTION OF THE ASSESSEE TO APPRECIATE THE INVESTMENT SO MADE DURING THE YEAR. (B) THE ASSESSEE HAD NO INTENTION TO HOLD HIS SHARES IN ORDER TO EARN REGULAR INCOME OUT OF SUCH PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE CLAUSE(B) OF SECTION 2(42A) IS ONLY FOR DETERMINING THE IN DEPTH ANALYSIS MADE BY THE A.O. BEFORE TREATING THE GAINS AS BUSINESS INCOME AND THAT CIRCULAR NO.4 OF 2007 HAS BEEN TA KEN INTO CONSIDERATION TO DECIDE WHETHER THE GAINS ARE TO BE TREATED AS SUCH OR AS BUSINESS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE TRANSACTION IS SHOWN WHETHER BY HIMSELF OR THROUGH HIS AGENT HAS TO BE TREATED AS ASSESSEE'S OWN TRANSACTION AND THE MOTIVE BEHIND SUCH TRANSACTION WAS TO EARN MAXIMUM PROFIT AND NOT INVESTMENT. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET SIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE - AN INDIVIDUAL, DERIVING INCOME FROM HOUSE PROPERTY AND CAPITAL GAIN FILED RETURN OF INCOME ON 29.10.2008 DECLARING I NC OME OF RS. 2,93,790/ - . 1620/11 (07 - 08)SURESH CHANDRA.M 2 2. THE EFFECTIVE GROUND OF APPEAL IS ABOUT TREATMENT GIVEN TO SHARE TRANSACTION UNDER TAKEN BY ASSESSEE .DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAD BEEN ENGAGED IN TRADING OF SHARES , THAT HE HAD SUFFERED SPECULA TION LOSSES, THAT HE HAD EARNED SHORT TERM CAPITAL GAIN AS WELL AS LONG TERM CAPITAL GAIN. CONSIDERING THE VOLUME OF SHARES TRADED BY ASSESSEE FOR THE Y EA R UNDER APPEAL ,THE AO HELD THAT HE WAS ENGA G ED IN SHARE TRADING OF SPECULATIVE AND NON - SPECULATIVE NAT URE . REFERRING TO THE ORDER FOR THE AY 20 05 - 06, PASSED U/S. 143(3) OF THE ACT, THE AO HELD THAT CAPITAL GAIN SHOWN BY THE ASSESSEE HAD TO BE TREATED AS BUSINESS INCOME .HE FURTHER MENTIONED THAT IN APPELLATE PROCEEDINGS THE FIRST APPELLATE AUTHORITY ( FAA ) HAD DELETED THE ADDITION MADE BY THE A O , THAT TH E APPEAL WAS PENDING BEFORE THE TRIBUNAL , THAT HE HAD DEVOTED MOST OF HIS TIME IN SHARE TR ADING BUSINESS, THAT THE SHARES WERE PART OF STOCK IN TRADE AND NOT OF INVESTMENT , THAT HIS INCOME FROM SHARE TRANSACTIO N HAD TO BE TREATED UNDER HEAD BUSINESS INCOME. 3. A GGREIVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA . AFTER C ONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER , SHE HELD THAT FACTS OF THE CASE FOR THE YEAR UN DER APPEAL WERE SIMILAR TO THE FACTS OF AY 20 05 - 06, THAT IN THAT YEAR ASSESSEE HAD DECLARED SHARE - TRANSACTION - INCOME UNDER HEAD CAPITAL GA I N, THAT THE AO HAD MADE NO INDEPENDE NT INQUIRY DURING ASSESSMENT P ROCEEDINGS TO ARRIVE AT A FINAL CONCLUSION , THAT HE HAD NOT EXAMINED THE BOOK S OF ACCOUNT OR CONSIDERED THE PAST HISTORY OF THE ASSESSEE, THAT HIS ORDER WAS TOTALLY BASED ON THE ORDER OF 20 05 - 06 . THE FAA, FINALLY HELD THAT INCOME EARNED BY THE ASSESSEE FOR THE Y EA R UNDER CONSIDERATION SHOULD BE ASSESSES UNDER THE HE A D I NCOME FROM CAPITAL GAINS. 4. BEFORE US DEPARTMENTAL REPRESENTATIVE ( DR ) STATED THAT WHILE DECIDING THE APPEAL FOR THE IMMEDIATE PRECEDING Y EA R THE TRIBUNAL HAD RESTORED BACK THE MATTER TO THE FILE OF AO, THAT THE AO AND THE FAA HAD REFERR ED TO THE ORDER OF THE EARLIER Y EA R WHILE FINALIZING THE ASSESSMENT/ DECIDING THE APPEAL. AUTHORISED REPRESENTATIVE ( AR ) STATED THAT ASSESSEE WAS NOT A TRADER BUT WAS AN INVESTOR, THAT NO CLEAR CUT FINDING WAS GIVEN BY AO TO ARRIVE AT CONCLUSION THAT ASSES SEE WAS CARRYING ON BUSINESS IN TRADING IN SHARES 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.WE FIND THAT AO AND FAA HAVE NOT BROUGHT ON RECORD THE RELEVANT FACTS TO DECIDE THE ISSUE, THAT THE TRIBUNAL HAD SENT BACK THE MATT ER TO THE FILE OF AO FOR THE AY 20 05 - 06 FOR THE IDENTICAL IS SUE. WE ARE OF THE OPINION THAT, IN THE INTEREST OF JUSTICE , THE MATTER SHOULD BE REMITTED BACK TO AO WHO WILL DECIDE THE ISSUE AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER CONSIDERING THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT DELIVERED WITH REF ERENCE TO THE SUBJECT BEFORE US. EFFECTIVE GROUND OF APPEAL I S DECIDED IN FAVOUR OF THE AO, IN PART. AS A RESULT,APPEAL FILED BY THE AO STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH , JUNE ,2015. 25.06. 2 015 SD/ - SD/ - ( / JOGINDER S INGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 25 .0 6 .2015 . . . JV . SR.PS . 1620/11 (07 - 08)SURESH CHANDRA.M 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.