D.C.I.T Cir - 44,Kol, Kolkata V. Shri Daulal Kothari, Kolkata

ITA 1729/KOL/2012

• Counselvise Citation: 172923514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACK STREET KOLKATA
• Keywords: Business income; Depreciation; Question of law

Judgement Text

I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER I.T.A. NO. 1 72 9 /KOL./201 2 ASSESSMENT YEAR: 200 8 - 200 9 DEPUTY COMMISSIONER OF INCOME TAX, . ................. ............APPELLANT CIRCLE - 44, KOLKATA, 3, GOVT. PLACE (WEST), GROUND FLOOR, KOLKATA - 700 001 - VS. - SHRI DAULAL KOTHARI,.......................... ................................RESPONDENT 4, BYSACK STREET, KOLKATA - 700 007 [PAN : AIYPK 2894 C] & I.T.A. NO. 1 9 5 /KOL./201 3 ) ASSESSMENT YEAR: 200 8 - 200 9 SHRI DAULAL KOTHARI,......................... ............................ ...... . APPELLANT 4, BYSACK STREET, KOLKATA - 700 007 [PAN : AIYPK 2894 C] - VS. - ASSISTANT COMMISSIONER OF INCOME TAX, ........... ...... ... .......RESPONDENT CIRCLE - 44, KOLKATA, 3, GOVT. PLACE (WEST), GROUND FLOOR, KOLKATA - 700 001 APPEARANCES BY: SHRI AMITABHA CHOUDHURY , SR. D.R., FOR THE DEPARTMENT SHRI S.L. KOCHAR & SHRI ANIL KOCHAR, ADVOCATES , FOR THE ASSESSEE DATE OF CONCL UDING THE HEARING : JULY 0 9 , 2015 DATE OF PRONOUNCING THE ORDER : JULY 27 , 2015 O R D E R PER P.K. BANSAL: THE CROSS APPEAL FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY HA S ARISEN OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XXX, K OLKATA DATED 09 .0 7 .201 2 FOR THE ASSESSMENT YEAR 200 8 - 0 9 . I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 2 OF 6 2. THE APPEAL FILED BY THE ASSESSEE IS TIME BARRED BY 58 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 2 8.0 1 .201 2 TO CONDONE THE DELAY. WE AFTER HEARING THE LD. A.R. AND ON THE BASIS OF THE A FFIDA VIT CONDONE THE DELAY AND THE APPEAL IS ADMITTED. ITA NO. 1729/KOL/2012 (REVENUE S APPEAL) 3. THE ONLY ISSUE INVOLVED IN T HE APPEAL RELATES TO WHETHER THE INCOME DERIVED BY THE ASSESSEE ON THE PURCHASE AND SALE OF SHARES HELD BY THE ASSESSEE AS INVESTME NT AND TREATING THE GAIN FROM SHARE TRANSACTIONS AS BUSINESS INCOME OR CAPITAL GAIN. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERING THE SAME, WE NOTED THAT THE ISSUE INVOLVED IS DULY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE HON BLE CALCUTTA HIGH COURT IN G.A. NO. 2489 OF 2014 IN ITAT NO. 113 OF 2014, IN WHICH THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF ASSESSEE S WIFE VIDE ORDER DATED 01.09.2014 TOOK THE VIEW ON THE SIMILAR ISSUE IN THE ASSESSMENT YEAR 2007 - 08 THAT THE IN COME WILL BE ASSESSABLE NOT AS BUSINESS INCOME BUT AS CAPITAL GAIN. THE RELEVANT FINDINGS OF THE HON BLE CALCUTTA HIGH COURT ARE REPRODUCED AS UNDER: - WE FIND THAT THE TRIBUNAL WHILE NEGATING THE CONCLUSION OF THE REVENUE HAD REFERRED TO THE ORDER OF TH E CIT(A). THE RELEVANT PORTION OF THE ORDER PASSED BY THE CIT(A) IS AS UNDER: - 5. THE CONTENTIONS OF THE APPELLANT AS SUMMED UP ABOVE HAVE BEEN CONSIDERED IN THE CONTEXT OF THE FINDINGS ARRIVED AT BY THE ASSESSING OFFICER IN HIS ORDER WHILE TREATING THE I NCOME FROM SHARE TRANSACTIONS AS APPELLNAT S BUSINESS INCOME. IT IS SEEN THAT THE APPELLANT HAS CONSISTENTLY BEEN SHOWING HER SHARES AS INVESTMENTS AND THE SAME HAS BEEN ACCEPTED AS SUCH BY THE DEPARTMENT IN EARLIER YEARS AND THE ASSESSING OFFICER HAS NOT BROUGHT IN ANY FRESH EVIDENCE IN HIS ASSESSMENT ORDER FOR THE PRESENT YEAR TO THE CONTRARY. HE HAS SIMPLY REFERRED TO THE MAGNITUDE OF SHARE TRANSACTION AND COME TO HIS OWN CONCLUSIONS ABOUT THE INTENTIONS OF THE APPELLANT. THE DETAILED I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 3 OF 6 EVIDENCES AND WRITE UP GIVEN BY THE APPELLANT IN SUPPORT HER ARGUMENTS, SUBSTANTIATE HER CLAIM OF BEING AN INVESTOR. IT IS AL S O CLEAR T HAT THE ASSERTION THAT SHE IS AN INVESTOR CAN ONLY BE CHALLENGED ON THE BASIS OF HER OWN RECORDS AND TRANSACTIONS WHICH COULD INDICATE THAT IT IS ACTUALLY DOING TRADING BUSINESS. THIS IS NOT THERE IN THE APPELLANT'S CASE AND THE A.O. HAS FAILED TO DO SO OTHER THAN MAKING A LONGWINDING ANALYSIS OF THE GUIDELINES 'LAID OUT IN CBDT CIRCULAR NO.4/2007. THE RELIANCE OF ASSESSING OFFICER ON THE DECI SION OF ITO VS. LILY EXPORTS P VT. LTD. OF HON'BLE I.T.A.T. 'A' - BENCH, KOLKATA IS BASED ON DIFFERENT FACTS AND CANNOT BE APPLIED IN THE APPELLANT'S CASE. IN THE AFOREMENTIONED CASE THE HON'BLE I.T.A.T. HAS REFERRED TO SEVERAL F ACTORS WHILE HOLDING THAT THE INCOME WAS NORMAL BUS INE SS PROFIT REFERRING TO SHORT PERIOD OF RETENTION AND OTHER FACTORS WHICH ARE MISSING IN THE CASE OF APPELLANT. ON THE OTHER HAND, THE DECISIONS IN THE CASE OF M/S. ASTRIX ENTERPRISES AND M/S. ETERNA STEEL & INVESTMENT PVT. LTD. SUP RA ARE SQUARELY APPLICABLE IN THE APPELLANT'S CASE. IT MAY ALSO BE MENTIONED THAT THE MATTER HAD BEEN CONSIDERED IN APPEAL IN HER OWN CASE FOR AY 1992 - 93, AND DECIDED IN HER FAVO U R BY THE CIT(A)XXVI, KOLKATA IN HIS ORDER DATED 27 - 02 - 2002. CONSIDERING THE A BOVE, THE CONTENTION OF THE APPELLANT IS ACCEPTED AND THE INCOME FROM SHARE TRANSACTIONS OF RS. 43,59,492/ - IS TO BE TREATED AS OFFERED BY APPELLANT IN ITS LONG TERM CAPITAL GAIN AND INCOME - TAX RETURN AS RS.18,39,391/ - AS SHORT TERM CAPITAL GAINS.' THE Q UESTIONS RAISED DO NOT INCLUDE A CHALLENGE ON PERVERSITY. THE FINDINGS OF THE COMMISSIONER OF APP EALS ARE ON FACTS CONCURRED BY THE TRIBUNAL. WE FIND, T HEREF O RE, NO SUBSTANTIAL QUESTION OF LAW ARISES. ACCORDINGLY, THE APPLICATION AND THE APPEAL ARE DIS MISSED. URGENT CERTIFIED PHOTOCOPY OF THIS ORDER BE SUPPLIED TO THE PARTIES, IF APPLIED FOR, UPON COMPLIANCE OF ALL REQUISITE FORMALITIES . I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 4 OF 6 RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE HON BLE CALCUTTA HIGH COURT, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(APPEALS) ALLOWING RELIEF TO THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD SHORT TERM CAPITAL GAIN . 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 195/KOL/2013 (ASSESSEE S APPEAL) 6 . GROUND NO. 1 OF ASSESSEE S APPEAL WAS NOT PRESSED BY THE LD. COUNSEL OF THE ASSESSEE AT THE TIME OF HEARING THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 7. GROUND NO. 2 IS SIMILAR TO THE GRO UND NO. 1 IN C.O. 56/KOL/2011 FOR THE ASSESSMENT YEAR 2007 - 08. SINCE WE HAVE ALREADY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF THE SALARY AMOUNTING TO RS.21,000/ - R ESPECTFULLY FOLLOWING OUR AFORESAID ORDER IN C.O. NO. 56/KOL/2011 OF EVEN DATE, WE DELETE THE DISALLOWANCE OF SALARY AMOUNTING TO RS.21,000/ - . THUS THIS GROUND STANDS ALLOWED. 8. GROUND NO. 3 RELATES TO THE DOUBLE ADDITION OF RS.39,064/ - IN RESPECT OF PAYMENT OF INCOME - TAX. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND C AREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED FROM THE COMPUTATION STATEMENT OF THE ASSESSEE THAT THE ASSESSEE HAS ALREADY ADDED THE PAYMENT OF INCOME TAX AMOUNTING TO RS.39,064/ - WHILE MAKING THE COMPUTATION OF INCOM E BUT WRONGLY TAKEN THE FIGURE AT RS. 39,064/ - INSTEAD OF RS. 41,499/ - . IF THE ADDITION OF RS.39,064/ - IS SUSTAINED THAT WILL TANTAMOUNT TO THE DOUBLE ADDITION. BUT SINCE THE ASSESSEE HAS INCORRECTLY TAKEN THE FIGURE OF RS.39,064/ - IN THE COMPUTATION STATEM ENT IN PLACE OF RS.41,499/ - , THEREFORE, REDUCED THE ADDITION OF RS.2,435/ - . THUS THIS GROUND IS PARTLY ALLOWED. I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 5 OF 6 10. GROUND NO. 4 RELATES TO THE SUSTENANCE OF THE DISALLOWANCE OF RS.1,00,000/ - OUT OF RS.2,00,000/ - MADE BY THE ASSESSING OFFICER. 11. BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESESE HAS DEBITED TELEPHONE EXPENSES AT RS.24,407/ - , MOTOR CAR EXPENSES OF RS.40,118/ - AND MOTOR CAR DEPRECIATION OF RS.56,397/ - TO THE PROFIT & LOSS ACCOUNT. HE WAS OF THE OPINION THAT THE ASSESSEE HAS PERSONALLY USED THE TELEPHONE AND MOTOR CAR AND, THEREFORE, HE MADE THE AD HO C DISALLOWANCE TO RS.2,00,000/ - AFTER NOTING THAT ALL THE EXPENSES WERE ON SELF - MADE VOUCHERS. WHEN THE MATTER WENT BEFORE THE CIT(APPEALS), THE CIT(APPEALS) REDUCED T HE DISALLOWANCE TO RS.1,00,000/. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS SUBMITTED ALL THE DETAILS OF EXPENSES, IN OUR OPINION, NO AD HOC DISA LLOWANCE CAN BE MADE AT THE MOST. DISALLOWANCE CAN BE MADE IN RESPECT OF PERSONAL EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT AS THE ASSESSEE ALSO DID NOT DISPUTE BEFORE US THAT MOTOR CAR HAS NOT BEEN PERSONALLY USED. WE, THEREFORE, RESTRICT THE DISALLOW ANCE TO 10% IN RESPECT OF MOTOR CAR DISALLOWANCE AS WELL AS MOTOR CAR DEPRECIATION, I.E. AMOUNTING TO RS.4,012/ - AND RS.5,640/ - . WE ACCORDINGLY REDUCE THE DISALLOWANCE OF RS.1,00,000/ - TO RS.9,652/ - . THUS THIS GROUND IS PARTLY ALLOWED. 13 . IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 14. TO SUM UP, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 27 , 2015. SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, THE 27 TH DAY OF JULY, 2015 I.T.A. NO . 1 72 9 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 & I.T.A. NO . 19 5 /KOL./201 3 ASSESSMENT YEAR: 200 8 - 200 9 PAGE 6 OF 6 COPIES TO :(1) INCOME TAX OFFICER, CIRCLE - 44, KOLKATA, 3, GOVT. PLACE (WEST), GROUND FLOOR, KOLKATA - 700 001 (2) SHRI DAULAL KOTHARI, 4, BYSACK STREET, KOLKATA - 700 007 ( 3 ) COMMISSIONER OF INCOME - TAX (APPEALS) ( 4 ) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.