DCIT (OSD) CIR 2(2), MUMBAI V. PIVOTAL SECURITIES P. LTD, MUMBAI

ITA 187/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88203 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PERMINDER; J PREMANAND
• Keywords: Capital asset; Business income

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI . . , ! '#, $ BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.2815/MUM/2009 ASSESSMENT YEAR: 2005-06 ACIT OSD 2(2), AAYKAR BHAVAN, ROOM NO.545, 5 TH FLOOR, M.K.RAOD, MUMBAI-400020 / VS. M/S PIVOTAL SECURITIES PVT. LTD. 22, RAJA BAHADUR MANSION, 3 RD FLOOR, MUMBAI SAMACHAR MARG, MUMBAI-400001 ( '# / REVENUE) ( ()* /ASSESSEE) P.A. NO.AAACP3754F ITA NO.4507/MUM/2009 ASSESSMENT YEAR: 2006-07 ACIT OSD 2(2), AAYKAR BHAVAN, ROOM NO.545, 5 TH FLOOR, M.K.RAOD, MUMBAI-400020 / VS. M/S PIVOTAL SECURITIES PVT. LTD. 22, RAJA BAHADUR MANSION, 3 RD FLOOR, MUMBAI SAMACHAR MARG, MUMBAI-400001 ( '# / REVENUE) ( ()* /ASSESSEE) P.A. NO.AAACP3754F ITA NO.187/MUM/2011 ASSESSMENT YEAR: 2007-08 ACIT OSD 2(2), AAYKAR BHAVAN, ROOM NO.545, 5 TH FLOOR, M.K.RAOD, MUMBAI-400020 / VS. M/S PIVOTAL SECURITIES PVT. LTD. 22, RAJA BAHADUR MANSION, 3 RD FLOOR, MUMBAI SAMACHAR MARG, MUMBAI-400001 ( '# / REVENUE) ( ()* /ASSESSEE) P.A. NO.AAACP3754F M/S PIVOTAL SECURITIES PVT. LTD. 2 '# + , + , + , + , / REVENUE BY SMT. J. PREMANAND & SMT. PERMINDER CIT-DR ()* + , + , + , + , / // / ASSESSEE BY): SHRI HIRO RAI + *-! / / / / DATE OF HEARING : 28/01/2015 ./0 + *-! / DATE OF PRONOUNCEMENT : 28/01/2015 '1 '1 '1 '1 / / / / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THE REVENUE IS IN APPEAL FOR ASSESSMENT YEAR 2005-0 6 TO 2007-08 CHALLENGING THE RESPECTIVE ORDERS OF THE LD . FIRST APPELLATE AUTHORITY, MUMBAI, DATED 13/02/2009, 25/0 5/2009 AND 21/10/2010. 2. FOR ASSESSMENT YEAR 2005-06 (ITA NO.2815/MUM/200 9), THE FIRST GROUND RAISED PERTAINS TO HOLDING THAT TH E PROFIT FROM SALE OF SHARES IS TO BE ASSESSED AS INCOME UNDER TH E HEAD CAPITAL GAINS INSTEAD OF THE PROFIT AND GAINS OF BUSINESS AND PROFESSION AS ASSESSED IN THE ASSESSMENT ORDER. T HE CRUX OF ARGUMENT ADVANCED BY SHRI J. PREMANAND, LD. DR AND MS. PARMINDER KAUR, LD. CIT-DR IS IDENTICAL TO THE GROU ND RAISED I.E. IN SUPPORT TO THE ASSESSMENT ORDER. IT WAS ALSO SUB MITTED THAT IT WAS A BUSINESS INCOME AND WAS ALSO A NON-DELIVERY T RANSACTIONS. 2.1. ON THE OTHER HAND, SHRI HIRO RAI, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBMITTING THAT THE ASSESSEE IS A INVESTOR FOR WHICH OUR ATTENTION WAS INVITED TO PARA 9.1 OF THE IMPUGNED O RDER. M/S PIVOTAL SECURITIES PVT. LTD. 3 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IN ITS MEMORANDUM OF ASSOCIATION H AS ITS PRIMARY OBJECT TO INVEST IN SHARES AND SECURITIES. THE INVESTMENT SO MADE WAS CATEGORICALLY YEAR MARKED, I N ITS BOOKS OF ACCOUNTS, AS INVESTMENT AND EVEN SIMILAR IN ITS ACCOUNTS. THE ASSESSEE IN A SEPARATE SCHEDULE OF INVESTMENT ALSO SHOWED THE SAME AS INVESTMENT. WE NOTE THAT EVEN THE ASSESSIN G OFFICER IN EARLIER YEARS HAS ACCEPTED THE INVESTMENT AS INCOME FROM SHARES BY HOLDING THE SAME UNDER THE HEAD CAPITAL GAINS. THERE IS CATEGORICAL FINDING IN THE IMPUGNED ORDER THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) EXAMINED THE DOCUMENTS/EVIDENCES, FILED BY THE ASSESSEE BEFORE H IM, AND FOUND THAT THEY WERE ONLY TWO TRANSACTION OF LONG T ERM CAPITAL GAINS AND 26 TRANSACTIONS OF SHORT TERM CAPITAL GAI NS AND THE LONG TERM CAPITAL GAINS WERE HELD FOR MORE THAN TWE LVE MONTHS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHE R FOUND THAT MAJORITY OF THE SHARES UNDER THE HEAD SHORT TERM CA PITAL GAINS WERE HELD FROM FOUR MONTHS TO ELEVEN MONTHS. IT IS ALSO NOTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ALREADY CONSIDERED THE CBDT CIRCULAR, WHICH STATES THAT THE ASSESSING OFFICER HAS TO EXAMINE THE SHARES AND IS EXPECTED T O EXAMINE WHETHER THE SHARES WERE HELD AS INVESTMENT OR STOCK IN TRADE. EVEN THERE IS NO BAR IN MAINTAINING TWO PORTFOLIOS I.E. AS INVESTMENT PORTFOLIO, COMPRISING OF SECURITIES, WHI CH ARE TREATED TO BE CAPITAL ASSET AND TRADING PORTFOLIO FOR STOCK IN TRADE, WHICH IS TO BE TREATED AS TRADING ASSET. THE DECISION OF SHRI JANAK S. RANGBALA VS ACIT (ITA NO.1163/MUM/2004) AND MOTILAL OSWAL (ITA NO.3860 TO 3863/MUM/2001), WHICH IS ON IDENTIC AL FACT, HAS ALREADY BEEN CONSIDERED BY THE LD. COMMISSIONER OF INCOME M/S PIVOTAL SECURITIES PVT. LTD. 4 TAX (APPEALS) IN THE IMPUGNED ORDER, WHEREIN IT WAS HELD THAT INTENTION OF THE ASSESSEE HAS TO BE SEEN REGARDING NATURE OF TRANSACTION. EVEN OTHERWISE, IN THE CASE OF ASSESSE E ITSELF, THE DEPARTMENT HAD BEEN ACCEPTING THE CLAIM OF THE ASSE SSEE IN THE PAST, THUS, THE INCOME FROM SALE OF SHARES OUT OF I NVESTMENT HAS TO BE TREATED AS LONG TERM CAPITAL GAINS/SHORT TERM S CAPITAL GAINS, AS THE CASE MAY BE AND NOT AS A BUSINESS INC OME. EVEN OTHERWISE, THE CASE OF THE ASSESSEE IS COVERED BY T HE RATIO LAID DOWN IN GOPAL PUROHIT VS JCIT (2009)(122 TTJ (MUM. TRIBUNAL) 87) AND CIT VS GOPAL PUROHIT (2011) 336 ITR 287 (BO M.) FROM HONBLE JURISDICTIONAL HIGH COURT, WHEREIN IT WAS H ELD THAT TWO SEPARATE PORTFOLIOS ARE PERMISSIBLE. THUS, WE FIND NO INFIRMITY IN THE DIRECTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS).HIS STAND IS AFFIRMED. 2.3. SO FAR AS, (GROUND NO.2) DIRECTING THE ASSESSI NG OFFICER TO ALLOW SET OFF OF BROUGHT FORWARD UNABSORBED CAPITAL LOSSES, AGAINST THE PROFIT OF SUCH SALE OF SHARES, ASSESSED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION BY THE ASSESSING OFFICER IS CONCERNED, SINCE, WE HAVE DECI DED THE AFORESAID GROUND IN FAVOUR OF THE ASSESSEE, THEREFO RE, IT IS CONSEQUENTIAL IN NATURE MORE SPECIFICALLY WHEN WE H AVE HELD THAT ASSESSEE IS A INVESTOR AND THERE IS NOTHING ON RECORD TO SUGGEST THAT SAME SCRIPS WERE TRANSACTED AGAIN AND AGAIN. THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 3. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE F OR ASSESSMENT YEAR 2006-07 (ITA NO.4507/MU/2009), WHER EIN, IDENTICAL GROUND HAS BEEN RAISED AND THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) HAS RELIED UPON THE EARLIER AS SESSMENT M/S PIVOTAL SECURITIES PVT. LTD. 5 YEAR I.E. 2005-06. IN VIEW OF THE OUR AFORESAID OR DER FOR ASSESSMENT YEAR 2005-06, THIS APPEAL OF THE REVENUE IS AUTOMATICALLY DISPOSED OFF, CONSEQUENTLY, DISMISSED . 4. IDENTICAL IS THE SITUATION FOR ASSESSMENT YEAR. 2007-08 (ITA NO.187/MUM/2011), THEREFORE, ON THE REASONING CONTA INED IN THE IMPUGNED ORDER, WE FIND NO INFIRMITY, CONSEQUEN TLY, THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IS UPHELD. FINALLY, ALL THESE APPEALS OF THE REVENUE ARE DISMI SSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 28/01/2015. '1 + ./0 2'3 28/01/2015 / + 9 SD/- (N.K.BILLAIYA) SD/- (JOGINDER SINGH) ! '# ! '# ! '# ! '# / ACCOUNTANT MEMBER '# '# '# '# / JUDICIAL MEMBER MUMBAI; 2' DATED : 28/01/201 5 F{X~{T? P.S/. .. '1 + :* '1 + :* '1 + :* '1 + :* ;0* ;0* ;0* ;0*/ COPY OF THE ORDER FORWARDED TO : 1. <= / THE APPELLANT 2. :><= / THE RESPONDENT. 3. ? ( ) / THE CIT, MUMBAI. 4. ? / CIT(A)- , MUMBAI 5. A9 :* , , / DR, ITAT, MUM BAI 6. 9B( C / GUARD FILE. '1 '1 '1 '1 / BY ORDER, >* :* //TRUE COPY// D DD D/ // /E ' E ' E ' E ' (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI