MSA Securities Services Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2003/CHNY/2013

• Counselvise Citation: 200321714 RSA 2013
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB LD
• Assessee Lawyers: R SIVARAMAN
• Keywords: Capital asset; Date of conversion
• Section: 143(3); 115JB; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . . , ! ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ./ I.T.A.NO.2003/MDS/13 ( / ASSESSMENT YEAR :2010-11 ) M/S,MSA SECURITIES SERVICES PRIVATE LTD., OLD NO.21,NEW NO.6,FIRST FLOOR, POSTALCOLONY 4 TH STREET, WEST MAMBALAM, CHENNAI 600 033. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(3), CHENNAI. PAN AAECM 6823 E ( #$ / APPELLANT ) ( %&#$ / RESPONDENT ) / APPELLANT BY : R.SIVARAMAN,ADVOCATE / RESPONDENT BY : SHRI SHAJI P JACOB, ADDL. LD. CIT D.R. / DATE OF HEARING : 15.01.2014 ! /DATE OF PRONOUNCEMENT : 17.02.2014 ITA NO.2003/MDS/13 2 ' / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LD. CIT(A) IN ITA 433 /13-14 DATED 30.08.2013 PASSED U/S. 143(3) & SEC. 154 READ WITH SEC.50 OF THE ACT FOR T HE ASSESSMENT YEAR 2010-11. 2. THE APPELLANT IS A LIMITED COMPANY, ENGAGED IN THE BUSINESS OF INVESTMENT COUNSELING, HANDLING OF PORTFOLIOS ETC. THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME ON 22.09.2010 F OR THE RELEVANT ASSESSMENT YEAR DECLARING TOTAL INCOME OF ` 29,02,940/-. SUBSEQUENTLY THE RETURN OF INCOME WAS REVISED FOR T HE SECOND TIME ON 24.01.2012 ENHANCING THE TOTAL INCOME TO ` 39,19,20,704/- IN ACCORDANCE WITH SECTION 115JB OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTINY AND IT WAS OBSERVED BY THE LD. ASSESSING O FFICER THAT THE ASSESSEE HAD TRANSFERRED ITS INVESTMENTS IN EQUITY SHARES HELD UNDER THE HEAD STOCK-IN-TRADE TO INVESTMENTS ON 01. 04.2009 AND FINALLY ASSESSMENT WAS COMPLETED BY THE LD. ASSESSING OFFIC ER ON 04.02.2013 WHEREIN THE LD. ASSESSING OFFICER ALONG WITH OTHER ITA NO.2003/MDS/13 3 ADDITIONS, MADE AN ADDITION UNDER THE HEAD SHORT T ERM CAPITAL GAINS. AGGRIEVED BY THE ACTION OF THE LD. ASSESSING OFFICE R, THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT (A), WHO FURTHER C ONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER. UNDER THESE CI RCUMSTANCES, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE ASSESSEE HAS RAISED TWO GROUNDS BEFORE US, HOWEVER, THE ISSUE IS SOLITARY AND THEREFORE, THE GROUNDS ARE CO NCISED HEREIN BELOW FOR OUR CONSIDERATION. LD.LD.CIT (A) HAD ERRED IN CONFIRMING THE ORDER OF THE LD. ASSESSING OFFICER FOR TREATING THE LONG TERM CAPITA L GAIN AS SHORT TERM CAPITAL GAIN WITH RESPECT TO THE SHARES SOLD. 4. LD. A.R. ARGUED BEFORE US STATING THAT OVER THE PRECEDING FINANCIAL YEARS THE ASSESSEE HAD VERY MEAGER SALE O F SHARES AND THE SHARES WERE CONSISTENTLY SHOWN AT COST PRICE IN THE BALANCE SHEET. IT WAS FURTHER SUBMITTED THAT ON NO OCCASION THE SHARE S WERE REVALUED, THOUGH THEY WERE SHOWN UNDER DIFFERENT NOMENCLATURE . FOR THE ITA NO.2003/MDS/13 4 AFORESAID REASONS, THE LD. A.R. PLEADED THAT THE PE RIOD OF HOLDING OF THE EQUITY SHARES MAY BE COMPUTED FROM THE YEAR OF PURCHASE OF THE SHARES AND NOT FROM THE PERIOD THE SHARES WERE SHOW N IN THE BALANCE SHEET AS INVESTMENT. 5. LD. D.R ON THE OTHER HAND STATED THAT SINCE THE ASSET WAS SHOWN IN THE BALANCE SHEET UNDER THE HEAD INVESTME NTS AS ON 01.04.2009, PRIOR TO WHICH IT WAS SHOWN AS STOCK IN TRADE, THE HOLDING PERIOD FOR SALE OF SUCH SHARES HAS TO BE COMPUTED F ROM 01.04.2009 AND NOT FROM THE DATE ON WHICH THE SHARES WERE PURC HASED. IT WAS THEREFORE ARGUED THAT THE ORDER OF THE LD. ASSESSIN G OFFICER AND LD. LD. CIT (A) ARE JUSTIFIED AND THE SAME MAY BE UPH ELD. THE LD. D.R FURTHER RELIED ON THE DECISION OF THE ITAT CHENNAI BENCHES IN LOHIA METALS (P) LTD., VS. ACIT REPORTED IN (2010) 131TTJ (CHENNAI) 472, WHICH WAS RELIED UPON BY THE LD. ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS PRES ENTED BEFORE US IT IS EVIDENT THAT THE ASSESSEE HAS CONVERTED IT STOC K IN TRADE VIZ. ITA NO.2003/MDS/13 5 EQUITY SHARES TO INVESTMENTS AS ON 01.04.2009 I .E. FOR THE RELEVANT ASSESSMENT YEAR 2010-11. ON THE IDENTICAL SITUATIO N IN THE CASE CITED BY THE LD. D.R, IT WAS DECIDED THAT WHEN STOCK-IN-TRADE IS CONVERTED INTO CAPITAL ASSET, THE HOLDING PERIOD O F CAPITAL ASSET FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IS TO BE RECKONED FROM THE DATE OF CONVERSION OF STOCK-IN-TRADE INTO CAPITAL ASSET BECAUSE PRIOR TO THAT DATE, THE ASSET WAS NOT HELD AS CAPITAL ASSETS; AFTER CONVERSION OF STOCK-IN-TRADE OF SHARES INTO CAPITAL ASSETS, SHARES WERE NOT HELD FOR 12 MONTHS BEFORE SALE AND THEREFORE EXEMPTION UNDER S.10(38) WAS NOT ALLOWABLE . 7. FROM THE ABOVE REASONED DECISION OF CO-ORDINAT E BENCHES OF THE CHENNAI TRIBUNAL, IT IS MADE CLEAR THAT IN A SI TUATION WHERE STOCK IN TRADE IS CONVERTED AS INVESTMENTS, ON SUBSEQUENT TRANSFER THE PERIOD OF HOLDING OF INVESTMENT SHALL BE COMPUTED F ROM THE DATE IN WHICH THE STOCK-IN-TRADE WAS CONVERTED AS INVESTMEN TS. THEREFORE, WE DO NOT HAVE ANY REASON TO INTERFERE WITH THE ORD ERS OF THE LD. ASSESSING OFFICER OR THE LD.CIT (A). THUS, THE ISSU E IS DECIDED AGAINST THE ASSESSEE. ITA NO.2003/MDS/13 6 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON 17 TH FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (S.S.GODARA) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH FEBRUARY, 2014. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE