The ACIT, 5(1), Indore V. Shri Jawaharlal Agrawal, Indore

ITA 204/IND/2011

• Counselvise Citation: 20422714 RSA 2011
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: MAHESH AGRAWAL C AS
• Keywords: Business income; Retrospective amendment; Non-deduction of tax; Ignorance of law
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M. PAN NO. : ADSPA1202H I.T.A.NO. 204 & 205/IND/2011 A.Y. : 2006 - 07 & 2007 - 08 ACIT, SHRI JAWAHARLAL AGRAWAL, 5(1), VS 402, ALANK AR CHAMBERS, INDORE RATLAM KOTHI, INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI KESHAVE SAXENA, CIT DR RESPONDENT BY : SHRI MANOJ GUPTA & SHRI MAHESH AGRAWAL, C. AS DATE OF HEARING : 1 8 .0 7 .2012 DATE OF PRONOUNCEMENT : 31 . 0 8 .201 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDERS OF CIT(A)-II, INDORE, DATED 8.6.2011, FOR TH E ASSESSMENT YEARS 2006-07 & 2007-08. -: 2: - 2 2. COMMON GRIEVANCE OF THE REVENUE IN BOTH THE YEARS RELATES TO TREATING THE GAIN ON SALE OF SHARES AS C APITAL GAINS AS AGAINST BUSINESS INCOME HELD BY THE ASSESSING OF FICER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS E NGAGED IN TRADING BUSINESS AS WELL AS INVESTMENT IN SHARES. D URING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER OBSERVE D THAT IN THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAD MADE TOTAL TRANSACTION OF SHARES WORTH RS. 1.53 CRORES ON WHIC H SHORT TERM CAPITAL GAIN OF RS. 21,04,055/- HAS BEEN SHOWN IN THE RETURN. BY OBSERVING THAT THE ASSESSEE HAS DONE PUR CHASE AND SALE OF SHARES WITH THE MOTIVE OF EARNING PROFIT, T HE ASSESSING OFFICER TREATED THE SHORT TERM CAPITAL GAIN AS BUSI NESS INCOME. 4. BY THE IMPUGNED ORDER AFTER RECORDING FOLLOWING FINDINGS, THE CIT(A) HELD THAT CAPITAL GAIN EARNED ON SALE OF SHARES WERE SHORT TERM CAPITAL GAINS AND NOT BUSINE SS INCOME - 4.1 GROUND NO.1 RELATES TO TREATMENT GIVEN BY THE AO TO SHORT TERM CAPITAL GAINS AS BUSINESS INCOME. IN THE CASE OF -: 3: - 3 THE ASSESSEE HIMSELF, THE ISSUE HAS BEEN DECIDED A GAINST HIM BY MY PREDECESSOR IN HIS ORDER DTD. 19-03-08 IN APPEAL NO. IT- 317/07-08/236 FOR AY 2005-06. IN ASSESSMENT YEAR 20 05-06, EVEN AFTER AVAILING SUFFICIENT TIME AND OPPORTUNITY THE ASSESSEE DID NOT MAKE WRITTEN SUBMISSIONS; DURING APPEAL PRO CEEDINGS AND THE APPEAL HAD TO BE DECIDED IN A BEST JUDGMENT MANNER. BUT THIS IS NOT THE CASE THIS YEAR. THE APPELLANT H AS MADE VERY ELABORATE AND EXHAUSTIVE SUBMISSIONS DISCUSSED HERE INABOVE. IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSES SING OFFICER HAD ACCEPTED THE CLAIM OF THE ASSESSEE IN THE EARLI ER ASSESSMENT YEARS WHICH IS APPARENT FROM THE COPIES OF ORDERS FILED DURING APPEAL PROCEEDINGS. DURING DISCUSSIONS , THE AR EXPLAINED THAT FROM THE TOTAL TURNOVER OF THE ASSES SEE IN CONSTRUCTION BUSINESS, IT IS EVIDENT THAT THE ASSES SEE WOULD BE HARDLY ABLE TO DEAL IN SHARES LIKE A WHOLE TIME BUS INESSMAN. THE SON OF THE ASSESSEE WORKING WITH HIM IS A TECHNICAL PERSON LOOKING MAINLY TECHNICAL ASPECTS OF THE CONTRACT WO RKS LEAVING ALL OTHER ASPECTS AND MATTERS TO BE ATTENDED BY THE ASSESSEE ONLY. IN SUCH A POSITION IT IS BUT NATURAL THAT TH E ASSESSEE MIGHT BE GETTING HARDLY ANY SPARE TIME TO DEVOTE TO THE SHARE -: 4: - 4 BUSINESS. OF COURSE, SALE/PURCHASE OF SHARES IS DON E THROUGH BROKER BUT STILL THE BROKER HAS TO BE INSTRUCTED EV ERY TIME FOR SALE/PURCHASE DILIGENTLY AND THIS CAN BE DONE ONLY BY A FULL TIME BUSINESSMAN WHO KEEPS HIMSELF WELL INFORMED OF UPS AND DOWNS IN SHARE PRICES AND NOT LIKE ASSESSEE ALREADY OVERBURDENED WITH HIS MAIN BUSINESS OF CONSTRUCTION SPREAD OVER TO DIFFERENT DISTRICTS IN ALL FOUR DIRECTIONS. IT IS REITERATED THAT THE ASSESSEE HELD THE SHARES ONLY AS INVESTMEN T AND NOT AS STOCK IN TRADE HENCE THE SURPLUS SHOULD BE ASSED AS CAPITAL GAINS ONLY AND NOT INCOME FROM BUSINESS. TAKING IN TO ACCOUNT ALL RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE. IT CLEARLY EMERGES THAT THE SURPLUS FROM SALE PURCHASE OF SHARES IN THE ASSESSEE'S CASE IS RIGHTLY ASSESSABLE AS CAP ITAL GAINS AND NOT AS BUSINESS PROFITS . THE INCOME OFFERED UN DER THE HEAD SHORT TERM CAPITAL GAINS IS DIRECTED TO BE ASS ESSED AS SUCH AS AGAINST ASSESSED BY THE ASSESSING OFFICER A S BUSINESS PROFITS. 5. BY FOLLOWING THE FINDINGS FOR ASSESSMENT YEAR 2006- 07, THE CIT(A) HELD THAT PROFIT EARNED BY THE ASSESSEE ON SALE OF -: 5: - 5 SHARES IN THE ASSESSMENT YEAR 2007-08 WERE ALSO SHO RT TERM CAPITAL GAINS. 6. IN THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFIC ER HAS ALSO MADE DISALLOWANCE BY INVOKING THE PROVISIO NS U/S 40(A)(IA) IN RESPECT OF THE PAYMENT MADE FOR TRANSP ORTATION CHARGES. 7. FACTS IN BRIEF ARE THAT THE ASSESSEE HAS INCURRED TRANSPORTATION CHARGES, LABOUR & SUB CONTRACTOR CHA RGES AND HIRE CHARGES TO THE TUNE OF RS. 21,84,555/-, RS. 1, 61,09,029/- AND 15,35,953/- RESPECTIVELY. OUT OF THE ABOVE, THE ASSESSEE WAS LIABLE TO DEDUCT TDS ON SOME PAYMENTS, WHICH WA S DONE BY THE ASSESSEE IN THE MONTH OF MARCH AND ENTIRE TA X DEDUCTED WAS DEPOSITED ON 31/10/2007. AS PER THE RE GULAR PRACTICE FOLLOWED BY THE ASSESSEE, HE HAS GENERALLY MADE PAYMENTS FOR THE WHOLE YEAR TO VARIOUS PARTIES ON AD HOC BASIS AND HAS RECEIVED AND CREDITED THEIR FINAL BILLS IN THE MONTH OF MARCH ITSELF. THE ASSESSEE DEDUCTED THE TAX AT THE TIME OF CREDIT OF BILL I.E. IN THE MONTH OF MARCH AND DEPOS ITED THE SAME IN GOVERNMENT A/C ON 31/10/2007, WHICH IS THE DUE DATE FOR ASSESSEE TO FILE THE INCOME TAX RETURN. TH E LD. A.O. -: 6: - 6 HAS TAKEN RECOURSE TO THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT, AS RETROSPECTIVELY AMENDED BY THE FINANCE ACT, 2008 AND ACCORDINGLY DISALLOWED ALL SUCH AMOUNTS PAID TILL F EBRUARY, 2007 ON WHICH TDS WAS NOT DEDUCTED AND PAID IN THE FINANCIAL YEAR ITSELF. ALTHOUGH, HE STATED IN THE O RDER THAT HE ALLOWED THE EXPENSES INCURRED IN THE MONTH OF MARC H '07 ON THE BASIS OF THE ABOVE AMENDMENT. 8. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE DISALLOWANCE AFTER HAVING THE FOLLOWING OBSERVATION S :- 4.4 GROUNDS NO. 4,6,7 AND 8 RELATE TO DISALLOWANCE S MADE U/S 40(A)(IA) OF RS. 18,89,506/-, RS. 67,94,274/-, RS. 3,50,108/- AND RS. 25,33,828/- ON ACCRUAL OF TRANSPORT CHARGES, LABOUR EXPENSES, MACHINERY HIRE CHARGES AND PAYMENTS MADE TO SUBCONTRACTORS RESPECTIVELY. THE ABOVE DISALLOWANCES HAVE BEEN MADE ON ACCOUNT OF LATE PAYMENT OF TAX DEDUCTED AT SOURCE AND NO OTHER ADVERSE FINDING ARE RECORDED BY THE ASSESSING OFFIC ER IN ASSESSMENT ORDER. THE ASSESSING OFFICERS REPORT AS NOTED ABOVE WAS CALLED FOR ON APPELLANTS SUBMISSIO N. -: 7: - 7 IN HIS COUNTER COMMENTS TO AO'S REMAND REPORT, THE APPELLANT HAS STATED THAT HE PRODUCED ALL THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS ETC. BEFORE TH E AO TO VERIFY THE FACTS AT HIS END. IT IS ASSERTED B Y THE APPELLANT THAT THE AO REPORTED THE DIFFERENCES IN SUMMARY MANNER WITHOUT ASSIGNING ANY REASON FOR THE SAME AND REQUESTED FOR ALLOWING THE APPELLANT'S CLAIM IN FULL. IT IS ALTERNATELY CLAIMED THAT DISALLOWANCE BE DELETED AS TDS WAS FINALLY PAID BEF ORE DUE DATE OF FILING OF RETURN IN VIEW OF AMENDMENT B Y FINANCE ACT, 2010. IT WAS FURTHER EMPHASIZED THAT THERE CANNOT BE ANY ESTOPPELS IN LAW. IF THE APPELL ANT ON ACCOUNT OF IGNORANCE OF LAW OR MISTAKEN BELIEF I N LAW AGREED TO DISALLOWANCE AND IF THE BENEFIT IS FO UND TO BE DUE IN LAW, MORE SO ON ACCOUNT OF SUBSEQUENT AMENDMENT WHICH WAS NOT AVAILABLE AT RELEVANT POINT OF TIME, THE APPELLANT CANNOT BE DENIED THE BENEFIT ADMISSIBLE IN LAW. AFTER CONSIDERING SUBMISSIONS OF THE APPELLANT THAT -: 8: - 8 WHATEVER MAY- BE REASON FOR DIFFERENCE IN FIGURES AS CLAIMED BY THE APPELLANT AND REPORTED BY THE AO, TH E FACT IS THAT SUCH CLAIM OF THE APPELLANT IS TO BE ALLOWED AFTER AMENDMENT IN SECTION 49(A)(IA) BY FINANCE ACT, 2010, SINCE THE AMENDMENT IS CURATIVE IN NATURE AND RETROSPECTIVE IN OPERATION DESIGNED T O ELIMINATE UNINTENDED CONSEQUENCES WHICH CAUSED UNDUE HARDSHIP TO THE TAXPAYERS. HON'BLE AHMADABAD BENCH OF ITAT HAS HELD IN THE CASE OF KANUBHAI RAMJIBHAI MAKWANA V. ITO,[2011] 37 (II) ITCL 349 (ABD 'B' TRIB), THAT NATURE OF AMENDMENT MADE BY THE FINANCE ACT, 2010 IN SECTION 40(A)(IA) IS OF CLARIFICATORY NATURE AND HENCE WOULD APPLY RETROSPECTIVELY FROM 01-04-05. SINCE THE APPELLANT HAS PAID TAX DEDUCTED AT SOURCES BEFORE DUE DATE OF FILING THE RETURN OF INCOME FOR THIS YEAR, THE IMPU GNED ADDITIONS OF RS. 18,89,506/- RS. 67,94,274, RS. 3,50,108/- AND RS. 25,33,828/- ON ACCOUNT OF TRANSPORT CHARGES, LABOUR EXPENSES, MACHINERY HIRE CHARGES AND PAYMENTS MADE TO SUBCONTRACTORS -: 9: - 9 RESPECTIVELY ARE HEREBY DELETED. GROUND NOS. 4,6,7 AND 8 ARE ALLOWED. 9. AGAINST THE ABOVE ORDERS OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US IN BOTH THE YEARS UNDER CONSIDERAT ION. 10. IT WAS ARGUED BY THE LD. CIT DR, SHRI KESHAVE SAXEN A, THAT AS PER FINANCE ACT, 2008, SECTION 40(A)(IA) WA S AMENDED WITH EFFECT FROM 01.04.2005 IN WHICH IN SUB SEC(B) IT WAS MADE MANDATORY TO PAY TDS DEDUCTED/DEDUCTABLE UPTO FEBRUARY OF PREVIOUS YEAR (I.E. FROM APRIL, 2006 TO FEB, 2007) UPTO 31.03.2007. BUT ASSESSEE PAID THIS AMOUNT IN G OVT. A/C ON 31.10.2007 AND THEREFORE COMMITTED DEFAULT U/S 40(A)(IA). THE FINANCE ACT, 2010 AMENDED THIS PROVISION U/S 40(A)(IA) WITH EFFECT FROM 01.04.2010, WHEREBY TDS DEDUCTED W AS ALLOWED TO BE PAID IN GOVT. A/C UPTO DUE DATE FOR FILING RETURN I.E. IN PRESENT CASE UPTO 31.10.2007. BUT THIS AMEN DED PROVISION IS EXPRESSLY MADE APPLICABLE BY PARLIAMEN T FROM 01.04.2010 AND NOT WITH RETROSPECTIVE EFFECT FROM 01.04.2005. IT IS PERTINENT TO NOTE THAT WHEN ASSES SEE DEDUCTED TDS IN F.Y. 2006-07 UPTO MARCH, 2007 OR WH EN -: 10: - 10 ASSESSEE PAID TDS IN GOVT. A/C ON 31.10.2007 OR WHEN ASSESSEE FILED RETURN OF INCOME ON 31.03.2008 FOR A .Y. 2007- 08, OR WHEN ASSESSMENT ORDER WAS PASSED ON 31.11.20 09, THE AMENDMENT IN PROVISIONS OF SECTION 40(A)(IA) MA DE BY FINANCE ACT, 2010 W.E.F. 01.04.2010 WAS NOT EVEN IN EXISTENCE. THE PROVISIONS WHICH WERE NOT EVEN IN TH E STATUTE WHEN RELEVANT ACT OF DEDUCTION OF TDS WAS MADE OR W HEN TDS WAS PAID IN GOVT. A/C, COULD NOT BE GUIDING PROVISIONS GOVERNING SECTION 40(A)(IA) BUT THE PROVISION APPLI CABLE WAS THE ONE BROUGHT BY FINANCE ACT, 2008 MADE APPLICABL E W.E.F. 01.04.2005. THESE PROVISIONS ARE CLEARLY FLOUTED BY ASSESSEE, AS TDS WAS NOT PAID IN GOVT. A/C UPTO 31.03.2007 AS REQUIRED BY THESE PROVISIONS. THE CONTENTION IF ACC EPTED THAT DIFFERENCE IN PROVISIONS OF FINANCE ACT'2008 & THAT IN FINANCE ACT'20L0 WILL PUT ASSESSEE'S IN TWO DIFFERE NT YEARS INTO ADVERSE POSITION, IS HEAVILY WEIGHED AGAINST A SSESSEE, BECAUSE ACCEPTING ASSESSEE'S CONTENTION WOULD PUT A LL THOSE ASSESSEE'S IN A.Y. 2007-08 IN ADVERSE CONDITION, WH O PAID TDS IN GOVT. A/C IN MARCH, 2007 ITSELF FOLLOWING THE EXISTING PROVISIONS, WHEREAS ASSESSEE ENJOYED SUCH AMOUNT AN D -: 11: - 11 INTEREST ON IT BY NOT PAYING IT IN MARCH'2007 & INS TEAD PAID IT ON 31.10.2007. 11. RELIANCE WAS PLACED BY THE LD. CIT DR ON THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE GYM GRANITES, 271 ITR 322, WHEREIN THREE MEMBERS BENCH LAID DOWN FOLLOWI NG PRINCIPLE:- 'PARA 13:- EVERY STATUTE IS PRIMA FACIE PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE RETROSPECTIVE OPERATION. THERE IS NOTHING IN THE WO RDING OF THE 1991 AMENDMENT TO SUGGEST THAT IT WAS TO OPERATE RETROSPECTIVELY. APART FROM THE LACK OF ANY EXPRESS WORDS INDICATING SUCH INTENTION, THERE IS NOTHING IN THE STATUTE FROM WHICH WE CAN INFER ON ANY PRINCIPLE OF INTERPRETATI ON THAT THE INTENTION OF PARLIAMENT WAS TO GIVE THE AMENDMENT R ETROSPECTIVE EFFECT' 'PARA 14:- AN ARGUMENT FOUNDED ON WHAT IS CLAIMED TO BE THE INTENTION OF PARLIAMENT MAY HAVE APPEAL BUT A COU RT OF LAW HAS TO GATHER THE OBJECT OF THE STATUTE FROM THE LANGUAG E USED. WHAT ONE MAY BELIEVE OR THINK TO BE THE INTENTION OF PARL IAMENT CANNOT PREVAIL IF THE LANGUAGE OF THE STATUTE DOES NOT SUPPORT THAT V IEW. -: 12: - 12 12. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAGHUBIR SINGH, 171 IT R 548, CONSISTING OF FIVE MEMBERS BENCH WHEREIN IT WAS HEL D THAT THE PRINCIPLE IN PARA 38 BY STATING THAT IF PARLIAM ENT HAD INTENDED THAT THE BENEFIT OF ENHANCED SOLATIUM SHOU LD BE EXTENDED TO ALL PENDING PROCEEDINGS, IT WOULD HAVE SAID SO IN CLEAR LANGUAGE. ON THE CONTRARY THE TERMS OF SEC 30 (2) INDICATE A LIMITED EXTENSION OF THE BENEFIT. SINCE IT IS NECESSARY TO SPELL OUT THE DEGREE OF RETROSPECTIVIT Y FROM THE LANGUAGE OF THE RELEVANT PROVISION ITSELF, CLOSE AT TENTION MUST BE PAID TO THE PROVISIONS OF SECTION 30(2) FOR DETE RMINING THE SCOPE OF RETROSPECTIVE RELIEF INTENDED BY PARLIAMEN T IN THE MATTER OF ENHANCED SOLATIUM. 13. I N VIEW OF THE ABOVE DECISIONS, THE LD. CIT DR ARGUE D THAT IT IS SETTLED LAW AS PER THE AFORESAID TWO JUD GMENTS OF THREE MEMBER FIVE MEMBER BENCH ON RETROSPECTIVE APPLICATION OF AN AMENDMENT IN THE ACT, THAT THE DE GREE OF RETROSPECTIVITY HAS TO BE GATHERED FROM THE LANGUAG E OF THE -: 13: - 13 RELEVANT PROVISION ITSELF. THEIR LORDSHIP WENT ON T O SUCH AN EXTENT TO SAY THAT WHAT ONE MAY BELIEVE OR THINK TO BE THE INTENTION OF PARLIAMENT CANNOT PREVAIL IF THE LANGU AGE OF THE STATUTE DOES NOT SUPPORT THAT VIEW. NOW IF WE APPLY THIS PRINCIPLE TO THE PRESENT CASE THE WORDINGS OF AMEND MENT IN SECTION 40(A)(IA) OF THE I.T. ACT ARE ABSOLUTELY CL EAR THROUGH FINANCE ACT' 2008 WHICH MAKES IT APPLICABLE FROM 01.04.2005, WHEREAS THE FINANCE ACT'2010 MAKES AMENDMENT IN THIS SECTION APPLICABLE FROM 01.04.201 0. WHEN THERE IS NO AMBIGUITY IN DATE OF APPLICATION O F SUCH AMENDMENTS, THERE IS NO SCOPE OF ANY INTERPRETATION REGARDING RETROSPECTIVITY OF SUCH AMENDMENTS. 14. HEAVY RELIANCE WAS ALSO PLACED BY LD. CIT DR ON THE DECISION OF I.T.A.T. SPECIAL BENCH IN THE CASE OF B HARTI SHIPPING YARD LIMITED, 141 TTJ 129, WHEREIN RETROSP ECTIVELY OF THESE TWO AMENDMENTS IN SECTION 40(A)(IA) WERE D EALT BY THE SPECIAL BENCH AND IT WAS HELD IN PARA 25 THAT : - IT CAN THUS BE NOTICED THAT AMENDMENT TO SECTION 40(A)(IA) BY FINANCE ACT'2010 HAS BEEN -: 14: - 14 SPECIFICALLY MADE RETROSPECTIVELY APPLICABLE FROM T HE A.Y. 2010-11.IT HAS NOWHERE BEEN EXPRESSLY SET OUT THAT THE AMENDMENT IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW. THE INTENTION OF T HE LEGISLATURE AS GATHERED FROM THE NOTES ON CLAUSES AND THE MEMORANDUM EXPLAINING THE PROVISION OF FINANCE BILL DOES NOT DOES NOT PARTICULARLY INDICA TE ANY RELAXATION IN THE PROVISION RETROSPECTIVELY FRO M A. Y: 2005-06. ' (2) IN PARA 28 FOLLOWING WAS NOTED:- 'IT IS SETTLED RULE OF CONSTRUCTION THAT EVERY STA TUTE IS PRIMA / FACIE PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE RETROSPECTIVE OPERATION '. 'THE INTENTION OF THE LEGISLATURE WHILE INTRODUCING THE PROVISION IS GATHERED, INTER ALIA, FROM THE FINANCE BILL, MEMORANDUM EXPLAINING THE PROVISION OF THE FINANCE BILL'. -: 15: - 15 (3)IN PARA 29A, 29:8 CASE LAW IN CASE OF ALLIED MOTORS P. LTD. (1997) 224 ITR 677(SC) WAS DISCUSSED IN WHICH AMENDMENT TO SECTION 43B WAS HELD AS RETROSPECTIVE ON THE GROUND THAT IT WAS MADE TO REMOVE UNINTENDED CONSEQUENCES OF THE SECTION. (4) IN PARA 29C & 29D CASE LAW OF ALOM EXTRUSION LTD. (2009) 227 CTR(SC) 417 WAS DISCUSSED IN WHICH IT WAS HELD THAT INSERTION OF SECOND PROVISO TO SECTION 43B RESULTED IN IMPLEMENTATION PROBLEMS. (5) IN PARA 34 FOLLOWING WAS NOTED:- 'IT IS THE SOLE PREROGATIVE OF THE LEGISLATURE TO ENACT, MODIFY AND REPEAL ANY LAW AND ALSO TO INTRODUCE ANY AMENDMENT AS RETROSPECTIVE OR PROSPECTIVE. ALL PROVISIONS OF THE ACT ARE BROUGHT OUT WITH A PARTICULAR OBJECT IN MIND. SOFT PROVISIONS, IN THE SHAPE OF INCENTIVES ETC., ARE -: 16: - 16 USUALLY AIMED AT SPECIFIC GROWTH, LIKE THAT OF A PARTICULAR INDUSTRY OR PARTICULAR AREA. ON THE OTHER HAND, THE SO-CALLED HARSH PROVISIONS ARE AIMED AT MOBILIZING RESOURCES FOR UTILIZING THEM IN WELFARE MEASURES AND FOR GENERAL GROWTH OF THE NATION, SUCH AS THAT OF HEALTH AND EDUCATION OF ITS CITIZENS AND MAKING AVAILABLE BETTER INFRASTRUCTURE ETC. ' 'SO LONG AS A PROVISION IS CONSTITUTIONALLY VALID , THE JUDICIARY CANNOT INTERVENE, EVEN IF IT IS HARSH' (6) IN PARA 35 FOLLOWING WAS NOTED:- 'THE RELEVANT CRITERIA TO BE TAKEN INTO CONSIDERATI ON FOR ARRIVING AT THE DECISION ABOUT THE RETROSPECTIVE OR PROSPECTIVE EFFECT OF A LATER PROVISION, IS TO UNEARTH THE INTE NTION OF THE LEGISLATURE AT THE TIME OF INTRODUCING THE ORIGINAL PROVISION AND NOT WHETHER IT CAUSED HARDSHIP TO THE TAXPAYERS . ' 'THE REASON FOR NOT HOLDING SUCH LATER AMENDMENT AS RETROSPECTIVE IS MANIFEST THAT THE LEGISLATURE IN I TS WISDOM INTENDED TO IMPOSE A HARSH LEVY. IN SUCH A CASE THE JUDICIAL OR QUASI JUDICIAL AUTHORITIES CANNOT HELP THE SITUA TION BY -: 17: - 17 GRABBING THE LEGISLATIVE POWER IN HOLDING SUCH LATE R RELAXATION AS RETROSPECTIVE, WHEN THE LEGISLATURE H AS ITSELF MADE IT PROSPECTIVE. ' (7) IN PARA 38 FOLLOWING WAS NOTED:- 'THE CASES OF ALLIED MOTORS (P. ) LTD. (SUPRA) AND ALOM EXTRUSIONS LTD. (SUPRA) FIT INTO THIS SECOND CATEGO RY OF CASES. IN ALLIED MOTORS ( P.) LTD. 'S CASE (SUPRA) THE AMENDMENT WAS HELD TO BE RETROSPECTIVE ON THE GROUND THAT IT WAS IMPOSSIBLE TO PAY SALES-TAX FOR THE LAST QUARTER BEFORE THE CL OSE OF THE YEAR AS THE LIABILITY TO PAY WOULD ARISE ONLY ON OR AFTER 1ST APRIL. AS IT COULD NEVER HAVE BEEN THE INTENTION OF THE LEGISLATURE TO REQUIRE THE ASSESSEE TO DO IMPOSSIBL E, THE AMENDMENT MADE TO SECTION 43B WAS HELD TO HAVE RETROSPECTIVE EFFECT FROM THE DATE OF INSERTION OF THE PROVISION. SIMILARLY IN ALOM EXTRUSIONS LTD. 'S CASE (SUPRA), THE IMPLEMENTATION OF THE PROVISION LED TO THE DENIAL O F DEDUCTION FOR ALL TIMES NOTWITHSTANDING THE INTENTION OF THE LEGISLATURE TO ALLOW DEDUCTION ON PAYMENT BASIS. ' (8) IN PARA 39 FOLLOWING WAS NOTED:- 'THE CASES OF ALLIED MOTORS ( P.) LTD. (SUPRA) AND ALOM -: 18: - 18 EXTRUSIONS LTD. (SUPRA) ARE BASED ON THE PROPOSITIO N THAT THE IMPLEMENTATION OF THE EARLIER PROVISIONS LED TO THE CONSEQUENCES WHICH WERE NEVER ENVISAGED. THE EMPHAS IS IS ON THE REMOVAL OF UNINTENDED CONSEQUENCES AND NO T INTENDED CONSEQUENCES, EVEN IF HARSH. IT IS SETTLED LEGAL POSITION THAT THERE CANNOT BE ANY EQUITY ABOUT THE TAX. IT IS FOR THE PARLIAMENT TO DECIDE AS TO IN WHAT MANNER T HE TAX IS TO BE LEVIED AND COLLECTED. IF A PROVISION IS MADE WHICH IS HARSH BUT OTHERWISE CONSTITUTIONAL AND PRACTICAL OF IMPLEMENTATION, THERE CANNOT BE ANY QUESTION OF REA DING DOWN SUCH PROVISION ON THE GROUND OF EQUITY OR HARD SHIP. INTERVENTION BECOMES NECESSARY WHEN AS A RESULT OF IMPLEMENTATION OF A PROVISION, CERTAIN SUCH CONSEQU ENCES FOLLOW WHICH WERE NEVER INTENDED. IF SUBSEQUENTLY T HE RIGOUR OF THE PROVISION IS TONED DOWN FOR ADDRESSIN G TO SUCH UNINTENDED HARDSHIP TO THE ASSESSEES, IT WOULD BE CONSIDERED AS RETROSPECTIVE. ON THE OTHER HAND IF I T WAS CLEAR AT THE TIME OF THE INSERTION OF THE PROVISION THAT SOME HARDSHIP FROM THE ASSESSEE'S PERSPECTIVE IS GOING T O BE CAUSED, THEN A SUBSEQUENT AMENDMENT TO REDUCE SUCH -: 19: - 19 HARDSHIP FROM A HIGHER LEVEL TO LOWER LEVEL, CANNOT BE CONSIDERED AS RETROSPECTIVE UNLESS EXPRESSLY STATED . ' (9) IN PARA 42 FOLLOWING IS NOTED :- 'WITH THE INSERTION OF SECTION 40(A) ( IA) BY THE FINANCE (NO.2) ACT, 2004 NON-DEDUCTION OF TAX AT SOURCE FRO M THE ITEMS OF EXPENSES SPECIFIED OR FAILURE TO PAY S UCH TAX AFTER DEDUCTION, RESULTS INTO ONE MORE ADVERSE CONSEQUENCE IN THE SHAPE OF DISALLOWANCE OF THE AMOUNT OF EXPENDITURE IN THE YEAR OF INCURRING IT. SIMULTANEOUS WITH THE DISALLOWANCE, PROVISO PROVIDES THAT THE DEDUCTION OF THE EXPENDITURE SHAL L BE ALLOWED IN THE SUBSEQUENT YEAR WHEN THE DEDUCTED TAX IS PAID. ' THIS LEADS US TO TWO CONCLUSIONS, THAT PROVISO HA S MADE SECTION WORKABLE AND REMOVED UNINTENDED CONSEQUENCES MEANING THEREBY THE FINDINGS OF APEX COURT IS CASE OF ALLIED MOTORS (P) LTD. AND ALOM EXTRUSION LTD. WILL NOT APPLY TO PRESENT CASE. SECO NDLY IF ON THE BASIS OF HARDSHIP & EQUITY AMOUNT IS ALLOWED AS EXPENSE IN A.Y : 2007-08, THEN IT WILL RENDER THE -: 20: - 20 PROVISO TO SECTION 40(A)(IA) OTIOSE AS THAT PROVISO PERMITS ALLOWANCE OF SUCH EXPENSE ONLY IN A. Y: 2008- 09, WHEN SUCH TDS WAS PAID TO GOVT. INTERPRETATION OF STATUTE SHOULD NOT GIVE RISE TO ABSURDITY & SHOULD NOT MAKE A PROVISION REDUNDANT AS HELD IN CASE OF HP. VISHWERWARIAH (KAR) 250 ITR 863 AND CHARTERED HOUSING(KAR) 250 ITR 1. (10) IN PARA 44 FOLLOWING IS NOTED THAT:- 'IT IS IMPORTANT TO NOTE THAT THE AMENDMENT BY THE FINANCE ACT, 2008 WAS MADE WITH RETROSPECTIVE EFFECT FROM 1 -4-2005. THUS IT CAN BE SEEN THAT FROM THE ASSESSMENT YEAR 2 005-06 UP TO ASSESSMENT YEAR 2009-10, POST THE RETROSPECTI VE AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2008, THE FIRST CATEGORY OF DISALLOWANCES INCLUDED THE CASES IN WHI CH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE ON THE P ART OF THE ASSESSEE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139; AND THE SECOND CATEGORY INCLUDED CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE FIRST ELEVEN MONTHS OF THE PREV IOUS YEAR -: 21: - 21 BUT THERE WAS FAILURE TO PAY IT BEFORE THE LAST DAY OF THE PREVIOUS YEAR. THE FINANCE ACT, 2010 HAS MADE PARTI AL CHANGE IN THE SPECIFIED TIME FOR PAYMENT OF TAX ONL Y IN THE ABOVE REFERRED SECOND CATEGORY BY EXTENDING IT FROM THE LAST DAY OF THE PREVIOUS YEAR TO THE TIME SPECIFIED UNDE R SECTION 139(1) OF THE ACT, IN PARITY WITH THE SPECIFIED TIM E OF THE FIRST CATEGORY. EXCEPT FOR THAT THERE IS NO CHANGE IN THE OVERALL STRUCTURE OF THE PROVISION. ' (11) IN PARA 45 FOLLOWING IS NOTED:- 'WHEN THE AMENDMENT DOES NOT REMOVE THE UNINTENDED HARDSHIP OR IS NOT EXPLANATORY, THE SAME CANNOT BE HELD TO BE RETROSPECTIVE UNLESS IT IS SPECIFICALLY PROVIDED . ' (12) IN PARA 49 FOLLOWING IS NOTED:- 'IT IS THE COMPLETE PROVISION OF SECTION 40(A)( IA) TOGETHER WITH ITS PROVISO AS PREVAILING IN A PARTICULAR YEAR WHIC H GOVERNS THE NON-DEDUCTIBILITY OF EXPENDITURE IN ONE YEAR AN D THEN ITS DEDUCTIBILITY IN THE LATER YEAR. ' (13) IN PARA 52 FOLLOWING IS NOTED:- 'FROM THE ABOVE PARA IT CAN BE SEEN THAT THERE IS N O HINT IN THE -: 22: - 22 PROVISO TO SECTION 40(A)(IA), AS CONTENDED BY THE L D. AR, THAT THE AMENDMENT IS RETROSPECTIVE FROM 1:4-2005. ON THE OT HER HAND THE FINANCE MINISTER'S SPEECH IS ONE MORE ADDITIONA L REASON FOR HOLDING AMENDMENT OF THE FINANCE ACT, 2010 AS NOT RETROSPECTIVE FROM ASSESSMENT YEAR 2005-06. THE REL EVANT PARA OF THE SPEECH IS AS UNDER :- 137. RELAXING THE CURRENT PROVISIONS ON DISALLOWANCE OF EXPENDITURE, I PROPOSE TO ALLOW DEDUCTION OF SUCH EXPENDITURE, IF TAX HAS BEEN DEDUCTED AT ANY TIME DURING THE FINANCIAL YEAR AND PAID BEFORE THE DUE DATE OF FILING THE RETURN. THIS WILL ALLOW MOST DEDUCTORS ADDITIONAL TIME UP TO SEPTEMBER OF THE NEXT FINANCIAL YEAR. AT THE SAME TIME, I PROPOSE TO INCREASE THE INTEREST CHARGED ON TAX DEDUCTED BUT NOT DEPOSITED BY THE SPECIFIED DATE, FROM 12 PER CENT TO 18 PER CENT PER ANNUM. ' 'IT IS THUS EVIDENT THAT SIMULTANEOUS WITH PARTIA L RELAXING OF THE TIME LIMIT FOR DEPOSITING THE TAX DEDUCTED AT SOURCE, THE INTEREST RATE CHARGEABLE ON -: 23: - 23 TAX DEDUCTED BUT NOT DEPOSITED BEFORE THE SPECIFIED TIME HAS ALSO BEEN INCREASED FROM 12 PER CENT TO 18 PER CENT PER ANNUM AS PER SECTION 201 (1). IT IS A TRITE LAW THAT EVERY STATUTE WHICH IMPAIRS VESTED RIGHTS ACQUIRED UNDER THE EXISTING LAWS OR GETS A NEW OBLIGATION OR ATTACHES A NEW DISABILITY IN RESPECT OF TRANSACTIONS ALREADY PASSED, MUST BE PRESUMED TO BE PROSPECTIVE. THIS VIEW HAS BEEN REITERATED SEVERAL TIMES BY THE HON'BLE SUPREME COURT INCLUDING IN THE CASE OF R. RAJAGOPAL REDDY V. PADMINI CHANDRASEKHARAN [1995] 124 CTR(SC)311 : (1995) 213 ITR 340(SC). ' (14) IN PARA 53 & 54 FOLLOWING IS NOTED:- 'THE LEARNED A.R. EMPHATICALLY FOCUSED ON THE CONTE NTION THAT THE EXPENDITURE SO INCURRED BY THE ASSESSEE WAS GENUINE AND BY DEPOSITING THE TAX DEDUCTED AT SOURC E A LITTLE LATE, IT SUBSTANTIALLY COMPLIED WITH THE PRO VISIONS OF SECTION 40(A)(IA). ' 'WE ARE EQUALLY UNCONVINCED WITH THE CONTENTION OF -: 24: - 24 SUBSTANTIAL COMPLIANCE OF THE PROVISIONS ON LATE DEPOSIT OF TAX DEDUCTED AT SOURCE. THERE CAN BE EITHER COMPLIANCE OR NONCOMPLIANCE OF A PARTICULAR PROVISION. GIVEN THE TIME LIMIT FOR THE DEPOSIT OF TAX DEDUCTED AT SOURCE, IF IT IS DEPOSITED BY THE TIME PRESCRIBED IT IS A CASE OF COMPLIANCE OF THE PROVIS ION AND IF IT IS LATE DEPOSIT EVEN BY A SINGLE DAY, IT IS NON-COMPLIANCE. 15. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIV E RELIED ON THE DECISION OF KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATIONS, ORDER DATED 23.11.2011 AND SUBMIT TED THAT VARIOUS BENCHES OF I.T.A.T., SPECIAL BENCH IN THE C ASE OF BHARTI SHIPYARD LIMITED AND HELD THAT AMENDMENT TO THE PROVISIONS OF SECTION 40A(IA) BY THE FINANCE ACT, 2 010, WERE HELD TO BE RETROSPECTIVE FROM 01.04.2005. FOLLOWING DECISIONS WERE RELIED ON :- 1. M/S. ALPHA PROJECTS V. DCIT, I.T.A.NO. 2869/A/2011 ( I.T.A.T. AHMEDABAD). 2. PIYUSH C. MEHTA V. ACIT, (I.T.A.NO. 1321/M/09) (I.T.A.T., MUMBAI). -: 25: - 25 3. RAJAMAHENDRI SHIPING V. ACIT, I.T.A.NO. 352/VIZ/08 (I.T.A.T. VIZAG) 4. ITO V. NARESH KUMAR , I.T.A.NO. 1300/D/12 (I.T.A.T. DELHI) 5. PSCHFHB SOCIETIES LIMITED VS. DCIT (I.T.A.T. CHANDIGARH) 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO DELIBERATED ON THE DECISIONS RELIED ON BY THE CIT D R IN THE CASE OF BHARTI SHIPYARD, AS WELL AS THE DECISION OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATIONS. WE FOUND THAT VARIOUS BENCHES OF THE TRIBUNAL HAVE DEALT WIT H THE ISSUE OF ALLOWABILITY OF CLAIM OF DEDUCTION U/S 40A(IA) D URING THE ASSESSMENT YEAR 2005-06 AND SUBSEQUENTLY, WHEREIN I T WAS HELD THAT IN VIEW OF THE DECISION OF HON'BLE KOLKAT A HIGH COURT IN THE CASE OF VIRGIN CREATIONS AMENDMENT BROUGHT I N BY THE FINANCE ACT, 2010, WERE RETROSPECTIVE FROM 1.4.2005 . IN THE CASE OF PIYUSH C.MEHTA, I.T.A.T., MUMBAI BENCH IN I .T.A.NO. 1231/MUM/2009 VIDE ORDER DATED 11 TH APRIL, 2012, HELD AS UNDER :- -: 26: - 26 17. IT CAN BE SEEN FROM THE ABOVE DECISION OF THE HON'BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 AS AFORESAID WAS HELD TO BE RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CONSIDERED AS RETROSPECTIVE FROM 1.4.2005, THE EFFECT WILL BE THAT PAYMENTS OF TDS TO THE CREDIT OF THE GOVERNMENT ON OR BEFORE THE LAST DATE FOR FILING RETURN OF INCOME U/S. 139(1) OF THE ACT FOR THE RELEVANT AY HAVE TO BE ALLOWED & DEDUCTION. ADMITTEDLY, IN THE CASE OF THE ASSESSEE PAYMENTS WERE SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT NO DISALLOWANCE COULD BE MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HON'BLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE FROM 1.4.2005 OR THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT TAKING A CONTRARY VIEW. -: 27: - 27 ON THE ABOVE QUESTION, THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTERNATIONAL (P) LTD. V. DY. CIT (2000) 69 TTJ (DEL) 650, WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN AUTHORITY HIGHER THAN THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIAL AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON-JURISDICTIONAL HIGH COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GODAVARIDEVI SARAF, 113 ITR 589(BOM). 19. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO -: 28: - 28 AND FROM AY 05-06 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DISAALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE MADE. ADMITTEDLY IN THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE. 17. IN VIEW OF THE ABOVE DISCUSSION AND APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE DECISION OF CALCUTTA HIGH COURT, WHERE PAYMENT TO THE GOVERNMENT TREASUR Y WAS ADMITTEDLY MADE BEFORE LAST DATE OF FILING RETURN, THE SAME CANNOT BE DISALLOWED U/S 40A(IA). ACCORDINGLY,, ACT ION OF THE CIT(A) IS UPHELD. 18. WITH REGARD TO THE ISSUE REGARDING TREATMENT OF CAP ITAL GAIN AS BUSINESS INCOME, WE FOUND THAT ASSESSEE WAS BUYING SHARES AS AN INVESTMENT. IN ALL THE EARLIER YEARS, THE ASSESSEES CLAIM FOR SHORT TERM AND LONG TERM CAPIT AL GAIN ON SALE OF SHARES WERE ACCEPTED BY THE DEPARTMENT IN T HE -: 29: - 29 SCRUTINY ASSESSMENT FRAMED U/S 143(3) DURING THE ASSESSMENT YEAR 2006-07 AND 2007-08, THE ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN OF RS. 58.35 LAKHS AND IN THE ASSESSMENT YEAR 2007-08 RS. 5.50 LAKHS RESPECTIVELY AND THE SAME HAVE BEEN ACCEPTED BY THE DEPARTMENT UNDER SCR UTINY ASSESSMENT AND THE ASSESSING OFFICER HAS MERELY DIS TURBED THE SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE A ND TREATED THE SAME AS BUSINESS INCOME. BY GIVING DETAILED FIN DINGS, THE LD. CIT(A) HAS FOUND THAT THE ASSESSEE WAS MAKING I NVESTMENT IN SHARES, THEREFORE, CAPITAL GAIN ARISING ON SALE OF SHARES WERE LIABLE TO TAX AS SHORT TERM AND LONG TERM CAPITAL G AIN AS PER THE PERIOD OF HOLDING. IN THE INSTANT CASE BEFORE U S, WE FOUND THAT INVESTMENT IN SHARES WERE MADE BY THE ASSESSEE OUT OF HIS OWN FUNDS AND NO BORROWING WAS TAKEN FROM THE M ARKET AND ASSESSEE WAS ALSO IN RECEIPT OF SUBSTANTIAL AMO UNT OF DIVIDEND INCOME OF RS. 2.30 LAKHS AND RS. 1.90 LAKH S IN THE ASSESSMENT YEAR 2006-07 AN 2007-08 RESPECTIVELY. KE EPING IN VIEW THE INTENTION OF THE ASSESSEE, THE TREATMENT G IVEN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IN RESPECT OF SHAR ES SO SOLD, THE STAND TAKEN BY THE DEPARTMENTAL AUTHORITIES IN EARLIER -: 30: - 30 YEARS AND THE FACT OF ASSESSEE HAVING USED OWN FUND S FOR INVESTMENT IN SHARES, WE ARE INCLINED TO AGREE WITH THE CONTENTION OF LD. AUTHORIZED REPRESENTATIVE THAT P ROFIT ARISING OUT OF SALE OF SHARES WERE ESSENTIALLY LIABLE TO BE TAXED AS SHORT TERM AND LONG TERM CAPITAL GAINS DEPENDING ON PERIOD OF HOLDING OF SHARES. THUS, WE CONFIRM THE ACTION OF C IT(A) IN BOTH THE YEARS FOR TREATING THE INCOME OFFERED ON S ALE OF SHARES AS CAPITAL GAINS RATHER THAN BUSINESS INCOME. 19. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :31 ST AUGUST, 2012. CPU* 101131.8