M/s.Samanvitha Securities Pvt. Ltd., Bangalore V. Income Tax Officer, Bangalore

ITA 2128/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5350 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVASAN J BENGALURU
• Assessee Lawyers: B CHATTARJ
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.2128/BANG/2016 ASSESSMENT YEAR : 2010-11 M/S. SAMANVITHA SECURITIES PVT. LTD., NO.2/3, NANJAPPA ROAD, SHANTHI NAGAR, BENGALURU 560 027. PAN: AAECS 9941B VS. THE INCOME TAX OFFICER, WARD 12(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI B. CHATTARJ, ADVOCATE RESPONDENT BY : SHRI A.R.V. SREENIVASAN, JCIT(DR)(ITAT) BENGALURU DATE OF HEARING : 02.03.2017 DATE OF PRONOUNCEMENT : 22.05.2017 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD CIT (APPEAL) - 6, BENGALUR U IN THE PRESENT CASE IS OPPOSED TO LAW. 2. THE LD CIT (APPEAL) ERRED BOTH IN LAW AS WELL A S IN FACT IN DENYING TO ACCEPT THE LEGAL PRINCIPLE ESTABLISHED O N THE ISSUE BY HER PREDECESSOR IN OFFICE FOR THE PRECEDING YEAR IN THE ASSESSEE'S OWN CASE IN TERMS OF NON-APPLICABILITY O F THE PRINCIPLE OF RES-JUDICATA. ITA NO. 2128/BANG/2016 PAGE 2 OF 5 3. THE LD CIT (APPEAL) HAD MISCONCEIVED THE PRINCI PLE OF RES-JUDICATA AND ERRED IN LAW IN NOT CONSIDERING TH E LEGAL PRINCIPLES DETERMINED BY THE HONOURABLE HIGH COURT AND ITAT. 4. THE LD CIT (APPEAL) ERRED BOTH IN FACTS AS WELL AS IN LAW IN NOT VERIFYING THE VELOCITY OF THE OBSERVATION OF THE LD AO TO THE EFFECT THAT THE AR OF THE APPELLANT HAD AGREED TO THE PROPOSAL OF TREATING THE SHORT TERM CAPITAL GAINS EARNED BY THE APPELLANT AS BUSINESS INCOME. 5. THE LD CIT (APPEAL) ERRED BOTH IN FACT AS WELL AS IN LAW IN NOT GIVING CREDENCE TO THE SUBMISSION FILED BY THE AR OPPOSING THE PROPOSAL TO TREAT THE SHORT TERM CAPITAL GAINS EARNED BY THE APPELLANT AS BUSINESS INCOME. 6. THE LD CIT (APPEAL) ERRED IN FACTS AS WELL AS I N LAW IN NOT ADJUDICATING THE ISSUE ON THE BASIS OF SUBMISSION M ADE BEFORE HER AND UNDERLINED LEGAL PRINCIPLES BUT RELYING SOLELY ON THE OBSERVATION OF THE AR . 7. THE APPELLANT CRAVES LEAVE TO ADD/ALTER ADDITIO NAL GROUNDS DURING THE COURSE OF HEARING. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED TH AT ASSESSEE HAS ADMITTED SHORT TERM CAPITAL GAIN OF RS.40,00,853. T HE ISSUE WAS EXAMINED BY THE AO AND IT WAS NOTICED THAT ASSESSEE HAS DEAL T WITH TRADING SHARES FREQUENTLY AND HENCE IT WAS PROPOSED TO TREAT THE S AID INCOME AS INCOME FROM BUSINESS. WHEN THE ASSESSEE WAS ASKED TO EXPL AIN THE SAME, HE HAS ACCEPTED THAT THE SAME BE TREATED AS BUSINESS INCOM E. ACCORDINGLY, THE SAID AMOUNT OF RS.40,00,853 WAS BROUGHT TO TAX UNDE R THE HEAD INCOME FROM BUSINESS. ASSESSEE HAS REQUESTED TO SET OFF T HE BUSINESS LOSS FOR AY 2009-10 OF RS.6,37,494 AND BUSINESS DEPRECIATION L OSS OF RS.2,36,754 IN ITA NO. 2128/BANG/2016 PAGE 3 OF 5 RESPECT OF ITS CLAIM OF RS.8,13,960 IN THE COMPUTAT ION OF INCOME. SINCE THE SAID INCOME IS BEING TREATED AS BUSINESS INCOME, IT WAS ALLOWED AND ACCORDINGLY INCOME WAS REVISED. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPE ALS) WITH THE SUBMISSION THAT IT KEPT SHARES AS INVESTMENT AND HA S SHOWN SHORT TERM CAPITAL GAIN ON ITS SALE, BUT THE AO HAS TREATED TH E SAME AS BUSINESS INCOME. THE CIT(APPEALS) RE-EXAMINED THE NATURE OF BUSINESS OF ASSESSEE AND MEMORANDUM OF ASSOCIATION AND NOTICED THAT THE MAIN BUSINESS OF THE COMPANY IS SHARE BROKING. BEING NO T CONVINCED WITH THE EXPLANATION OF ASSESSEE, THE CIT(APPEALS) HAS TREAT ED THE SAID INCOME AS BUSINESS INCOME AND CONFIRMED THE ORDER OF AO. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AND HAS FILED THE DETAILS OF SHARE HOLDING AND PROFIT EARNED THEREON. IT WAS FURTHER CONTENDED THAT SINCE THE ASSESSEE HAS KEPT SHARES AS INVESTME NT, THE PROFIT EARNED THEREON SHOULD BE TREATED AS SHORT TERM CAPITAL GAI N. THE CIT(APPEALS) DID NOT LOOK INTO THIS ASPECT AND HAS CONFIRMED THE ADD ITION. 5. THE LD. DR PLACED RELIANCE UPON THE ORDER OF CIT (APPEALS). 6. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES AND THE DOCUMENTS PLACED ON RECORD, I FIND THAT ASSESSEE HA S FILED THE DETAILS OF SHARE HOLDING WHEREFROM IT IS NOTICED THAT CLOSING STOCK WAS OF RS.11,74,349.29 AND SALE EFFECTED WAS OF RS.22,63,9 86. DURING THE COURSE ITA NO. 2128/BANG/2016 PAGE 4 OF 5 OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE WAS AS KED TO FURNISH THE DETAILS OF TRANSACTION TO VERIFY THE FREQUENCY OF TRANSACTI ONS IN ORDER TO EXAMINE WHETHER ASSESSEE WAS ENGAGED IN TRADING OF SHARES O R HOLDING SHARES AS INVESTMENT, BUT IT WAS NOT FILED. BUT FROM A CAREF UL PERUSAL OF A NUMBER OF SCRIPTS AND THE COMPANIES TO WHICH IT BELONGS AND T HE QUANTUM OF TRANSACTIONS, IT APPEARS THAT ASSESSEE WAS HOLDING SHARES AS STOCK-IN-TRADE AND PROFIT EARNED THEREON SHOULD BE A BUSINESS PROF IT. THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT SHARES WERE KEPT AS INVESTMENT IN THE LIGHT OF THE FACT THAT IT IS ENGAGED IN SHARE TRADING BUS INESS. BUT NO EVIDENCE WAS FILED IN THIS REGARD, EXCEPT ORAL STATEMENTS. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE ASSESSEE IS BADLY FAILED TO ESTABLISH THAT SHARES WERE KEPT AS INVESTMENT AND NOT AS STOCK-IN-TRADE. I ACCORDINGLY FIND NO INFIRMITY IN THE ORDER OF CIT(APPEALS), WHO HAS RIG HTLY ADJUDICATED THE ISSUE. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF MAY, 2017. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE, DATED, THE 22 ND MAY, 2017. / D ESAI S MURTHY / ITA NO. 2128/BANG/2016 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.