DCIT 14(2), MUMBAI V. RAJKISHORE MUNDRA, MUMBAI

ITA 2143/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3575 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAVA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ITA NO.2143/MUM/2010 : ASST.YEAR 2006-2007 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 14(2) MUMBAI. VS. SHRI RAJKISHORE MUNDRA 312 KALBADEVI ROAD MUMBAI 400 002. PA NO.AAGPM4307G. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S.SRIVASTAVA RESPONDENT BY : --- NONE --- O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 16.12.2009 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. THE ONLY GROUND IS AGAINST THE DIRECTION OF THE LEARNED CIT(A) TO TREAT PROFIT ON SALE OF SHARES AS CHARGEABLE TO TAX UNDER `CAPIT AL GAIN AND NOT AS `BUSINESS INCOME AS HELD BY THE AO. BRIEFLY STATED THE FACT S OF THE CASE ARE THAT THE ASSESSEE, AN EMPLOYEE ALSO HAVING INCOME FROM HOUS E PROPERTY DEALT IN SHARES. APART FROM OTHERS, A SUM OF RS.4,27,206 WAS OFFERE D AS INCOME FROM SHORT TERM CAPITAL GAIN ON SHARE TRANSACTIONS. ON BEING CALLED UPON TO EXPLAIN AS TO WHY SUCH INCOME BE NOT TREATED AS BUSINESS INCOME, THE ASSES SEE TENDERED EXPLANATION STATING THAT HE SIMPLY INVESTED HIS SURPLUS FUNDS IN SHARES ; WAS NEITHER A SHARE BROKER NOR A DEALER IN SHARES ON DAY TO DAY BASIS; SHORT TERM CA PITAL GAIN WAS MOSTLY EARNED FROM INVESTMENT IN SHARES; NO SHARES WERE SHOWN AS STOCK IN TRADE IN HIS BALANCE SHEET; AND, MAGNITUDE OF PURCHASE AND SALE OF SECURITIES W AS NOT THAT HIGH SO AS TO BE TREATED AS A BUSINESS ACTIVITY. THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE HAD SHOWN THE SHARES AS `INVESTMENT IN HIS BALANCE SH EET. AS SUFFICIENT INCOME WAS SHOWN FROM TRADING IN SPECULATION ALSO, THE ASSESSI NG OFFICER OPINED THAT THE AMOUNT SHOWN AS SHORT TERM CAPITAL GAIN WAS LIABLE TO BE ASSESSED AS BUSINESS ITA NO.2143/MUM/2010 SHRI RAJKISHORE MUNDRA. 2 INCOME. THE LEARNED CIT(A) OVERTURNED THE ASSESSMEN T ORDER ON THIS ISSUE, AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE US. 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE NOTICE. IT IS SEEN THAT THE LEARNED CIT(A) HAS RECORDED CATEGORICAL FINDING THAT THE ASSESSEE INVESTED ONLY SURPLUS FUNDS IN SH ARES AND MUTUAL FUNDS AND NO AMOUNT WAS EVER TAKEN ON LOAN FOR THE PURPOSE OF IN VESTMENT IN SHARES. IT HAS FURTHER BEEN NOTED IN PARA 6 OF THE IMPUGNED ORDER THAT SUCH INVESTMENTS WERE MADE SINCE PAST MANY YEARS AND THE DEPARTMENT HAD A CCEPTED THE SAME BY TAXING INCOME THERE FROM AS LONG TERM CAPITAL GAIN OR SHOR T TERM CAPITAL GAIN, AS THE CASE MAY BE, ON SALE OF SUCH SHARES. IT HAS FURTHER BEEN NOTED THAT MOST OF THE SHARES WERE PURCHASED IN 2001 AND SOLD IN 2005. THEN THE L EARNED CIT(A) HAS RELIED ON THE ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNA L IN SHRI BHARAT KUNWVERJI KENIA IN ITA NO.6544/MUM/2008 FOR COMING TO THE CON CLUSION THAT THE PROFIT OR GAIN ON SALE OF SHARES IN SUCH A SITUATION WAS LIA BLE TO BE CONSIDERED AS CAPITAL GAIN AND NOT AS BUSINESS INCOME. THE LEARNED DEPARTMENTA L REPRESENTATIVE COULD NOT CONTROVERT ANY OF THE FINDINGS RECORDED BY THE LEAR NED CIT(A) WITH ANY MATERIAL OR EVIDENCE. FROM THE NARRATION OF ABOVE FACTS IT IS C LEAR THAT THE INCOME FROM THE TRANSFER OF SUCH SHARES CANNOT BE HELD AS BUSINESS INCOME. WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LEARNED CIT(A) IN UPHOLDING T HE TREATMENT GIVEN BY THE ASSESSEE AS CAPITAL GAIN. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF DECEMBER, 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 20 TH DECEMBER, 2010. DEVDAS* ITA NO.2143/MUM/2010 SHRI RAJKISHORE MUNDRA. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.