DCIT, Circle-7(1), Kolkata, Kolkata V. Shri Vivek Mundra, Kolkata

ITA 2171/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1663 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, KOLKATA (BENCH- C) BEFORE SHRI N. V. VASUDEVAN JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER, I.T.A. NO. 2171/KOL/2014 ASSESSMENT YEARS: 2010-11 ORDER PER M. BALAGANESH , AM THIS IS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA (HEREINAFTER REFERRED TO AS THE LD. CIT(A)), ARISING FROM THE APPEAL NO. 24/CIT(A)-VIII/KOL/13-14, DT. 10.04.2013, PASSED UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD.CIT(A) WAS JUSTIFIED IN TREATING INCOMEFROM SHORT TERM CAPITAL GAINS AS NOT INCOME FROM BUSINESS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. D.C.I.T., CIR-7(1), KOLKATA [PAN : AFQPM3436D ] -VS- SRI VIVEKMUNDRA (APPELLANT) (RESPONDENT) FOR THE ASSESSEE SHRI S.K. TULSIYAN, ADVOCATE FOR THE REVENUE NONE DATE OF HEARING 04.05.2017 DATE OF PRONOUNCEMENT 02.06.2017 2 I.T.A. NO. 2171/KOL/2014 ASSESSMENT YEARS: 2010-11 SHRIVIVEKMUNDRA 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE EARNED INCOME FROM CONSULTANCY, DIVIDEND, INTEREST, SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. THE LD. AO TAXED THE GAIN ON SHARES BROUGHT FORWARD FROM EARLIER YEARS UNDER THE HEAD SHORT TERM CAPITAL GAIN BUT HE TAXED THE SURPLUS ON SHARES PURCHASED AND SOLD DURING THE RELEVANT PREVIOUS YEAR UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. HE WAS OF THE VIEW THAT THE MAGNITUDE OF THE TRANSACTION WAS HIGH AND THAT THE INTENTION WAS NOT THAT OF INVESTMENT BUT OF EARNING MAXIMUM PROFIT. HE WAS ALSO OF THE VIEW THAT THE SURPLUS WAS SHOWN UNDER THE HEAD SHORT TERM CAPITAL GAIN TO CLAIM BENEFIT OF LOWER RATE OF TAX U/S 111A OF THE ACT. IT WAS PLEADED BEFORE THE LD. AO THAT THIS ISSUE IN EARLIER YEARS HAD BEEN HELD IN FAVOUR OF THE ASSESSEE UPTO TRIBUNAL LEVEL. THE LD. AO HOWEVER HELD THAT THE ISSUE OUGHT TO BE KEPT ALIVE AS THE DEPARTMENT HAD FILED APPEAL BEFORE THE HONBLE HIGH COURT AND ACCORDINGLY MADE THIS ADDITION BY GIVING DIFFERENTIAL TREATMENT TO GAINS RECEIVED ON SALE OF SHARES. THE ASSESSEE ALSO PLEADED THAT HE HAD ALL ALONG IN THE PAST TREATED THE INVESTMENTS IN SHARES AS CAPITAL ASSET AND ALL LOSS / GAIN ON DISPOSAL OF SUCH INVESTMENTS WERE TREATED UNDER THE HEAD CAPITAL GAIN AND THE SAME WAS ACCEPTED BY THE REVENUE IN THE EARLIER YEARS. BEFORE THE LD.CIT(A), THE ASSESSEE ALSO SUBMITTED THAT THIS ISSUE HAS BEEN HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE. IT WAS ALSO PLEADED THAT OUT OF THE TOTAL DISPOSAL OF INVESTMENTS MADE DURING THE YEAR UNDER CONSIDERATION, A LARGE QUANTITY OF SHARES HAVE BEEN BROUGHT FORWARD FROM EARLIER YEARS WHICH WERE ALREADY TREATED AS INVESTMENTS. THE ASSESSEE HAD PAID SECURITIES TRANSACTION TAX (STT) ON DISPOSAL OF INVESTMENTS BUT HAD SUOMOTO DISALLOWED THE SAME IN THE RETURN OF INCOME. IT WAS PLEADED THAT THE ASSESSEE HAD INVESTED HIS OWN CAPITAL AND RESERVE FUNDS TO ACQUIRE THE SHARES AND HAD EARNED REASONABLE DIVIDENDS ON SUCH INVESTMENTS. IT WAS FURTHER PLEADED THAT THE ASSESSEE HAD 3 I.T.A. NO. 2171/KOL/2014 ASSESSMENT YEARS: 2010-11 SHRIVIVEKMUNDRA ACTUALLY TAKEN DELIVERY OF ALL THE SHARES. IT WAS FURTHER PLEADED THAT THE LD. AO HAD TREATED THE INCOME FROM DISPOSAL OF INVESTMENTS UNDER THE HEAD INCOME FROM CAPITAL GAINS U/S 143(3) OF THE ACT ON 27.9.2013 FOR THE ASSESSMENT YEAR 2011-12. IT WAS FURTHER PLEADED THAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE HAD SUCCEEDED THIS ISSUE UPTO HONBLE CALCUTTA HIGH COURT AND NO FURTHER APPEAL WAS PREFERRED BY THE REVENUE AGAINST SUCH HIGH COURT ORDER. FOR ASSESSMENT YEAR 2006-07, THE ASSESSEE SUCCEEDED UPTO TRIBUNAL LEVEL AND NO FURTHER APPEAL WAS PREFERRED BY THE REVENUE BEFORE THE HONBLE HIGH COURT. FOR THE ASSESSMENT YEAR 2008-09, ON THE SAME CONTENTIOUS ISSUE, THE CASE WAS SET ASIDE BY THE LD. CIT III, KOLKATA U/S 264 OF THE ACT VIDE HIS ORDER DATED 30.3.2013 AND THE LD. AO VIDE HIS ORDER U/S 264/ 143(3) OF THE ACT DATED 20.3.2014 AGREED TO THE CONTENTIONS OF THE ASSESSEE AND TREATED THE GAINS FROM DISPOSAL OF INVESTMENTS UNDER THE HEAD INCOME FROM CAPITAL GAINS. THE LD.CIT(A) HELD THIS ISSUE IN FAVOUR OF THE ASSESSEE FOR THE YEAR UNDER APPEAL BY PLACING RELIANCE ON THE ORDERS OF THIS TRIBUNAL AND THE FURTHER ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT UPHOLDING THE TRIBUNALS ORDER. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS THE LD. CIT(A) JUSTIFIED IN TREATING INCOME FROM SHORT TERM CAPITAL GAINS AS INCOME FROM BUSINESS & PROFESSION DESPITE THE CLEAR FINDINGS OF THE A.O. THAT THE MAIN MOTIVE OF THE ASSESSEE WAS TO EARN PROFITS BY TRADING IN SHARES RATHER THAN INVESTMENT. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE, ALTER, MODIFY OR TAKE NEW GROUNDS OF APPEAL. 4. NONE APPEARED ON BEHALF OF THE REVENUE. WE FIND THAT THE LD. DR HAD SOUGHT ADJOURNMENT FOR ALL THE CASES LISTED ON THE DATE OF HEARING ON 3.5.2017. SINCE THIS 4 I.T.A. NO. 2171/KOL/2014 ASSESSMENT YEARS: 2010-11 SHRIVIVEKMUNDRA IS A COVERED ISSUE, THE ADJOURNMENT REQUEST OF THE LD. DR WAS REJECTED AND WE PROCEED TO HEAR THE LD. AR AND DISPOSE THE APPEAL. 5. WE HAVE HEARD THE LD. AR. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN ASSESSEES OWN CASE AGAINST THE APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IN GA NO. 3189 OF 2013 DATED 20.1.2014 HAD HELD AS UNDER:- WHETHER THE INCOME AROSE FROM BUSINESS OR FROM OUT OF SHORT TERM CAPITAL GAIN IS NOT A PURE QUESTION OF LAW, BUT IT IS A MIXED QUESTION OF FACT AND LAW. THE LEARNED TRIBUNAL AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES ARRIVED AT THE FINDINGS INDICATED ABOVE. WE ARE UNABLE TO FIND ANY GLARING MISTAKE IN THE REASONING ADOPTED BY THEM. IT CANNOT BE SAID THAT THE ORDER PASSED BY THE LEARNED TRIBUNAL IS PERVERSE NOR IS THE SAME THE CONTENTION OF MR.BHOWMIK. WITHOUT EXAMINING THE CORRECTNESS OF FINDING ON FACTS, IT IS NOT POSSIBLE TO HOLD THAT THE VIEW EXPRESSED BY THE LEARNED TRIBUNAL IS ERRONEOUS. WE ARE, IN THOSE CIRCUMSTANCES, UNABLE TO ACCEPT THE CONTENTION OF MR.BHOWMIK. THE APPEAL IS ACCORDINGLY DISMISSED. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN ASSESSEES OWN CASE FOR SIMILAR ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN THIS REGARD. HENCE THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 02.06.2017. SD/- SD/- [N. V. VASUDEVAN] [M. BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :02.06.2017 {SC SPS} 5 I.T.A. NO. 2171/KOL/2014 ASSESSMENT YEARS: 2010-11 SHRIVIVEKMUNDRA COPY OF THE ORDER FORWARDED TO: 1. ASSESSEE- SHRI VIVEK MUNDRA, 803-04, SHUBHAM, SAROJINI NAIDU SARANI, PARK STREET, KOL-17 2.REVENUE D.C.I.T., CIRCLE-7(1), KOLKATA 3.CIT(A)- KOLKATA. 4.CIT , KOLKATA. 5.CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKATA BENCHES, KOLKATA.