TERENCE CLEMENT MENEZES, MUMBAI V. ITO WD 24(2)4, MUMBAI

ITA 2206/MUM/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4291 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Keywords: Business income

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 2206 / MUM/ 20 1 3 ( ASSESSMENT Y EAR : 200 8 - 20 0 9 ) M/S SHRI TERENCE CEMENT MENEZES, C/702, NAZARENE APARTMENTS, MARVE ROAD, MALAD (W), MUMBAI - 400 009 VS. ITO WD 24(2)(4) , MUMBAI PAN/GIR NO. : AGAPM 8626 J ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : NONE /REVENUE BY : SHRI O.P.SINGH DATE OF HEARING : 1 ST JULY , 201 3 DATE OF PRONOUNCEMENT : 10 TH JULY , 2013 O R D E R TH IS APPEAL HAS BEE N PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 18 - 12 - 2012 OF CIT(A) - 3 4 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 8 - 0 9 . 2 . THE ASSESSEE IS OBJECTING IN TREATING THE GAINS ON SALE OF SHARES AS INCOME FROM BUSINESS INSTEAD OF SHORT TERM AND LONG TERM C APITAL GAINS. 3 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN ON SALE OF SHARES. THE AO FOUND THAT ABOUT 200 TRANSACTIONS IN SALE AND PURCHASE OF SHARES HAS BEEN DONE BY THE ASSESSEE. PLACING RELIANCE ON THE DECISION IN THE CASE OF SRIDEVI STEEL AND CEMENT STORES, REPORTED IN 106 ITD 326 , THE AO HELD THAT THE TRANSACTION DONE BY THE ASSESSEE ARE BUSINESS ITA NO. 2206 /20 1 3 2 IN NATURE. ACCORDINGLY, HE TREATED THE SHORT TERM CAPITAL GAIN AS BUSINES S INCOME . 4 . BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE ASSESSEES MAIN ACTIVITY THROUGHOUT THE DAY IS OF CARRYING ON PROFESSIONAL DUTIES AS A RADIO OFFICER FOR DOLPHIN OFFSHORE ENTERPRISES (INDIA) LIMITED. HE HAS DONE 200 TRANSACTIONS FOR PURCHASE AND SALE OF SHARES RANGING BETWEEN ONE TO SIX MONTHS. IT WAS ALSO EXPLAINED THAT THE ASSESSEES TOTAL NUMBER OF SCRIPS DEALT WITH 44. ONLY TWO TRANSACTIONS, WHICH WERE MADE WITHIN TWO DAYS, OTHERWISE ALL TRANSACTIONS WERE HELD FOR ONE MONTH TO SIX MONTHS. THE REFORE, THE LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE HAS TO BE ACCEPTED. RELIANCE WAS PLACED ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT VS. JCIT, REPORTED IN (2010) 228 CTR 582 (BOM) AND MANY O THER DETAILS. HOWEVER, LEARNED CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AS IN HIS OPINION, THE INTENTION AT THE TIME OF PURCHASES IS THE MOST IMPORTANT FACTOR TO DRAW AN INFERENCE AS TO WHETHER THE TRANSACTION IS DONE FOR BUSINESS PROFIT OR FOR INVESTMENT PURPOSE. THE CIT(A) NOTED THAT THE NUMBER OF SCROPS CREDIT WAS 44 AND FROM THESE TRANSACTIONS, IT IS SEEN THAT THE INTENTION OF THE ASSESSEE WAS OF EARNING PROFIT. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE AO. RELIANCE WAS PLACED BY LEARNED CIT(A) IN CASE OF M/S KAMLESH REAL ESTATE PRIVATE LIMITED, DECIDED IN ITA NO. 1451 /M/2010, DATED 20 - 4 - 2011 . NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . NONE APPEARED ON BEHALF OF THE ASSESSEE, THOUGH NOTICE WAS SENT THROUGH REG ISTERED AD POST. ITA NO. 2206 /20 1 3 3 6 . ON THE OTHER HAND, LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF AO AND CIT(A). 7 . AFTER CONSIDERING THE ORDER OF THE AO, CIT(A) AND THE SUBMISSION OF THE ASSESSEE MADE BEFORE THE LEARNED CIT(A) , WHICH ARE REPRODUCED IN THE ORDER OF THE CIT(A) AT PAGES 2 & 3 OF HIS ORDER, I FOUND THAT THE ASSESSEE DESERVE TO SUCCEED IN ITS APPEAL. THE ASSESSEE IS A SALARIED PERSON, WHO DEALS WITH PURCHASE AND SALE OF SHARES . ALL THE SHARES WERE PURCHASED FROM HIS OWN CAPITAL. THOUGH THE TRANSACTION S O F PURCHASE AND SALES ARE ABOUT 200 OF 44 SCRIPS. VARIOUS BENCHES OF THE TRIBUNAL HAS HELD THAT WHERE THE INVESTMENT IN SHARES ARE SHOWN UNDER THE INVESTMENT PORTFOLIO, THEY SHOULD BE TREATED FOR THE PURPOSE OF INVESTMENT AND RESULTANT PROFIT IS TO BE SHOW N AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN, AS THE CASE MAY BE. WHERE THE TRANSACTIONS ARE SHOWN UNDER THE HEAD STOCK - IN - TRADE THEN RESULTANT PROFIT OR LOSS HAS TO BE TREATED AS BUSINESS LOSS OR BUSINESS PROFIT. IN CASE OF GOPAL PUROHIT , REPORT ED IN (2009) 29 SOT 117 (MUM) , THE TRIBUNAL HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE ASSESSEE HAS SHOWN THE PURCHASE CONSIDERATION UNDER THE HEAD INVESTMENT PORTFOLIO. THIS DECISION OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT REPORTED IN 228 CTR 582 . BOTH THE LOWER AUTHORITIES HAVE NOT TAKEN INTO CONSIDERATION THE DECISION OF THE JURISDICTIONAL HIGH COURT, NEITHER ANY COMMENT HAS BEEN GIVEN BY THE LEARNED CIT(A) AS TO WHY THIS DECISION IS NOT APPLICABL E. THE CIT(A) HAS ASSUMED THAT THE INTENTION OF THE ASSESSEE WAS TO EARN PROFIT AND, THEREFORE, THE SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN TREATED BY THE ASSESSEE AS BUSINESS INCOME WAS ITA NO. 2206 /20 1 3 4 CONFIRMED. THE CIT(A) HAS NOT TAKEN INTO CONSIDERATION AND IN THE ACT ITSELF THE PERIOD OF HOLDING IS PRESCRIBED WHERE THE PERIOD OF HOLDING OF SHARES IS MORE THAN 12 MONTHS, THEN LONG TERM CAPITAL GAIN IS TO BE CHARGED AND WHERE THE PERIOD OF HOLDING IS LESS THAN 12 MONTHS, THEN THE SHORT TERM CAPITAL GAIN IS TO BE LEVIED. UNDISPUTEDLY, THE ASSESSEE IS SHOWING THE PURCHASE CONSIDERATION UNDER THE HEAD INVESTMENT. IT IS ALSO A MATTER OF FACT THAT FOR ASSESSMENT YEAR 2006 - 07 AND FOR 2007 - 08, THE ASSESSMENT HAS BEEN COMPLETED AND THE DEPARTMENT ITSELF HAS TREATED THE GAINS ARISING FROM SHARE TRANSACTION AS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. LEARNED CIT(A) HAS ALSO NOT TAKEN INTO CONSIDERATION THIS ASPECT ALSO. 8. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THE SHORT TERM CAPITA L GAIN OR SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE HAS TO BE ACCEPTED. ACCORDINGLY, I ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE AO TO ACCEPT THE LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN AS SHOWN BY THE ASSESSEE. 9 . IN THE RESULT, APPEA L OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JU LY .2013 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI; DATED : 10/0 7 / 2013 /PKM , PS ITA NO. 2206 /20 1 3 5 COPY OF THE ORDER FORWARDED TO : 1. / THE APPEL LANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI