Chandak Krishnagopal Motilal, Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 223/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7732 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: S N DOSHI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 223 /P U N/201 5 / ASSESSMENT YEAR : 20 0 6 - 07 CHANDAK KRISHNAGOPAL MOTILAL, 3302, ADAT BAZAR, AHMEDNAGAR 414001 PAN : ABAPC7514Q ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR / RESPONDENT ASSESSEE BY : S HRI S.N. DOSHI REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 25 - 07 - 2017 / DATE OF PRONOUNCEMENT : 18 - 0 8 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, PUNE DATED 31 - 12 - 2014 FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES. THE ASSESSEE 2 ITA NO . 223/PUN/2015, A.Y. 2006 - 07 FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 - 03 - 2008 DECLARING TOTAL INCOME OF RS.6,27,99,405/ - . THE ASSESSEE IN HIS RETURN OF INCOME DECLARED PROFIT ON TRADING OF SHARES AS SHORT TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AFTER ANALYZING THE SALE AND PURCHASE TRANSACTIONS OF SHARES HELD THAT THE INCOME DERIVED BY THE ASSESSEE F ROM TRADING IN SHARES IS IN THE NATURE OF BUSINESS INCOME AND ASSESSED THE SAME ACCORDINGLY . AGGRIEVED BY THE ASSESSMENT ORDER DATED 04 - 12 - 2008, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX ( APPEALS) UPHELD THE FINDINGS OF ASSESSING OFFICER IN TREATING THE INCOME ARISING FROM SHARE TRANSACTIONS AS BUSINESS INCOME. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI S .N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN NOT CONSIDERING THE FACTS THAT THE TRANSACTIONS RELATING TO PURCHASE OF SHARES ARE BASED ON PHYSICAL DELIVERY, ROUTED THROUGH DEMAT ACCOUNT. THE ASSESSEE IS N OT A BROKER OR SUB - BROKER BUT AN INVESTOR. THE LD. AR FURTHER REFERRED TO CBDT CIRCULAR NO. 6/2016 DATED 29 - 02 - 2016 TO CONTEND THAT THE ASSESSEE HAS TREATED THE INCOME ARISING FROM TRADING IN SHARES AS CAPITAL GAIN , THEREFORE, THE SAME SHOULD NOT BE DISTU RBED. THE LD. AR FURTHER REFERRED TO THE DETAILED LIST OF SHARE TRANSACTIONS CARRIED OUT DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE LD. AR SUBMITTED THAT THE CHART AT PAGES 1 TO 33 OF THE PAPER BOOK GIVES THE LIST OF SHARES ON WH ICH THE ASSESSEE HAS EARNED SHORT TERM CAPITAL GAIN DURING FINANCIAL YEAR 2005 - 3 ITA NO . 223/PUN/2015, A.Y. 2006 - 07 06 AND THE CHART AT PAGES 34 AND 35 GIVES THE LIST OF SHARES ON WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN DURING THE FINANCIAL YEAR 2005 - 06. 4. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT SUBMITTED THAT CBDT CIRCULAR NO. 6/2016 DATED 29 - 02 - 2016 IS SUBSEQUENT TO THE PASSING OF THE IMPUGNED ORDER. THE LD. DR VEHEMENTLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING INCOME ARISING FROM SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE ASSESSEE IN HIS RETURN OF INCOME HAS CLAIMED SHORT TERM CAPITAL GAIN OF RS.4,73,30,889/ - AND LONG TERM CAPITAL GAIN OF RS.1,53,11,448/ - ARISING FROM TRADING IN SHARES. THE AUTHORITIES BELOW AFTER ANALYZING THE SALE AND PURCHASE TRANSACTIONS CARRIED OUT BY THE ASSESSEE C ONCLUDED THAT THE INCOME DERIVED BY THE ASSESSEE FROM TRADING OF SHARES IS BUSINESS INCOME. 6. THE CBDT CIRCULAR NO. 6/2016 DATED 29 - 02 - 2016 IN ORDER TO MITIGATE THE DIFFICULTIES FACE D BY THE ASSESSEE AND TO CAP THE DISPUTES AS TO WHETHER THE INCOME FROM SALE AND PURCHASE OF SHARES IS IN THE NATURE OF CAPITAL GAIN OR B USINESS I NCOME HAS GIVEN INSTRUCTION TO THE ASSESSING OFFICER TO BE FOLLOWED WHILE ADJUDICATING SUCH ISSUES. WE ARE OF CONSIDERED OPINION THAT AFORESAID CBDT CIRCULAR IS VITAL FOR ADJUDICATING THE CONTROVERSY RAISED IN THE PRESENT APPEAL BY THE ASSESSEE. SINCE, THE CIRCULAR WAS ISSUED SUBSEQUENT TO THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , HE HAD NO OC CASION TO LOOK INTO IT. WE DEEM IT APPROPRIATE TO REMIT THIS FILE BACK TO THE COMMISSIONER OF INCOME TAX 4 ITA NO . 223/PUN/2015, A.Y. 2006 - 07 (APPEALS) TO DECIDE THIS ISSUE AFRESH AFTER CONSIDERING THE AFORESAID CBDT CIRCULAR. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE DECIDING THE ISSU E DE NOVO SHALL GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. ACCORDING LY, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRON OUNCED ON FRIDAY, THE 18 TH DAY OF AUGUST, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 18 TH AUGUST, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, PUNE 4. / THE CIT - I, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE