MS.MANSI MUKESH NAGDA, MUMBAI V. ACIT 17(2), MUMBAI

ITA 2272/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9651 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: DR P DANIEL
• Keywords: Business income; Speculation loss; Speculative transactions; Set aside; Capital Gains
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH (JM) & SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 2272 /MUM/ 201 8 (ASSESSMENT YEAR 20 10 - 11 ) MS. MANSI MUKESH NAGDA FLAT NO. C, - 401, PAM HOUSE CHS LTD., 16/MOGUL LANE MATUNGA (WES T) MUMBAI - 400 016. PAN : AFAPN9947A V S . ACIT - 17(2) PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY DR. P. DANIEL DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 19 . 09 . 201 9 DATE OF PRONOUNCEMENT 03 . 1 2 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 25.1.2018 AND PERTAINS TO A.Y. 2010 - 11. 2. T HE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF AS SESSING OFFICER IN TREATING SHORT TERM CAPITAL GAINS OF RS. 33,11,542/ - AS BUSINESS INCOME. 3. T HE ASSESSEE IS IN THIS CASE IS AN INDIVIDUAL AND HIS NATURE OF BUSINESS HAS BEEN REFERRED AS INVESTOR IN SHARES AND SECURITIES. DURING THE COURSE OF ASSESSM ENT THE ASSESSING OFFICER NOTED THAT PERUSAL OF THE RETURN OF INCOME SHOWS THAT APART FROM A SMALL INCOME FROM OTHER SOURCES, THE ASSESSEE HAS REPORTED SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL LOSS ON SHARES TRANSACTIONS AND SPECULATION LOSS. THE ASSE SSING OFFICER OBSERVED THAT TOTAL INCOME OF ASSESSEE CONSTITUTES MAINLY OF SHORT TERM CAPITAL GAINS ON SHARE TRANSACTION. HE FOUND THAT IT WAS QUITE HIGH. HE NOTED THAT THIS SHORT TERM CAPITAL GAIN WAS ON ACCOUNT OF TRANSACTION CARRIED OUT INVOLVING PURCHA SE OF MS. MANSI MUKESH NAGDA 2 SHARES FOR RS. 2,49,99,195/ - AND SALE THEREOF AT RS. 2,83,86,986/ - DURING THE YEAR. THAT A TOTAL OF 2,02,938 SCRIPS SPLIT OUT OF 134 COMPANIES THAT WERE SOLD DURING THE YEAR. THAT BARRING A SMALL PERCENTAGE OF SUCH TRANSACTIONS THE HOLDING PERIOD IN THESE CASES VARIES FROM ONE DAY, FOUR DAYS, ONE WEEK AND FOURTEEN DAYS AND THE AVERAGE HOLDING PERIOD IS AROUND 10 - 11 DAYS. THE ASSESSING OFFICER OPINED THAT THE ASSESSEES ACTIVITY WAS IN THE NATURE OF IN THE NATURE OF BUSINESS. HE FURTHER NOTED THAT THE ASSESSEE HAS ALSO CARRIED OUT NON DELIVERY BASED SPECULATIVE TRANSACTIONS DURING THE YEAR. DIVIDEND RECEIVED WAS VERY MINISCULE . THAT OPENING STOCK AND CLOSING STOCK OF BUSINESS DID NOT COMPRISE OF SOME SCRIPS. HE PROCEEDED TO HOLD THAT SHORT TERM CAPITAL GAIN WAS TO BE TREATED AS BUSINESS INCOME. IN THIS PROCESS THE ASSESSING OFFICER ALSO HELD THAT THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHIT (122 TTJ 97) I S NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 4. UPON AS SESSEES APPEAL LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND IN THIS CASE THE ASSESSEE HAS BEEN OFFERING SHORT TERM AND LONG TERM CAPITAL GAIN CONSISTENTLY IN THE PAST. THIS HAS NEVER BEEN DISPUTED BY THE REVENUE. IT IS ALSO UNDISPUTED THAT THE ASSESSEE AS AN INVESTOR HAS MAINTAINED TWO SEPARATE PORTFOLIOS ONE F O R THE SPECULATIVE AND OTHER ONE OF INVESTOR. THE ASSE SSING OFFICER HAS TREATED AS INVESTOR TO THE EXTENT OF LONG TERM CAPITAL LOSS ON SHARES. FURTHERMORE IT IS UNDISPUTED THAT THE ASSESSEE HA D TAKEN DELIVERY OF SHARES ON ITS PURCHASE AND GIVE N DUE DELIVERY OF THE SHARES ON ITS SALE . IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHIT (SUPRA) IS SQUARELY APPLICABLE ON THE FACTS OF THE CASE. IN OUR CONSIDERED OPINION THE AUTHORITIES BELOW HAVE CLEARLY ERRED IN DISTINGUISHING THIS CASE. AC CORDINGLY, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. MS. MANSI MUKESH NAGDA 3 6. IN THE RESULT, THIS APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 03 . 1 2 . 201 9 . SD/ - SD/ - ( MAHAVIR SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 03 / 1 2 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. C IT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI