Smt. Manjari Devi Mantri, Kolkata V. ITO, Ward - 35(4), Kolkata, Kolkata

ITA 230/KOL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70496 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2011
• Court: TRIBUNAL
• Department Lawyers: R P NAG SRDR
• Assessee Lawyers: M K JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI ABRAHAM.P.GEORGE, ACCOUNTANT MEMBER ITA NO. 230 / KOL / 2011 ASSESSMENT YEAR :2005-06 SMT.MANJARIDEVI MANTRI, CONTINENTAL CHEMBERS,4 TH LOOR, 15A HEMANTABASU SARANI, KOLKATA- 700 001 [ PAN NO.AEWPM 7006 A ] V/S . INCOME TAX OFFICER, WARD-35(4), PODDAR COURT,18, RABINDRA SARANI, KOLKATA 700 001 / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI M.K. JAIN, AR /BY RESPONDENT SHRI R.P. NAG, SR-DR /DATE OF HEARING 26-11-2013 /DATE OF PRONOUNCEMENT 19-12-2013 / // / O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XX, KOLKATA IN APPEAL NO.413/C IT(A)-XXWD-35(4)07- 08/KOL DATED 15-11-2010. ASSESSMENT WAS FRAMED BY I TO, U/S. 143(3)(II) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATE 31-12-2007. 2. FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF STANDARD DEDUCTION C LAIMED BY ASSESSEE U/S. 16(I) AT RS.30,000/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1:- ITA NO.230KOL2011 A.Y. 2005-06 SMT.MANJARI DEVI MANTRI V.ITO WD-35(4) KOL PAGE 2 1) FOR THAT THE LD. CIT ERRED IN CONFIRMING OF NOT ALLOWING CLAIM OF STANDARD DEDUCTION OF RS.30,000 WITHOUT ANY BASIS; 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING O FFICER DISALLOWED STANDARD DEDUCTION BY HOLDING THAT THERE WAS NO EMPLOYER-EMP LOYEE RELATIONSHIP AND ACCORDINGLY, HE DISALLOWED THE CLAIM OF STANDARD DE DUCTION. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO C ONFIRMED THE ACTION OF AO VIDE PARA-3 OF HIS ORDER BY OBSERVING AS UNDER:- 3 GROUND NO. 1 RELATES TO NOT ALLOWING STANDARD DEDUCTION U/S. 16(I).THE APPELLANT HAS RECEIVED REMUNERATION OF RS.82,000/- FROM MANIP UR TEA CO LTD IN WHICH SHE IS A DIRECTOR. THE AO HELD THAT THERE WAS NO EMPLOYER-EM PLOYEE RELATION; AND SO, THE CLAIM OF STANDARD DEDUCTION IS NOT ALLOWABLE. THE L D. AR ARGUED THAT THE APPELLANT IS WORKING DIRECTOR, AND, IS PART OF MANAGEMENT FOR RU NNING AND ADMINISTRATION OF THE COMPANY. I DO NOT FIND MERIT IN THE CONTENTION. THE AO HAS RIGHTLY HELD THAT THERE WAS NO EMPLOYER-EMPLOYEE RELATION AND CLAIM OF STANDARD DEDUCTION IS NOT ALLOWABLE.GROUNDNO.1 IS DISMISSED . 4. WE FIND THAT EVEN NOW BEFORE US ASSESSEE COULD N OT PRODUCE ANY EVIDENCE THAT ASSESSEE IS ACTUALLY WORKING DIRECTOR AND IN THE ABSENCE OF THE SAME, WE ARE OF THE VIEW THAT STANDARD DEDUCTION CA NNOT BE ALLOWED BECAUSE IT IS REMUNERATION TO SLEEPING DIRECTOR, WHICH DOES NOT FALL UNDER THE DEFINITION OF SALARY AS PROVIDED IN THE PROVISIONS OF INCOME T AX ACT. HENCE, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF ASSESSEES AP PEAL IS DISMISSED. 5. NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES CLAIMED UND ER THE HEAD PROFIT AND GAINS OF BUSINESS AT RS.8,95,019/-. FOR THIS, ASSE SSEE HAS RAISED FOLLOWING GROUND NO.2:- 2) FOR THE LD.CIT ERRED IN CONFIRMING DISALLOWANCE OF EXPENSES OF RS.8,95,019/- UNDER THE HEAD OF PROFIT AND GAINS OF BUSINESS OR P ROFESSION WITHOUT APPRECIATING THE FACTS AND BASIS OF DISALLOWANCE IN A PROPER MANNER. 6. BRIEFLY STATED FACTS ARE THAT ASSESSING OFFICER DISALLOWED EXPENSES ON THE GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED OU T BY THE ASSESSEE. ACCORDING TO AO, ASSESSEE HAS CLAIMED BUSINESS LOSS OF RS.8,62,495/- AND ITA NO.230KOL2011 A.Y. 2005-06 SMT.MANJARI DEVI MANTRI V.ITO WD-35(4) KOL PAGE 3 THESE EXPENSES ARE RELATED TO ASSESSEE'S SHARE TRAN SACTIONS WHICH WAS CLAIMED BY ASSESSEE UNDER THE HEAD CAPITAL GAINS AND NOT BUSINESS OR PROFESSION. AGGRIEVED, AGAINST THE DISALLOWANCE AS SESSEE PREFERRED APPEAL BEFORE CIT(A) WHO CONFIRMED THE ACTION OF AO VIDE P ARA-4 BY OBSERVING AS UNDER:- 4 GROUND NO. 2 & 3 RELATE TO DISALLOWANCE OF EXP ENSES ON THE GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED OUT BY THE APPELLANT. THE APPELLANT HAS SHOWN BUSINESS LOSS OF RS.8,62,495/-. THE AO FOUND FROM THE P&L A/ C THAT NO BUSINESS ACTIVITY WAS CARRIED OUT BY THE APPELLANT. THE APPELLANT HAS ACT UALLY MADE INVESTMENTS IN SHARES; AND, HAS EARNED CAPITAL GAIN ON SALE OF SUCH SHARES . AS SUCH, THE CLAIM OF EXPENSES IS NOT ALLOWABLE. THE LD. AR SUBMITTED THAT THE AO HAS ERRED IN HOLDING THAT THE APPELLANT DID NOT CARRY BUSINESS ACTIVITY AS SHE WA S ACTIVELY ENGAGED IN SHARE INVESTMENTS . THE LD.AR ALSO ARGUED THAT THE CLAIM OF EXPENSES SHOULD BE OTHERWISE ALLOWED FROM CAPITAL GAIN. I DO NOT FIND MERIT IN T HE CONTENTIONS OF THE APPELLANT. THE AO HAS RIGHTLY HELD THAT THE APPELLANT HAS MADE INV ESTMENT IN SHARES, AND, PROFIT ON SALE OF SUCH SHARE IS ASSESSABLE AS CAPITAL GAIN. T HE APPELLANT HAS HERSELF ADMITTED THAT SHE WAS ACTIVELY ENGAGED IN SHARE INVESTMENTS. MOREOVER, CLAIM OF EXPENSES CANNOT BE ALLOWED FROM CAPITAL GAIN. IN VIEW OF THE ABOVE, THE ORDER OF THE AO IS UPHELD. GROUND NO. 2 & 3 ARE DISMISSED . 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT SIMILAR ISS UE IS DECIDED BY A COORDINATE BENCH OF THIS TRIBUNAL I.E. C BENCH OF KOLKATA IN ITA NO.1761/K/2010 IN THE CASE OF ACIT VS. RAGHUPATI SI NGHANIA VIDE ORDER DATED 27 TH MAY, 2011, WHEREIN IT IS HELD AS UNDER: 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS EE HAD ALWAYS BEEN AN INVESTOR IN SHARES AND NOT A TRADER AND TO SUPPORT THIS CONTENTION, THE ASSESSEE FILED COPIES OF ACCOUNTS FOR THE PAST ASSESSMENT YE ARS I.E. 2000-01 TO 2005-06 AND RELEVANT COPIES OF ASSESSMENT ORDERS FOR THESE ASSESSMENT YEARS. HE ENCLOSED THESE COPIES IN HIS PAPER BOOK. THE ASSESS EE ALSO FILED COPIES OF ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR 2007-08 IN HIS PAPER BOOK WHICH PROVES THAT SHARES AND SECURITIES ARE HELD AS INVES TMENT AND NOT STOCK IN TRADE. EVEN THE COPIES OF PFM LIKE PRUDENTIAL ICICI PORT-F OLIO MANAGEMENT SERVICES LTD. AND AUM KOTAK SECURITIES LTD ARE ENCLOSED IN T HE ASSESSEES PAPER BOOK, CLEARLY REVEALS THAT THE SAME SURPLUS GENERATED IS REFLECTED UNDER THE HEAD SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS , AS THE CASE MAY BE. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE PFMS HA VE NO AUTHORITY TO CHANGE THE CHARACTER OF THE INVESTMENT. IN VIEW OF THESE EVIDENCES, WE ARE OF THE VIEW THAT THE TRANSACTIONS CARRIED OUT BY PFMS ON BEHALF OF THESE ASSESSEES WERE IN THE CAPITAL FIELD AND THE SURPLUS GENERATED IS EITH ER SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS, AS THE CASE MAY BE. WE FU RTHER FIND THAT THE REVENUE IN EARLIER YEARS IS ASSESSING THE SAME INVESTMENT A S SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS SINCE INCEPTION OF INVESTME NT MADE BY THE ASSESSEE. WE ARE OF THE VIEW THAT THE ASSESSEE WHILE MAKING I NVESTMENT HAS TAKEN EXPERTS ADVISE AND FOR THAT UTILISED THE SERVICES OF PFMS T O MAXIMIZE HIS INVESTMENT AND INTENTION OF THE ASSESSEE FROM THE TIME OF PURCHASE OF SHARES TO THE SALE OF ITA NO.230KOL2011 A.Y. 2005-06 SMT.MANJARI DEVI MANTRI V.ITO WD-35(4) KOL PAGE 4 SHARES IS VERY CLEAR I.E. THE INVESTMENT. WE ARE O F THE VIEW THAT IN CASE TRANSACTIONS ARE CARRIED OUT THROUGH PFMS, IT CANNO T CHANGE THE CHARACTER OF TRANSACTION AND TRANSACTION WILL REMAIN OF INVESTME NT. ACCORDINGLY, WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY HELD THE SURPLUS TO B E ASSESSED UNDER CAPITAL GAINS EITHER SHORT TERM CAPITAL GAINS OR LONG TERM CAPITA L GAINS, AS THE CASE MAY BE. ACCORDINGLY, WE CONFIRM ORDERS OF CIT(A) AND TH IS ISSUE OF ALL THE THREE APPEALS OF THE REVENUE ARE DISMISSED. AS THE ISSUE IS COVERED BY COORDINATE BENCH DECISIO N, TAKING A CONSISTENT VIEW WE DISMISS THIS ISSUE OF ASSESSEES APPEAL. 8. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ASSESSMENT OF INTEREST INCOME AS IN COME FROM OTHER SOURCES AS AGAINST THE CLAIM OF ASSESSEE THAT THE SAME BE A SSESSED UNDER THE HEAD PROFITS AND GAINS OR PROFESSION. FOR THIS, ASSESS EE HAS RAISED FOLLOWING GROUND NO.3:- 3) FOR THELD.CIT ERRED IN CONFIRMING ASSESSMENT OF INTEREST INCOME OF RS.32,506 UNDER THE HEAD OF INCOME FROM OTHER SOURCES RATHER THAN PROFITS AND GAINS OF BUSINESS OR PROFESSION. 9. BRIEFLY STATED FACTS ARE THAT ASSESSEE HAS CLAIM ED INTEREST INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE ASSESSING OFFICER ASSESSED THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO VIDE PARA-5 BY OBSERVING AS UNDER:- 5 GROUND NO.4 RELATES TO ASSESSMENT OF INTEREST OF RS.32,506/- AS INCOME FROM OTHER SOURCES. THE LD. AR SUBMITTED THAT THE AO HAS WRONGLY ASSESSED THE INTEREST OF RS.32,506/- AS INCOME FROM OTHER SOURCES SINCE A DVANCING OF LOAN IS A BUSINESS ACTIVITY OF THE APPELLANT. BUT, NO MATERIAL WAS BRO UGHT ON RECORD TO SHOW THAT MONEY LENDING WAS A BUSINESS ACTIVITY OF THE APPELLANT. F OR THE APPELLANT HAS RECEIVED DURING THE YEAR INTEREST OF RS.38,935/- COMPRISING BANK INTEREST OF RS.6,429/- AND INTEREST OF RS.32,506/-FROM SHRI MADHUKAR NOULAKHA. THE LEDGER COPY OF SHRI MADHUKAR NOULAKHA SHOWS BROUGHT FORWARD BALANCE OF RS.2,50,000- ON WHICH INTEREST OF RS.32,506/- WAS GIVEN, WHICH WAS PAID T O THE APPELLANT DURING THE YEAR, RESULTING IN CARRY FORWARD BALANCE OF RS.2,50,000/- . EXCEPT FOR THIS ISOLATED INSTANCE OF GIVING LOAN IN EARLIER YEAR; NO ACTIVITY OF GIVI NG LOANS WAS CARRIED OUT BY THE APPELLANT IN THE CURRENT YEAR. IN THIS FACTUAL BACK GROUND, THE ARGUMENT OF THE APPELLANT THAT MONEY LENDING WAS HER BUSINESS ACTIV ITY IS NOT ACCEPTABLE. THE AO HAS RIGHTLY ASSESSED THE INTEREST AS INCOME FROM OT HER SOURCES. GROUND NO. 4 IS DISMISSED . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE US. ITA NO.230KOL2011 A.Y. 2005-06 SMT.MANJARI DEVI MANTRI V.ITO WD-35(4) KOL PAGE 5 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT EVEN NOW BE FORE US THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE THAT IT IS IN THE BU SINESS OF GRANTING LOANS AND ADVANCES AND IN THE ABSENCE OF THE SAME, THE AO HAS RIGHTLY TREATED THE INCOME I.E. INTEREST INCOME AS INCOME FROM OTHER SO URCES AND CIT(A) HAS RIGHTLY AFFIRMED THE SAME. WE CONFIRM THE ORDER OF CIT(A). THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 /12/2013 SD/- SD/- (ABRAHAM.P. GEORGE) (MAHAVIR S INGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP !' #- 19 /1 2 /2013 ) **+ **+ **+ **+ ,+ ,+ ,+ ,+ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '.'*/ 0 / CONCERNED CIT 4. 0- / CIT (A) 5. +34 ***/, */ , / DR, ITAT, KOLKATA 6. 478 9: / GUARD FILE. BY ORDER/ , ;/< '= */ ,