SUDHA DAMANI, MUMBAI V. ACIT 25(2), MUMBAI

ITA 2402/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92239 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Salary income

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.2402/MUM/2012 MS. SUDHA DAMANI, A-73, SHRIDHAR SMRUTI, DEVIDAS EXTN LANE, BORIVALI WEST, MUMBAI-400103 / VS. COMMISSIONER OF INCOME TAX APPEALS-XXXV, C-11, PRATKASHAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI-400051 ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO AAADPD520Q !'# $ / ASSESSEE BY SHRI JAYANT R. BHATT % / REVENUE BY SMT. N.V.NADKARNI-DR & % ' $ ( / DATE OF HEARING 16/04/2015 ' $ ( / DATE OF ORDER: 16/04/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 31/01/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED/AGITATED IN THIS APPEAL PERT AINS TO MS. SUDHA DAMANI 2 SHORT TERM CAPITAL GAINS TO BE CHARGED AT SPECIAL R ATE OF TAX, AS PER THE PROVISIONS OF SECTION 111A OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AND ALSO WHETHER, IT IS SHORT TERM CAPITAL GAIN OR BUSINESS INCOME. 2. DURING HEARING OF THIS APPEAL, SHRI JAYANT R. BHATT, LD. COUNSEL FOR THE ASSESSEE, ADVANCED HIS A RGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITT ING THAT IT IS NOT A BUSINESS INCOME AND FURTHER THERE ARE O NLY FOUR SCRIPTS. ON THE OTHER HAND, SMT. N.V. NADKARNI, LD . DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT KEEPING IN VIEW, THE NATURE OF SCRI PTS, IT IS CERTAINLY A BUSINESS INCOME. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVED INC OME FROM SALARY, BUSINESS INCOME, CAPITAL GAINS, AND OTHER S OURCES, DECLARED INCOME IN OF RS.24,54,909/- IN HER RETURN ON 29/09/2008. THE ASSESSEE FILED NECESSARY DETAILS/ DOCUMENTS CALLED FOR. THE ASSESSEE ALSO MADE INVES TMENT IN SHARES OUT OF HER OWN EARNINGS BY CLAIMING SHORT TE RM CAPITAL GAIN ON THE SALE OF FOUR SCRIPTS. THE ASSE SSEE EARNED RS.9 LAKHS FROM SALARY AND RS.3,02,659/- FROM OTHER SOURCES INCLUDING EXEMPTED DIVIDEND INCOME OF RS.1,50,066/- APART FROM CAPITAL GAIN. FOR A FAIR UNDERSTANDING/CONCLUSION, WE ARE REPRODUCING HEREUN DER THE DETAILS OF SHORT TERM PROFITS/GAINS FROM SALE O F SHARES:- MS. SUDHA DAMANI 3 NAME OF THE SCRIPTS QTY OF SHARES DATE OF PURCHASE PURCHASE CONSIDERATION DATE OF SALE S ALE CONSIDERATION HOLDING PERIOD IN DAYS SHORT TERMS GAINS MICROTECH 1000 14.3.08 62310 24.03.08 64990 10 2680 PARSHWANATH DEVELOPERS 2000 13.3.07 489141 07.05.07 639737 54 150596 RANBAXY 1000 20.6.06 378190 21.05.07 402564 336 24 374 RCVL 4000 21.5.07 2008240 11.02.08 2506809 266 4985 69 TOTAL 676219 2.2. IF THE TOTALITY OF FACTS INCLUDING THE AFORES AID TABLE ARE ANALYZED, IT IS UNDISPUTED FACT THAT THE ASSESSEE I S NOT A WHOLE TIME DEALER IN SHARES AS THE ASSESSEE EARNED SALARY OF RS.9 LAKH AND INCOME OF RS.3,02,659/- FROM OTHER SOURCES. TH E LD. ASSESSING OFFICER TREATED THE SHORT TERM CAPITAL GA INS AS BUSINESS INCOME WITHOUT ASCERTAINING THE CORRECT FA CTS ALONG WITH INTERPRETATION AND INTENTION OF THE LEGISLATUR E, MORE SPECIFICALLY WHEN, THE ASSESSEE ONLY SOLD FOUR SCRI PTS AND DERIVED CAPITAL GAIN THERE FROM. ONE OF THE REASON FOR DEN YING RELIEF TO THE ASSESSEE BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IS THAT THE ASSESSEE MAINTAINED BOOKS LIKE A BUSINESSM AN CONTAINING THE DETAILS OF EXPENSES, IN OUR VIEW, IS NOT A VALID REASON FOR DENYING RELIEF, IF OTHERWISE, AVAILABLE TO THE ASSESSEE. THE ASSESSEE INVESTED HER OWN FUNDS AND IT IS NOT T HE CASE THAT FOR DOING BUSINESS, SHE BORROWED FUNDS AND INVESTED FOR PURCHASING/TRADING IN SHARES. FOR EARLIER ASSESSME NT YEAR, THE INCOME OF THE ASSESSEE WAS TAXED AS CAPITAL GAINS, THUS, UNLESS AND UNTIL CONTRARY FACTS ARE BROUGHT ON RECORD, CON SISTENCY HAS TO BE FOLLOWED, THOUGH, RES-JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS. ANOTHER REASON MENTIONED IN THE IM PUGNED ORDER IS THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY O THER ACTIVITY, WHICH INDICATES THAT DEALING IN SHARES IS HER LIVEL IHOOD. THIS IS ALSO CONTRARY TO FACTS, AS MENTIONED EARLIER, THE A SSESSEE DERIVES INCOME FROM SALARY, INCOME FROM OTHER SOURCES, ETC, WHICH MS. SUDHA DAMANI 4 CLEARLY PROVES THAT THE ASSESSEE WAS NOT DEVOTING F ULL TIME IN INVESTMENT IN SHARES RATHER WAS ENGAGED IN OTHER AC TIVITIES ALSO FOR EARNING. THE INTENTION OF THE ASSESSEE IS CLEA RLY INVESTMENT IN SHARES AND THUS THE PROFIT ARISING THEREFROM IS CLEARLY A SHORT TERM CAPITAL GAINS/LONG TERM CAPITAL GAINS. THERE I S NO SINGLE CRITERIA FOR DECIDING THE NATURE OF TRANSACTION RAT HER VOLUME AND FREQUENCY OF TRANSACTION, NUMBER OF SCRIPTS, ACTIVI TIES OF THE ASSESSEE, SCALE OF ACTIVITY, USE OF FUNDS WHETHER B ORROWED OR OWN, TIME DEVOTED BY THE ASSESSEE FOR PURCHASE AND SALE NATURE OF SHARES, HOLDING PERIOD, COMPOSITION OF INCOME EA RNED BY THE ASSESSEE, ETC ARE THE GUIDING FACTORS. THE ASSESSEE , DURING THE PERIOD, INVESTED IN ONLY FOUR SCRIPTS AND AT A SHOR T INTERVAL SOLD THE SHARES, ON THE OPPORTUNITY FOR EARNING SMALL DI VIDENDS. IT IS NOT THE CASE THAT THE ASSESSEE IS A BIG TRADER IN S HARES AND ONLY DEALING IN TRADING ACTIVITIES OF SHARES ONLY. THE VOLUME, HOLDING PERIOD AND THE NATURE OF TRANSACTION CLEARLY ESTAB LISH THAT THE ASSESSEE MADE INVESTMENT FOR EARNING PROFIT, THUS, THE INCOME SO DECLARED IS TO BE TAXED UNDER THE HEAD CAPITAL GAIN S, THUS, THE STAND OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS ) IS REVERSED FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 16/04/2015. SD/ - (B.R.BASKARAN) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & MUMBAI; ) DATED : 16/04/2015 F{X~{T? P.S/. . . MS. SUDHA DAMANI 5 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. & 0$ ( *+ ) / THE CIT, MUMBAI. P. & 0$ / CIT(A)- , MUMBAI 5. 2%3 .$! , *+( *! 4 , & / DR, ITAT, MUMBAI 6. 5' 6 / GUARD FILE. / BY ORDER, /2+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI