Smt. Shaila Shah, Indore V. The Addl. CIT, Range-3, Indore

ITA 249/IND/2013

• Counselvise Citation: 24922714 RSA 2013
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHEEM KUNWAR
• Assessee Lawyers: S N AGARWAL; PANKAJ MOGRA CAS
• Keywords: Business income
• Section: 80C

Judgement Text

PAGE 1 OF 6 A IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AKTPS4978C I.T.A.NO. 249 /IND/201 3 A.Y. : 2007-08 SMT. SHAILA SHAH, INDORE VS. ADDL. CIT, RANGE 3, INDORE. AP PELLANT RESPONDENT APPELLANT BY : S/SHRI S. N. AGARWAL AND PANKAJ MOGRA, CAS RESPONDENT BY : SHRI BHEEM KUNWAR, SR. DR DATE OF HEARING : 31 . 1 0 .201 3 DATE OF PRONOUNCEMENT : 20 . 1 1 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) DATED 20 TH FEBRUARY, 2013, FOR THE ASSESSMENT YEAR 2007-08. SMT. SHAILA SHAH, INDORE. I.T.A.NO. 249/IND/2013 A.Y.2007-08 2 PAGE 2 OF 6 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DECLI NE OF ASSESSEES CLAIM OF SHORT TERM CAPITAL GAIN AND TRE ATING THE SAME AS BUSINESS INCOME. 3. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FROM THE RECORD, WE FOUND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF I NCOME AT RS. 57,33,260/-, THE BREAK UP OF WHICH IS AS UNDER :- S.NO. NATURE OF INCOME AMUNT (RS.) 1. BUSINESS INCOME 14,71,594 2. SHORT TERM CAPITAL GAIN 43,50,516 3. INCOME FROM OTHER SOURCES 11,149 58,33,259 LESS: DEDUCTION U/S 80C LIP 1,00,000 TOTAL INCOME 57,33,260 4. IN THE TAX AUDIT REPORT ATTACHED WITH THE RETURN O F INCOME, THE ASSESSEE HAS CATEGORICALLY EXPLAINED AB OUT THE NATURE OF BUSINESS AND THE CHANGE IN NATURE OF THE BUSINESS IN THE YEAR UNDER CONSIDERATION, THE RELEVANT CLAUSE S BEING 8(A) AND 8 (B) OF TAX AUDIT REPORT READ AS UNDER :- SMT. SHAILA SHAH, INDORE. I.T.A.NO. 249/IND/2013 A.Y.2007-08 3 PAGE 3 OF 6 8(A) NATURE OF BUSINESS OR PROFESSION :- INVESTMENT IN SHARES & SECURITIES. 8(B) IF THERE IS ANY CHANGE IN THE NATURE OF BUSINESS OR PROFESSION, THE PARTICULARS OF SUCH CHANGE DURING THE YEAR ASSESSEE HAS CHANGED THE BUSINESS OF SHARES TO INVESTMENT IN SHARES. 5. IN THE RETURN OF INCOME, THE ASSESSEE HAS ALSO OFFE RED INCOME IN RESPECT OF F & O TRANSACTION AS INCOME FR OM BUSINESS AND DECLARED PROFIT IN RESPECT OF DELIVERY BASED TRANSACTION AS INCOME FROM CAPITAL GAINS. DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT PURCHASED ANY SHARES, BUT SHARES WERE SOLD, WHICH WERE CONVERTED FROM STOCK IN TRADE TO INVESTMENT. DURING THE YEAR UNDER CONSI DERATION, THE INTENTION OF THE ASSESSEE WAS MERE INVESTMENT A ND SHE WAS NOT ENGAGED IN DAY TO DAY ACTIVITY OF PURCHASE AND SALE OF SHARES. WE FOUND THAT THE SHARES SO SOLD DURING THE YEAR WERE DULY CONVERTED INTO INVESTMENT AND SHARES WORTH RS. 83,093/- WERE STILL LYING IN HER POSSESSION AS ON 31.3.2007 IN THE FORM OF INVESTMENT. THE LD. AUTHORIZED REPRESENTATIVE A LSO INVITED SMT. SHAILA SHAH, INDORE. I.T.A.NO. 249/IND/2013 A.Y.2007-08 4 PAGE 4 OF 6 OUR ATTENTION TO DEMAT STATEMENT INDICATING TRANSFE R OF SHARES IN DEMAT ACCOUNT IN THE PREVIOUS YEAR RELEVANT TO A SSESSMENT YEAR 2006-07 AND SHOWN AS OPENING BALANCE IN THIS Y EAR. THIS CLEARLY SHOWS THE INTENTION OF THE ASSESSEE WAS TO HOLD THESE SHARES AS INVESTMENT. THE ASSESSEE HAS EARNED CAPIT AL GAIN ON SALE OF SHARES OF THESE COMPANIES DURING THE YEAR U NDER CONSIDERATION. THE SHARES SO SOLD WERE FIRST CONVER TED INTO STOCK IN TRADE AT THE BEGINNING OF THE YEAR AND THE REAFTER ROUTED THROUGH DEMAT ACCOUNT. THIS CLEARLY INDICATE S THE INTENTION OF THE ASSESSEE TO HOLD THE SHARES AS INV ESTMENT, PROFIT AROSE ON SALE OF THOSE INVESTMENTS ARE LIABL E TO BE ASSESSED AS CAPITAL GAINS. WHILE FRAMING THE ASSESS MENT, THE ASSESSING OFFICER HAS TREATED THE SAME AS BUSINESS INCOME ON THE PLEA THAT ASSESSEE HAD OFFERED BUSINESS INCOME ON SALE OF SHARES IN ASSESSMENT YEARS 2005-06 AND 2006-07. IT IS TRUE THAT THE ASSESSEE HAS SHOWN PROFIT ON SALE OF SHARE S AS BUSINESS INCOME IN THESE TWO ASSESSMENT YEARS, SINC E IN THESE YEARS THE ASSESSEE WAS ACTIVELY ENGAGED IN BUSINESS OF THESE SHARES. HOWEVER, DURING THE YEAR UNDER CONSIDERATIO N, THE SMT. SHAILA SHAH, INDORE. I.T.A.NO. 249/IND/2013 A.Y.2007-08 5 PAGE 5 OF 6 ASSESSEE HAD NOT PURCHASED ANY SHARES BUT HAS CONVE RTED HER STOCK IN TRADE AS INVESTMENT. THE PROFIT SO AROSE W AS OUT OF SALE OF SHARES HELD AS INVESTMENT. THE ASSESSEES A CT OF CONVERSION OF SHARES HELD AS STOCK IN TRADE IN TO I NVESTMENT WAS BONA FIDE AND NOT WITH THE PURPOSE TO REDUCE TH E TAX LIABILITY. IT IS UP TO ASSESSEE TO DECIDED AS TO WH ETHER HE WANTS TO CONTINUE TO HOLD THE SHARES AS STOCK IN TRADE OR TO CONVERT THE SAME AS INVESTMENT. ONCE THE ASSESSEE BONAFIDEL Y DECIDES AND TAKES APPROPRIATE STEP OF CONVERSION OF SUCH ST OCK IN TRADE AS INVESTMENT, ANY SUBSEQUENT ACT RESULTING I NTO PROFIT OR LOSS ON SALE OF SUCH INVESTMENT IS LIABLE TO BE TREATED AS CAPITAL GAIN/CAPITAL LOSS. HON'BLE SUPREME COURT I N THE CASE OF NEW JAHAGIR VAKIL MILLS CO.LTD., 49 ITR 137, HEL D THAT IN MATTERS OF TAXATION, THERE CAN BE NO QUESTION OF RE S JUDICATA. THE DECISION GIVEN BY AN ITO FOR ONE ASSESSMENT YEA R CANNOT AFFECT OR BIND HIS DECISION FOR ANOTHER YEAR. GENER ALLY, DOCTRINE OF RES JUDICATA OR ESTOPPELS BY RECORD DOES NOT APP LY TO SUCH DECISION. IN VIEW OF THIS PROPOSITION OF HON'BLE SU PREME COURT, WE DO NOT FIND ANY MERIT IN ASSESSING OFFICERS ACT ION FOR SMT. SHAILA SHAH, INDORE. I.T.A.NO. 249/IND/2013 A.Y.2007-08 6 PAGE 6 OF 6 TAXING THE CAPITAL GAIN AS BUSINESS INCOME. IT IS N OT IN DISPUTE THAT DURING THE YEAR UNDER CONSIDERATION, BY TAKING APPROPRIATE ACTION THE ASSESSEE HAS CONVERTED HER S TOCK IN TRADE INTO INVESTMENT BONAFIDELY, ACCORDINGLY, PROF IT ON SALE OF SUCH SHARES CONVERTED INTO STATEMENT IS LIABLE TO B E TAXED AS CAPITAL GAIN AND NOT AS BUSINESS INCOME. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT FOR TAXING THE PROFIT AROSE ON SALE OF DELIVERY BASED T RANSACTION AS BUSINESS INCOME IN RESPECT OF SHARES BONAFIDELY CON VERTED INTO INVESTMENT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART, IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH NOVEMBER, 2013. CPU* 142011