Echolac Finvest Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(1), Ahmedabad

ITA 2493/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6144 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Keywords: Business income; Earning of tax free income
• Section: 143(3); 14A; 10; 2

Judgement Text

ITA NO S . 2492 & 2493 / AHD / 201 3 A SSESSMENT Y EAR S : 20 0 9 - 10 & 2010 - 11 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO S . 2492 & 2 4 93 /AHD/201 3 ASSESSMENT Y EAR S : 20 0 9 - 10 & 2010 - 11 ECHOLAC FINVEST PVT. LTD., ..... .......... .APPELLANT 44/D, SHARNAM 12,PRAHLADNAGAR, VEJALPUR, AHMEDABAD 380 015 . [PAN: A AA CE 3446 R ] VS. INCOME TAX OFFICER , WARD 4(1), AHMEDABAD. .. ......... RESPONDENT APPEARANCES BY: PARIN SHAH , FOR THE APPELLANT DEEPAK SUTARIA , FOR THE RESPONDENT D ATE OF CONCLUDING THE HE ARING : 10 . 0 2 . 201 7 DATE OF PRONOUNCING THE ORDER : 26 .04. 2017 O R D E R 1. BY WAY OF TH ESE TWO APPEAL S , THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE TWO SEPARATE ORDER S, BOTH DATED 30 TH AUGUST 2013, PASSED BY THE LEARNED CI T(A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR S 20 0 9 - 10 & 2010 - 11 . 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS : - A.Y. 2009 - 10 : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VIII AHMEDABAD HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN PASSING AN APPELLATE ORDER FOR A.Y. 2009 - 2010 ON 30.08.2013. ITA NO S . 2492 & 2493 / AHD / 201 3 A SSESSMENT Y EAR S : 20 0 9 - 10 & 2010 - 11 PAGE 2 OF 3 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,85,702/ - BEING EXEMPT INCOME OF LONG TERM CAPITAL GAIN ON SALE O F INVESTMENT IN SHARES & SECURITIES AS BUSINESS INCOME. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DISALLOWANCE U/S.14A OF THE I.T. ACT ON PROTECTIVE BASIS. 4. THE LD. CIT(A) AHMEDABAD HAS ERRED IN NOT ADJUDICATING GROUND RELATING TO INI TIATION OF PENALTY PROCEEDING. A.Y. 20 10 - 11: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VIII AHMEDABAD HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN PASSING AN APPELLATE ORDER FOR A.Y. 20 10 - 11 ON 30.08.2013. 2. THE LD. CIT(A) HAS ER RED IN CONFIRMING THE ADDITION OF RS. 4,34,455/ - BEING EXEMPT INCOME OF LONG TERM CAPITAL GAIN ON SALE OF INVESTMENT IN SHARES & SECURITIES AS BUSINESS INCOME. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DISALLOWANCE U/S.14A OF THE I.T. AC T OF RS.1,59,524/ - ON PROTECTIVE BASIS. 4. THE LD. CIT(A) AHMEDABAD HAS ERRED IN NOT ADJUDICATING GROUND RELATING TO INITIATION OF PENALTY PROCEEDING. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT SO FAR AS THE QUESTION AS TO WHETHER THE GAINS ON ALIE NATION OF SHARES IS TO BE TREATED AS BUSINESS INCOME OR CAPITAL GAINS, THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY A DECISION OF A DIVISION BENCH OF THIS TRIBUNAL, IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06, 2006 - 07, 2007 - 08 AND 20 08 - 09. RESPECTFULLY FOLLOWING THE DECISION OF THE DIVISION BENCH, I HOLD THAT THE GAINS ON SALE OF SHARES ARE REQUIRED TO BE TREATED AS CAPITAL GAINS. TO THIS EXTENT, PLEA OF THE ASSESSEE INDEED DESERVES TO BE UPHELD. ACCORDINGLY, PLEA OF THE ASSESSEE, FOR BOTH THE ASSESSMENT YEARS, IS ACCEPTED IN THIS RESPECT. 4. AS REGARDS THE DISALLOWANCE UNDER SECTION 14A , I FIND THAT THE DISALLOWANCE IS RESTRICTED TO 0.5% OF THE AVERAGE VALUE OF INVESTMENTS AS PER THIRD ELEMENT OF FORMULA SET ITA NO S . 2492 & 2493 / AHD / 201 3 A SSESSMENT Y EAR S : 20 0 9 - 10 & 2010 - 11 PAGE 3 OF 3 OUT UNDER RULE 8D. THE AS SESSMENT YEAR BEFORE US IS AN ASSESSMENT YEAR IN WHICH RULE 8D WAS IN PLACE, AND, IN ANY CASE, THERE IS NO DISALLOWANCE IN RESPECT OF INTEREST ETC. IN VIEW OF THIS FACTUAL SCENARIO, I SEE NO INFIRMITY IN THE DISALLOWANCE SUSTAINED BY THE CIT(A) AND I DECL INE TO INTERFERE IN THE MATTER SO FAR AS THIS ASPECT IS CONCERNED. ACCORDINGLY, PLEA OF THE ASSESSEE, FOR BOTH THE ASSESSMENT YEARS, IS REJECTED ON THIS COUNT. 5. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE . PRON OUNCE D IN THE OPEN COURT ON THE 2 6 TH DAY OF APRIL , 2017 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 26 TH DAY OF APRIL , 2017 . PBN/* COPIES TO: (1) THE APPEL LANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD