The DCIT, Circle-2, Ahmedabad V. Shri Ashokkumar Babulal Almal, Ahmedabad

ITA 2694/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94585 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH JHA SR DR
• Assessee Lawyers: PF JAIN
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.2694/AHD/2010 AY 2006-07 2. ./ I.T.A. NO.2695/AHD/2010 AY 2006-07 1. THE DCIT CIRCLE-2, AHMEDABAD 2. THE DCIT CIRCLE-2 AHMEDABAD / VS. 1.SHRI ASHOKKUMAR BABULAL ALMAL GHEE BAZAR, KALUPUR AHMEDABAD 2.SHRI DINESHKUMAR KUNJBIHARI ALMAL GHEE BAZAR, KALUPUR AHMEDABAD % & ./ ./ PAN/GIR NO(S). :1. ABAPA 7701 R 2. ABAPA 7700 Q ( %( / APPELLANTS ) .. ( )*%( / RESPONDENTS ) ASSESSEE(S) BY : SHRI P.F.JAIN, AR RE VENUE BY : SHRI RAKESH JHA, SR.DR +, - .& / DATE OF HEARING 01/10/2015 /012 - .& / DATE OF PRONOUNCEMENT 21/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE REVENUE IN THE CASE OF D IFFERENT ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VII, AHMEDABAD [CIT(A) IN SHORT] BOTH ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 2 - IDENTICALLY DATED 02/07/2010 PERTAINING TO ASSESSME NT YEAR (AY) 2006- 07. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .2694/AHD/2010 FOR AY 2006-07 (IN THE CASE OF SH.ASHOKKUMAR BABULA L ALMAL). THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD.CIT(A) ERRED BOTH ON FACTS AND IN LAW IN DIRECTING THE A.O. TO ASSESS THE INCOME OF RS.23,68,262/- BY TREA TING THE SAME AS INCOME FROM STCG ON WHICH STT IS PAID. 2. THE LD.CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE A.O. HAD ESTABLISHED THAT THE ASSESSEE WAS ENGAGED IN PURCHA SE AND SALE OF SHARES AND, HENCE THE TRADING ACTIVITY WAS BUSIN ESS ACTIVITY. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. THE AP PELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLOWED THE CLAIM OF INTEREST AMOUNTING TO RS.4, 29,778/- AND ALSO ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 3 - TREATED THE SHORT TERM CAPITAL GAIN (STCG) AS BUSIN ESS INCOME OF RS.23,68,262/- AND ENHANCED THE COMPUTED INCOME AT RS.30,36,200/-. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDE R, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. WHILE PART LY ALLOWING THE APPEAL, THE LD.CIT(A) CONFIRMED THE DISALLOWANCE MADE IN RE SPECT OF INTEREST EXPENDITURE. HOWEVER, LD.CIT(A) DIRECTED THE AO TO ALLOW THE CLAIM OF STCG BY TREATING THE SAME AS BUSINESS INCOME ON WHI CH STT IS PAID. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENU E IS NOW IN APPEAL BEFORE US. 3. ALL THE GROUNDS OF APPEAL ARE INTER-CONNECTED AN D, THEREFORE, THE SAME ARE DECIDED TOGETHER. THE LD.SR.DR SUPPORTE D THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN TREATING THE SURPLUS ARISING OUT OF SALE AND PURCHASE OF SHARES AS STCG AS IT IS EVIDENT FROM THE RECORD THAT THE ASSESSEE IS TRADING INTO SHARES . HE FURTHER SUBMITTED THAT THE AO HAS TREATED AND ASSESSED AS BUSINESS PR OFIT, UNDER THE HEAD INCOME FROM BUSINESS RELYING UPON THE CBDT CIRCUL AR DATED 15/06/2007. 3.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESS EE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS BEEN TRADING INTO SHARES AS INVESTMENT . ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 4 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT AS UNDER:- 4.3 I HAVE GONE THROUGH THE FACTS OF THE CASE AND ALSO CONSIDERED THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT A ND THE CASE LAWS RELIED UPON BY THE APPELLANT. IT IS FURTHER OBSERVE D THAT THE NUMBERS OF TRANSACTIONS ENTERED INTO ARE NOT MUCH. THE CAPITAL OF THE APPELLANT IS AROUND RS.222.12 LACS WHICH SHOWS THAT THE INVESTME NTS ARE MADE FROM THE NET WORTH OF THE APPELLANT AND NOT WITH THE BOR ROWED 'FUNDS. THE VALUE OF INVESTMENTS AS ON 31/03/2006 IS ALSO MEAGE R AT RS. 6.02 LACS. FURTHER, THE VOLUME OF TRANSACTION AND VOLUMES OF S HARES TRANSACTED ARE ALSO NOT ON VERY MUCH HIGHER SIDE. THE ASSESSEE IS ALSO MAINTAINING THE BOOKS OF ACCOUNT BY SHOWING THE SHARES AS INVESTMEN T IN THE BOOKS OF ACCOUNT AND NOT AS STOCK IN TRADE REGULARLY. THE AS SESSEE IS NOT A FREQUENT BUYER OF SHARES FROM MARKET BUT APPLIES IN THE IPO SO AS TO GIVE BOOST TO THE PRIMARY MARKET OF THE STOCK EXCHA NGE. FURTHER, LOOKING TO THE PARA 111 OF THE BUDGET SPEECH FOR FISCAL YEA R 2004-05, THE INTENTION OF THE LEGISLATURE IS ALSO EXPRESSED IN C LEAR CUT TERMS FOR TAXING THE INCOME FROM CAPITAL GAIN AND ALSO TO DO AWAY WITH VARIOUS COMPLEX AND VEXED ISSUES IN THIS REGARD. THE JUDGEM ENTS OF CIT VS. S. RAMAAMIRTHAM 217 CTR 206 (MADRAS), SHRI JANAK S. RA NGWALA ITA NO.1163/MUM/2004 DATED 19/12/2006 11 SOT 627 (MUMBA I) AND ADDL. CIT V/S SHRI MOTILAL OSWAL TTA NO. 3861/MUM/2 001 DATED 28/02/2006; 8 SOT 771 (MUMBAI), CIT VS NSS INVESTME NTS PVT. LTD. 277 ITR 149 (MADRAS) AND CIT VS. TRISHUAL INVESTMEN T LIMITED 215 CTR 96 MADRAS HIGH COURT HAVE ALSO HELD THE INCOME FROM SALE OF INVESTMENTS AS INCOME FROM CAPITAL GAINS AND NOT AS BUSINESS INCOME. RECENTLY IN THE CASE OF CIT V/S GOPAL PUROHIT, INCO ME-TAX APPEAL NO. 1121 OF 2009 (MUMBAI HIGH COURT), WHEREIN EVEN SALE AND PURCHASE OF LACS OF SHARES AMOUNTING IN CRORES OF RUPEES WAS HE LD TO BE INCOME FROM CAPITAL GAINS ON THE BASIS OF METHOD OF KEEPIN G BOOKS OF ACCOUNT. IN CASE OF DINESHKUMAR KUNJBIHARI ALMAL, AHOKKUMAR BABULAL ALMAL & ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 5 - IN CASE OF ASSESSEE HIMSELF DURING AY. 2005-06, SIM ILAR TRANSACTIONS WERE HELD TO BE AS INVESTMENT AND NOT AS BUSINESS. IN VIEW OF THE ABOVE REFERRED FACTS, I DIRECT THE A O TO ASSESS THE INCOME OF RS.23,68,262/- BY TREATING THE SAME AS INCOME FR OM SHORT TERM CAPITAL GAIN ON WHICH STT IS PAID. 4.1. THE REVENUE HAS NOT DISPUTED THE FACT THAT THE INVESTMENT IS NOT MADE OUT OF BORROWED FUNDS. THE VALUE OF INVESTMEN T AS ON 31/03/2006 IS AT RS.6.02 LACS. THE VOLUME OF TRANSACTIONS IS ALSO NOT VERY HIGH. THE LD.CIT(A) HAS OBSERVED THAT IN THE CASE OF DINESHKU MAR KUNJBIHARI ALMAL, AHOKKUMAR BABULAL ALMAL AND IN THE CASE OF A SSESSEE HIMSELF DURING AY 2005-06, SIMILAR TRANSACTIONS WERE HELD T O BE AS INVESTMENT AND NOT AS BUSINESS. THIS FINDING OF THE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE AND NO CHANGE INTO FACTS IS POINTED OUT AS TO WHY IN THIS YEAR UNDER APPEAL THE TRANSACTIONS ARE NOT TREATED AS IN VESTMENT. UNDER THESE FACTS, WE DO NOT SEE ANY REASON TO INTERFERE WITH T HE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, ALL THE G ROUNDS OF REVENUES APPEAL ARE REJECTED. 5. IN THE RESULT, REVENUES APPEAL (IN THE CASE OF SHRI ASHOKKUMAR BABULAL ALMAL) IN ITA NO.2694/AHD/2010 FOR AY 2006- 07 IS DISMISSED. ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 6 - 6. NOW, WE TAKE UP THE REVENUES APPEAL (IN THE CAS E OF SHRI DINESHKUMAR KUNJBIHARI ALMAL) IN ITA NO.2695/AHD/20 10 FOR AY 2006-07, WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE:- 1. THE LD.CIT(A) ERRED BOTH ON FACTS AND IN LAW IN DIRECTING THE A.O. TO ASSESS THE INCOME OF RS.18,47,028/- BY TREA TING THE SAME AS INCOME FROM STCG ON WHICH STT IS PAID. 2. THE LD.CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE A.O. HAD ESTABLISHED THAT THE ASSESSEE WAS ENGAGED IN PURCHA SE AND SALE OF SHARES AND, HENCE THE TRADING ACTIVITY WAS BUSIN ESS ACTIVITY. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. THE AP PELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 7. ALL THE GROUNDS ARE INTER-CONNECTED. THE EFF ECTIVE ISSUE IN THIS REVENUES APPEAL IS AGAINST THE FINDING OF THE LD.C IT(A) GIVING DIRECTION TO THE AO FOR TREATING THE SURPLUS OF SALE AND PURC HASE OF SHARES ON WHICH STT HAS BEEN PAID AS SHORT TERM CAPITAL GAIN (STCG) . IDENTICAL GROUNDS WERE RAISED BY THE REVENUE IN THE CASE OF S HRI ASHOKKUMAR BABULAL ALMAL IN ITA NO.2694/AHD/2010 FOR AY 2006-0 7(SUPRA), WHEREIN WE HAVE DISMISSED THE REVENUES APPEAL. ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 7 - 7.1. AT THE OUTSET, THE RESPECTIVE REPRESENTATIVES OF THE PARTIES HAVE ADOPTED THE SAME ARGUMENTS AS WERE ADDRESSED IN REV ENUES APPEAL IN ITA NO.2694/AHD/2010(SUPRA). SINCE THE REVENUE HAS NOT POINTED OUT ANY CHANGE INTO THE FACTS AND CIRCUMSTANCES, THEREF ORE TAKING A CONSISTENT VIEW, WE HEREBY REJECT ALL THE GROUNDS RAISED BY TH E REVENUE IN THE CASE OF SHRI DINESHKUMAR KUNJBIHARI ALMAL. AS A RESULT, REVENUES APPEAL IN ITA NO.2695/AHD/2010 IS DISMISSED. 8. IN THE COMBINED RESULT, REVENUES APPEALS IN THE CASE OF SHRI ASHOKKUMAR BABULAL ALMAL (IN ITA NO.2694/AHD/2010-A Y 2006-07) AND IN THE CASE OF SHRI DINESHKUMAR KUNJBIHARI ALMA L (IN ITA NO.2695/AHD/2010-AY 2006-07) BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 21 ST DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 21/ 10 /2015 5...+, .+../ T.C. NAIR, SR. PS ITA NOS.2694 & 2695/AHD/2 010 DCIT VS. SHRI ASHOKKUMAR BABULAL ALMAL & DCIT VS. SHRI DINESHKUMAR KUNJBIHARI ALMAL( RESPECTIVELY ) FOR AY 2006- 07 - 8 - !'#$%$&' / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 678 9 / CONCERNED CIT 4. 9 ( ) / THE CIT(A)-VII, AHMEDABAD 5. :; )+78 , . 782 , 6 / DR, ITAT, AHMEDABAD 6. ;< =, / GUARD FILE. / BY ORDER, *: ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 15.X.15 (DICTATION-PAD 7+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 16.X.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.20.X.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.X.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER