MOHAN N KARNANI, MUMBAI V. ASST CIT 19(3), MUMBAI

ITA 28/MUM/2013

• Counselvise Citation: 2819914 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Business income; Question of law; Fair market value; Valuation report
• Section: 143(3); 50C; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , , BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER . / ITA NO.28/MUM/2013 / ASSESSMENT YEAR 2008-09 MR.MOHAN N. KARNANI, SAMSHIBA, FLAT NO.382, NARGIS DUTT ROAD, PALI HILL, BANDRA (W), MUMBAI 400 050 / VS. THE ACIT 19(3), ROOM NO.305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400012 ./ ./ PAN/GIR NO. : AACPK 2592H ( / APPELLANT ) .. ( / RESPONDENT ) . / ITA NO.805/MUM/2013 / ASSESSMENT YEAR 2008-09 THE ACIT 19(3), ROOM NO.305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400012 / VS. MR.MOHAN N. KARNANI, SAMSHIBA, FLAT NO.382, NARGIS DUTT ROAD, PALI HILL, BANDRA (W), MUMBAI 400 050 ./ ./ PAN/GIR NO. : AACPK 2592H ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI HIRO RAI REVENUE BY DR. YOGESH KAMAT ' #$ / DATE OF HEARING : 10/06/2015 ' #$ / DATE OF PRONOUNCEMENT :14/08/2015 / O R D E R PER G.S.PANNU, A.M: THE CAPTIONED CROSS-APPEALS BY THE ASSESSEE AND T HE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 30/1 1/2012, WHICH IN TURN, HAS . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 2 ARISEN FROM AN ASSESSMENT ORDER DATED 30/12/2010 PA SSED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE CAPTIONED CROSS APPEALS RAISE CERTAIN COMMO N ISSUES, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CO NSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE ASS ESSEE IS AN INDIVIDUAL, WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 -09 DECLARING AN INCOME OF RS.56,94,817/-, WHICH INTER-ALIA, INCLUDED INCOME F ROM SALARY, BUSINESS, FUTURES AND OPTIONS, SHORT TERM / LONG TERM CAPITAL GAINS AND OTHER SOURCES. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SUBJ ECT TO SCRUTINY ASSESSMENT, WHEREIN THE TOTAL INCOME HAS BEEN ASSESSED AT RS.4, 63,70,000/-, WHICH INTER- ALIA, INCLUDED CERTAIN DISALLOWANCES, WHEREBY THE I NCOME SHOWN AS SHORT TERM / LONG TERM CAPITAL GAIN ON SALE OF SHARES AND SEC URITIES WAS HELD AS BUSINESS INCOME; AND, THE STATED CONSIDERATION PAID FOR AC QUISITION OF A PROPERTY WAS NOT ACCEPTED. ON BOTH THE ISSUES, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A). IN APPEAL CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT THE SHORT TERM/LONG TERM CAPITAL GAIN EARNED ON SALE AND PURC HASE OF SHARES AND SECURITIES WAS NOT ASSESSABLE AS BUSINESS INCOME AND, AGAINST SUCH A FINDING OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US ON TH E BASIS OF GROUND OF APPEAL NOS.1 & 2, REPRODUCED HEREINAFTER:- (1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO TRE AT THE LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAINS AS SUCH AND NOT AS BUSINESS INCOME WITHOUT APPRECIATING THE FOLLOWING FACTS; (A) THE MAGNITUDE OF TRANSACTIONS IS VOLUMINOUS IN VERY FREQUENT INTERVAL WHICH CLEARLY ESTABLISHES THAT THE MOTIVE FOR TRANSACTION S WAS TO EARN PROFIT BY PURSUING AN ADVENTURE IN THE NATURE OF TRADE. (B) THE DECISION IN THE CASE OF GOPAL PUROHIT [122 TT J (MUM) 87] HAS NOT BEEN ACCEPTED BY THE DEPARTMENT WHICH IS ALSO NOT APPLIC ABLE IN THE INSTANT CASE BECAUSE THE FACTS ARE DISTINCT. . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 3 (C) THE GUIDELINES LAID DOWN IN CSDT CIRCULAR NO. 4/2007 DATED 15.06.2007. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN HOLDING THAT THIS YEAR ALSO THE GAIN SHOUL D BE TREATED AS CAPITAL GAINS IN VIEW OF THE FACT THAT IN PAST THE DEPARTMENT HAD AC CEPTED THE GAINS AS CAPITAL GAINS WITHOUT EXAMINING WHETHER THE FACTS WERE SIMI LAR OR WHETHER THE DEPARTMENT'S STAND IN EARLIER YEARS WAS CORRECT. 4. WITH REGARD TO THE PRICE PAID FOR ACQUISITION OF PROPERTY, THE AO HAD PROPOSED AN ADDITION OF RS.2,04,65,000/- WHICH HAS BEEN SCALED DOWN BY THE CIT(A) TO RS. 1,00,25,000/-. AGAINST THE RELIEF AL LOWED BY CIT(A) REVENUE IS IN APPEAL BY WAY OF THE FOLLOWING GROUND OF APPEAL: (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) ERRED IN RESTRICTING THE ADDITION U/S. 69A OF THE I .T. ACT AT RS.1,OO,25,OOO/- BY DIRECTING TO ADOPT THE FAIR MARKET VALUE OF THE PRO PERTY AS 14/03/2008 IN TERM OF REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO U/S 142A(2) OF THE I. T. ACT AS PER THE DVO'S VALUE OF RS. 4,50,25,000/- INSTEAD OF VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY AT RS.5,54,65,OOO/- IGNOR ING THE FACTS THAT THE METHOD OF VALUATION OF A PROPERTY ADOPTED BY THE ST AMP VALUATION AUTHORITY SIMILAR TO METHOD ADOPTED BY THE DVO WAS BASED ON I NSTANCES OF SALE IN THE RECENT PAST IN RESPECT OF SIMILAR PROPERTIES IN THE SAME LOCALITY. WHEREAS THE ASSESSEE IN ITS APPEAL HAS CONTESTED T HE ACTION OF CIT(A) IN RETAINING AN ADDITION OF RS.1,00,25,000/- ON ACCOUN T OF UNDISCLOSED INVESTMENT IN ACQUISITION OF THE PROPERTY. 5. IN THIS BACKGROUND, RIVAL COUNSELS HAVE MADE TH EIR SUBMISSIONS. IN SO FAR AS THE ISSUE RELATING TO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ACQUISITION OF PROPERTY IS CONCERNED THE RELEVANT F ACTS ARE AS FOLLOWS. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE PURCHASED AN OFFICE PREMISES AT BANDRA FOR A STATED CONSIDERATION OF RS.3,50,00,000/-. T HE AO HOWEVER, NOTICED THAT THE REGISTRATION OF THE PURCHASE AGREEMENT WAS EFF ECTED ON 14/03/2008 AND THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHO RITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AS ON THAT DATE WAS RS.5,44,6 5,000/-. THE AO REFERRED THE VALUATION OF THE SAID PREMISES TO THE DVO UNDER SECTION 142A OF . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 4 THE ACT, 1961 WHOSE REPORT WAS NOT RECEIVED TIL L THE COMPLETION OF THE ASSESSMENT. NEVERTHELESS, THE AO PROPOSED AN ADDIT ION OF RS.2,04,65,000/- BEING THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE A ND THE PURCHASE PRICE OF THE PROPERTY. 5.1 IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFO RE CIT(A), THE VALUATION REPORT OF THE DVO WAS RECEIVED WHEREBY THE VALUE OF THE PROPERTY AS ON 14/3/2088 WAS ESTIMATED AT RS.4,50,25,000/-. THE A SSESSEE CONTENDED BEFORE CIT(A) THAT THERE WAS NO JUSTIFICATION TO ADOPT THE VALUATION ESTIMATED BY THE DVO IN ORDER TO DETERMINE ANY UNEXPLAINED INVESTME NT. THE ASSESSEE ALSO EXPLAINED THE REASONS FOR THE DIFFERENCE BETWEEN TH E STATED CONSIDERATION AND THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHO RITIES AS ON THE DATE OF REGISTRATION OF THE PROPERTY, I.E. ON 14/03/2008. IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAD BOOKED THE SAID PREMISES WITH THE BUILDER IN SEPTEMBER,2007 ITSELF AND OUT OF THE TOTAL CONSIDER ATION OF RS.3.50 CRORES, A SUBSTANTIAL AMOUNT OF RS.2.50 CRORES WAS PAID IN S EPTEMBER TO OCTOBER 2007. IT WAS EXPLAINED THAT SINCE A SUBSTANTIAL PORTION OF THE CONSIDERATION WAS PAID UPFRONT KNOWING THAT THE PREMISES WOULD BE READY FOR OCCUPATION ONLY AFTER 3 TO 4 YEARS, THE ASSESSEE WAS ABLE TO GET A GOOD P RICE FROM THE BUILDER. SECONDLY, ASSESSEE ALSO EXPLAINED THAT THE REGISTRA TION OF THE PROPERTY WAS ACTUALLY DONE IN MARCH 2008 AND THE STAMP DUTY VALU ATION ADOPTED WAS WITH RESPECT TO MARCH 2008 RATES, WHEREAS ASSESSEE HAD ACTUALLY BOOKED THE PROPERTY AT THE RATES PREVAILING IN SEPTEMBER, 2007 , WHEN ACTUAL ADVANCE WAS PAID. IT WAS EXPLAINED BY THE ASSESSEE THAT THE ST AMP DUTY VALUATION RATES HAD JUMPED 53.50% BETWEEN 2007 AND 2008 AND IN THIS CON TEXT THE ASSESSEE FURNISHED STAMP DUTY VALUATION READY RECKONER VALUE S PREVAILING IN SEPTEMBER, 2007 AND MARCH,2008, WHEN THE PROPERTY W AS ACTUALLY REGISTERED. BY CONSIDERING SUCH VARIATION, ASSESSEE DEMONSTRATE D BEFORE THE CIT(A) THAT THERE WOULD HARDLY BE ANY DIFFERENCE BETWEEN THE ST AMP DUTY VALUE OF RS.5,54,65,000/- AND THE ACTUAL PRICE PAID BY THE ASSESSEE. . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 5 5.2 ON THE POINT OF LAW, ASSESSEE ALSO ASSERTED THAT THERE WAS NO MATERIAL OR EVIDENCE AVAILABLE WITH THE AO TO SHOW THAT ASSE SSEE HAS PAID ANY CONSIDERATION OVER AND ABOVE THE CONSIDERATION STAT ED IN THE PURCHASE DEED. 5.3 THE SUBMISSIONS OF THE ASSESSEE WERE CONSIDERED BY THE CIT(A), BUT HE HAS, IN PRINCIPLE, DISAGREED WITH THE ASSESSEE. A S PER CIT(A) THE AO WAS JUSTIFIED IN ADOPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 14/3/2008 FOR MAKING AN ADDITION TOWARDS UNEXPLAINED INVESTMENT I N ACQUISITION OF THE PROPERTY. SO HOWEVER, INSTEAD OF RELYING UPON THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITIES AS ON 14/3/2008, THE CIT (A) RELIED UPON THE VALUE ESTIMATED BY THE DVO AND IN THIS MANNER HE DIRECTE D THE AO TO MAKE AN ADDITION OF RS.1,00,25,000/- TO THE RETURNED INCOME AS AGAINST RS.2,04,65,000/- DETERMINED BY THE ASSESSING OFFICE R. 6. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE HAS ASSAILED THE ORDER OF CIT(A) IN LAW AND ON FACTS. FACTUALLY SPEAKIN G, THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ASSESSEE HAD ACQUIRED THE PROPERTY ON THE BASIS OF A NEGOTIATED PRICE IN THE MONTH OF SEPTEMBER, 2 007 AND COMPARING THE PURCHASE CONSIDERATION WITH THE VALUATION DONE BY THE STAMP DUTY VALUATION AUTHORITY ON THE BASIS OF MARCH, 2008 RATES IS N OT JUSTIFIED. IT HAS ALSO BEEN POINTED OUT THAT THE STAMP DUTY READY RECKONER RAT ES PREVAILING IN MARCH, 2008 WERE ALMOST 53.5% HIGHER THAN THOSE PREVAILIN G IN 2007 AND IN THIS CONTEXT, HE HAS REFERRED TO THE DETAILED SUBMISSION S, WHICH HAVE BEEN REPRODUCED BY CIT(A) IN HIS ORDER. THUS, ON FACTS , LD. REPRESENTATIVE FOR THE ASSESSEE HAS JUSTIFIED THE PRICE PAID FOR ACQUISI TION OF THE PROPERTY. IT HAS ALSO BEEN POINTED OUT THAT THERE WAS NO MATERIAL ON RECORD TO ESTABLISH ANY PAYMENT MADE BY THE ASSESSEE OVER AND ABOVE THE STA TED CONSIDERATION. IT HAS ALSO BEEN SUBMITTED THAT IN LAW, THE VALUE DETERMI NED BY THE REPORT OF THE . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 6 DVO CANNOT FORM A BASIS TO HOLD THAT ASSESSEE HAS PAID ANY CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATION. 7. ON THE OTHER HAND, LD. DR APPEARING FOR THE REVE NUE HAS DEFENDED THE ACTION OF THE AO BY POINTING OUT THAT THE VALUE AD OPTED BY THE STAMP DUTY VALUATION AUTHORITY WAS MUCH HIGHER THAN THE STATED CONSIDERATION, WHICH REFLECTED THAT ASSESSEE DID NOT ACQUIRE THE PROPE RTY AT ITS FAIR MARKET VALUE AND, THEREFORE, ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ACQUISITION OF THE PROPERTY IS JUSTIFIED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT CASE, THE ADDITION PROPOSED BY THE AO AND WHICH HAS BE EN PARTLY RETAINED BY THE CIT(A), IS ON ACCOUNT OF UNEXPLAINED INVESTMENT I N ACQUISITION OF PROPERTY; AND, THE SAME IS PRIMARILY BASED ON THE VALUATION S DETERMINED BY THE STAMP DUTY VALUATION AUTHORITY AND THE DVO RESPECTIVELY. IN OUR CONSIDERED OPINION, THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHO RITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY CAN AT BEST BE DEEMED TO BE T HE FULL VALUE OF THE CONSIDERATION ONLY ON THE STRENGTH OF THE DEEMING P ROVISIONS OF SECTION 50C OF THE ACT, AND THAT TOO ONLY IN THE HANDS OF THE SE LLER. OPERATING MECHANICS OF SECTION 50C OF THE ACT ARE QUITE CLEAR AND THEY D O NOT IN ANY MANNER, SUGGEST THAT ITS DEEMING FICTION CAN BE APPLIED IN THE HAN DS OF A PURCHASER OF PROPERTY TO ASSESS THE DIFFERENCE AS UNEXPLAINED I NVESTMENT. IN THIS CONTEXT, A REFERENCE CAN GAINFULLY BE MADE TO THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. CHANDNI BHUCHAR, 323 ITR 510(P&H), WHICH WAS RELIED UPON BY LD. REPRESENTATIVE OF THE ASSESS EE BEFORE US. MOREOVER, THE ADOPTION OF HIGHER VALUE BY THE STAMP DUTY VALU ATION AUTHORITY, AND/OR BY THE DVO, CAN AT BEST BE A STARTING POINT FOR ENQUIR ING WHETHER THE STATED CONSIDERATION IS GENUINE OR NOT. SO HOWEVER, THE C ASE OF THE AO THAT CERTAIN UNDECLARED CONSIDERATION HAS CHANGED HAND FOR ACQUI SITION OF THE PROPERTY CANNOT REST MERELY ON THE BASIS THAT A HIGHER VALU E HAS BEEN ADOPTED BY THE . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 7 STAMP DUTY VALUATION AUTHORITY OR BY THE DVO. TH E HONBLE DELHI HIGH COURT IN THE CASE OF SMT. SURAJ DEVEI, 197 TAXMAN 173 (DE L) HAS ALSO HELD THAT THE PRIMARY BURDEN OF PROVING UNDERSTATEMENT OR CONCEA LMENT OF CONSIDERATION IS ON THE REVENUE AND IN THE ABSENCE OF SUCH BURDEN H AVING BEEN DISCHARGED, THE REVENUE WOULD NOT BE JUSTIFIED TO MAKE AN ADDI TION ON ACCOUNT OF UNEXPLAINED INVESTMENT. IN THE PRESENT CASE, THE RE IS NO MATERIAL OR EVIDENCE BROUGHT ON RECORD BY THE INCOME-TAX AUTHORITIES TO SHOW THAT ANY CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATI ON HAS BEEN PAID BY THE ASSESSEE FOR ACQUISITION OF THE IMPUGNED PROPERTY. THEREFORE, IT WOULD BE IMPERMISSIBLE FOR THE INCOME TAX AUTHORITIES TO REL Y UPON EITHER THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY OR RE PORT OF THE DVO TO SAY THAT ASSESSEE HAS PAID ANY CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATION. IN THIS VIEW OF THE MATTER, WE ARE UNABLE TO UPHOL D THE STAND OF THE INCOME- TAX AUTHORITIES. 8.1 FACTUALLY SPEAKING ALSO, ASSESSEE HAS APPROPR IATELY EXPLAINED THE REASONS FOR THE DIFFERENCE BETWEEN THE STATED CONSI DERATION AND THE VALUE DETERMINED BY THE STAMP DUTY VALUATION AUTHORITY A ND/OR THE REPORT OF THE DVO. THE ASSESSEE HAD EXPLAINED BEFORE THE CIT (A) THAT THE PREMISES WERE ACQUIRED ON THE BASIS OF A PRICE NEGOTIATED IN SEP TEMBER, 2007 AND THAT HE HAD PAID ALMOST 70% OF THE TOTAL CONSIDERATION IN SEPTEMBER & OCTOBER 2007 ITSELF KNOWING FULLY THAT THE PREMISES WOULD BE AVA ILABLE FOR OCCUPATION ONLY AFTER A PERIOD OF 3 YEARS TO 4 YEARS. THE SECOND ASPECT CANVASSED BY THE ASSESSEE WAS THE INCREASE IN THE STAMP DUTY READY R ECKONER RATES IN 2008 VIS- A-VIS THE RATES IN 2007. THE FACTS AND FIGURES, IN THIS REGARD HAVE BEEN REPRODUCED IN THE ORDER OF THE CIT(A) WHICH CLEARLY ESTABLISH THAT THE STAMP DUTY READY RECKNOR RATE IN 2008 WERE ALMOST 53.5% H IGHER THAN THOSE IN 2007. ALL THE AFORESAID EXPLANATIONS FURNISHED BY THE ASS ESSEE TO SHOW THAT THE PURCHASE CONSIDERATION PAID WAS JUSTIFIED, HAS NO T BEEN CONTROVERTED OR FOUND TO BE FALSE BY THE INCOME TAX AUTHORITIES. THEREFO RE, IN THE ABSENCE OF ANY . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 8 REPUDIATION OF THE EXPLANATION FURNISHED BY THE AS SESSEE, WE ARE SATISFIED THAT THE DIFFERENCE IN THE STATED CONSIDERATION PAID VIS --VIS MARKET VALUE IN MARCH, 2008 IS QUITE JUSTIFIED AND IS CERTAINLY NOT RE FLECTIVE OF PAYMENT OF ANY CONSIDERATION BY THE ASSESSEE OVER AND ABOVE THE S TATED CONSIDERATION. 8.2 IN THE RESULT, ON THE BASIS OF THE AFOREMENTION ED DISCUSSION, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE T HE ENTIRE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. 8.3 RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND GROUND OF APPEAL NO.3 OF REVENUE IS DISMISSED. 9. IN THE APPEAL OF THE REVENUE THE ONLY ISSUE REM AINING IS BY WAY OF GROUNDS OF APPEAL NOS.1 & 2. 9.1 IN THIS CONTEXT, BRIEF FACTS ARE THAT THE ASSES SEE HAD DECLARED INCOME FROM SALE AND PURCHASE OF SHARES AND SECURITIES UNDER THE HEAD CAPITAL GAINS, BEING LONG TERM AND SHORT TERM CAPITAL GAIN S DEPENDING ON THE PERIOD OF HOLDING. THE LONG TERM CAPITAL GAIN OF RS.3,85,55, 838/- WAS DECLARED IN RELATION TO TRANSACTIONS IN EQUITY SHARES AND CLAIM ED AS EXEMPT. LONG TERM CAPITAL GAIN ON MUTUAL FUND WAS ALSO DECLARED AT RS .16,19,350/-. THE ASSESSEE HAD ALSO DECLARED SHORT TERM CAPITAL GAIN OF RS.34,19,649/- ON TRANSACTION IN EQUITY SHARES. THE AO HAS TREATED THE AFORESAID TRANSACTIONS AS ASSESSABLE UNDER THE HEAD PROFITS FROM BUSINESS PRIMARILY ON THE GROUND THAT THE VOLUME OF TRANSACTIONS AND QUANTUM OF INVE STMENTS MADE SHOWED THAT IT IS A CASE OF BUSINESS TRANSACTION. THE AO ALSO NOTICED THAT ASSESSEE IS IN THE CONTINUOUS PRACTICE OF TRANSACTING IN E QUITY SHARES IN THE PAST YEARS ALSO. THE AO ALSO DISAGREED WITH THE ASSESSEE THAT PERIODICITY OF HOLDING IS A DETERMINING FACTOR TO TREAT THE TRANSACTION AS CAPI TAL GAIN. THE AO ALSO CONCLUDED THAT THE TRANSACTIONS WERE CARRIED OUT RE PETITIVELY AND WERE INTENDED . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 9 TO GAIN IMMEDIATE BENEFITS ON ACCOUNT OF INCREASE I N THE TRADE VALUES OF THE EQUITY SHARES AND, THEREFORE, HE TREATED THE LONG TERM AND SHORT TERM CAPITAL GAIN ON SALE AND PURCHASE OF SHARES AND SECURITIES/ MUTUAL FUNDS AS INCOMES ASSESSABLE UNDER THE HEAD BUSINESS INCOME. 9.2 BEFORE CIT(A), ASSESSEE CONTESTED THE STAND OF THE AO ON VARIOUS GROUNDS. THE CIT(A) ANALYZED THE FACTUAL POSITION AND CAME TO CONCLUDE THAT THE AO WAS NOT JUSTIFIED IN TREATING THE LONG TERM AND SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. APART FROM HIS ANALYSIS OF THE FACT- SITUATION FOR THE YEAR UNDER CONSIDERATION, THE CIT(A) ALSO NOTICED THAT T HE DEPARTMENT IN SCRUTINY ASSESSMENTS UNDER SECTION 143(3) OF THE ACT IN EARL IER YEARS HAD TREATED THE ASSESSEE AS AN INVESTOR IN SHARES AND THAT IN THIS YEAR THERE WAS NO NEW FACTOR WHICH COULD JUSTIFY THE TREATMENT OF LONG TERM OR S HORT TERM CAPITAL GAIN AS BUSINESS INCOME. ON THE POINT OF CONSISTENCY WITH THE PAST ASSESSMENTS, CIT(A) HAS RELIED UPON THE JUDGMENT OF HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT, 336 ITR 287(BOM). AGAINS T SUCH A DECISION OF CIT(A), REVENUE IS IN APPEAL BEFORE US. 10. BEFORE US, THE LD. DR APPEARING FOR THE REVENUE HAS PRIMARILY RELIED UPON THE ORDER OF THE AO IN SUPPORT OF THE CASE OF THE REVENUE. THE REASONING ADVERTED BY THE AO HAS ALREADY BEEN NOTED BY US I N THE EARLIER PARAS AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. THE ON LY OTHER PLEA PUT FORTH BY THE LD. DR BEFORE US WAS TO THE EFFECT THAT EACH YEAR I S AN INDEPENDENT YEAR AND THE CIT(A) ERRED IN DECIDING THE ISSUE BASED ON THE STAND TAKEN BY THE AO IN THE PAST ASSESSMENT YEARS. 11. LD. REPRESENTATIVE FOR THE ASSESSEE HAS VEHEMEN TLY SUPPORTED THE ORDER OF CIT(A) WITH REFERENCE TO THE FACTUAL POSITION AN ALYZED BY HIM. ACCORDING TO THE LD. REPRESENTATIVE FOR THE ASSESSEE THE FACTS C ONSIDERED BY CIT(A) CLEARLY ESTABLISH THAT IT IS A CASE OF INVESTOR IN SHARES SO AS TO ASSESS THE PROFIT ON . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 10 SALE AND PURCHASE OF SHARES AND SECURITIES AS CAPIT AL GAINS AND NOT AS BUSINESS INCOME. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IT IS QUITE WELL SETTLED THAT THE ISSUE AS TO WHETHER A PARTICULA R TRANSACTION IS A TRANSACTION OF TRADE SO AS TO BE ASSESSED UNDER THE HEAD BUSIN ESS OR IT IS A TRANSACTION OF INVESTMENT, SO AS TO BE ASSESSED UNDER THE HEAD CA PITAL GAIN IS A MIXED QUESTION OF LAW AND FACTS. IT IS ALSO AN EQUALLY SETTLED PROPOSITION THAT NO UNIVERSALLY ACCEPTABLE PRINCIPLE IS AVAILABLE WHIC H WOULD GOVERN ALL SITUATIONS, AND, THAT EACH CASE HAS TO BE DECIDED HAVING RE GARD TO ITS PECULIAR FACTS AND CIRCUMSTANCES. IN THE PRESENT CASE, THE PERTINENT FACTS ARE THAT THE ASSESSEE WAS EMPLOYED WITH LARSEN & TOUBRO LTD. FOR 41 YEARS AND RETIRED IN THE YEAR 2001 AS THE PRESIDENT OF THE COMPANY. IN THE YEARS 1999 AND 2000, ASSESSEE WAS OFFERED STOCK OPTIONS WHICH RESULTED IN HIS GETTING 41000 EQUITY SHARES OF THE SAID CONCERN IN 2004 AND AFTER THE BONUS IS SUE IN THE YEAR 2006-07, THE TOTAL SHARE HOLDING INCREASED TO 82000 SHARES. OUT OF THIS HOLDING, A SMALL QUANTITY OF 6895 SHARES WERE SOLD BY THE ASSESSEE W HICH HAS RESULTED IN A LONG TERM CAPITAL GAIN OF RS.2,61,39,275/-, OUT OF THE T OTAL LONG TERM CAPITAL GAIN OF RS.3,85,55,838/-. THE BALANCE OF THE LONG TERM CA PITAL GAIN HAS ALSO RESULTED OUT OF THE SHARES WHICH HAVE BEEN HELD SINCE 2004 AND 2005 AND IT IS ALSO BROUGHT OUT THAT ASSESSEE HAS SOLD SHARES OF ONLY E IGHT COMPANIES, WHICH HAS RESULTED IN THE LONG TERM CAPITAL GAIN. THE AFORESA ID FACTUAL BACKGROUND DOES NOT INSPIRE ANY CONFIDENCE IN THE PLEA OF THE REV ENUE THAT THE ASSESSEE TRANSACTED IN SHARES AS A TRADER. IT IS ALSO NOTA BLE THAT ASSESSEE HAD CANVASSED BEFORE THE LOWER AUTHORITES THAT NO BOR ROWED FUNDS HAVE BEEN USED FOR MAKING THE INVESTMENT IN SHARES. 12.1 THE STAND OF THE CIT(A), BASED ON THE PAST A SSESSMENTS ALSO CANNOT BE BRUSHED ASIDE . IT IS UNDISPUTABLE THAT IN THE EAR LIER YEARS, ASSESSEE HAS BEEN TREATED AS AN INVESTOR IN SHARES IN THE SCRUTINY AS SESSMENT FINALIZED UNDER . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 11 SECTION 143(3) OF THE ACT. NO DOUBT, EACH ASSESSME NT YEAR IS AN INDEPENDENT YEAR AND THE PRINCIPLES OF RESJUDICATA DOES NOT APP LY TO THE INCOME TAX PROCEEDINGS. SO HOWEVER, IT IS ALSO A WELL SETTLED PROPOSITION THAT A FACT- SITUATION WHICH PERMEATES THROUGH MORE THAN ONE ASSESSMENT YEAR SHOULD BE ACCORDED A UNIFORM TREATMENT UNLESS IT IS MADE OUT THAT THE FACTS OR THE APPLICABLE LAW HAS UNDERGONE A CHANGE. IN THE PRE SENT CASE THE ONUS IS ON THE REVENUE TO DEMONSTRATE ANY CHANGE IN FACTS OR LAW SO AS TO DEPART FROM THE POSITION ACCEPTED IN THE SCRUTINY ASSESSMENT I N THE PAST YEARS, WHEREIN ASSESSEE HAS BEEN HELD TO BE AN INVESTOR IN SHARES. QUITE CLEARLY, THE DISCUSSION IN THE ASSESSMENT ORDER DOES NOT SHOW TH AT THE REVENUE HAS DISCHARGED SUCH A BURDEN. THEREFORE, CONSIDERING T HE FACTUAL POSITION ANALYZED BY CIT(A) AS WELL AS THE PRINCIPLE OF CO NSISTENCY, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN HOLDING THAT THE LONG TER M AS WELL AS THE SHORT TERM CAPITAL GAINS EARNED BY THE ASSESSEE ARE NOT TO BE ASSESSED AS BUSINESS INCOME. THE AFORESAID FINDING OF THE CIT(A) IS HER EBY AFFIRMED, IN THE ABSENCE OF ANY COGENT REASONING BROUGHT OUT BY THE REVENU E TO CONTROVERT THE SAME. THUS ON THIS ASPECT REVENUE FAILS. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 14. RESULTANTLY, APPEAL OF THE ASSESSEE IS ALLOWE D, WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/08/2015 ' *+ ,- 14./08/2015 ' SD/- SD/- ( / SANJAY GARG ) ( . . / G.S.PANNU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * MUMBAI; , DATED 14/08/2015 . / ITA NO.28& 805/MUM/2013 / ASSESSMENT YEAR 2008-09 12 ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0# ( ) / THE CIT(A)- 4. 0# / CIT 5. 12 #34 , $ 34 , * / DR, ITAT, MUMBAI 6. 5 / GUARD FILE. / BY ORDER, 1# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , * / ITAT, MUMBAI . . ./ VM , SR. PS