ACIT-CIRCLE-4, Nagpur V. SMT SAROJDEVI AGRAWAL, Nagpur

ITA 301/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1692 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2014
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 301/NAG./2014 ASSESSMENT YEAR : 200809 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE4, NAGPUR APPELLANT V/S SMT. SAROJDEVI AGRAWAL 283, GEETA SADAN, WARDHAMAN NAGAR NAGPUR PAN ABGPA3681A .. RESPONDENT ASSESSEE BY : SHRI MUKESH AGRAWAL REVENUE BY : SHRI NARENDRA KANE DATE OF HEARING 05.08.2015 DATE OF ORDER 28.08 .2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS APPEAL FILED BY THE REVENUE IS EMANATING FROM THE IMPUGNED ORDER DATED 5 TH MARCH 2014, PASSED BY THE LEARNED CIT(A), NAGPUR, FOR THE ASSESSMENT YEAR 200809, ON THE FOLLO WING GROUND OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ACCEPTING THE PRO FIT ARISING FROM THE SALE OF SHARES AS CAPITAL GAIN EVEN THOU GH THE TRANSACTIONS ARE CARRIED OUT BY ASSESSEE THROUGHOUT THE YEAR, SMT. SAROJDEVI AGRAWAL 2 CONSTANTLY, REGULARLY, WITHOUT ENJOYING ANY BENEFIT S OF LONG TERM HOLDING SUCH AS DIVIDEND ETC., AND ARE CARRIED AS ADVENTURE IN THE NATURE OF TRADE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN APPRECIATING THE F ACT THAT DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE HAS F AILED TO PROVE THAT THE INCOME FROM TRANSACTIONS OF SHARES A RE CAPITAL GAIN ON THE BASIS OF 15 TESTS DEVISED BY THE ASSESS ING OFFICER FOR VERIFICATION OF NATURE OF TRANSACTIONS DONE BY THE ASSESSEE. 2. AT THE OUTSET, WE HAVE BEEN INFORMED THAT IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 200708, THE TRIBUNAL, NAGPUR BENCH, IN ITA NO.253/NAG./2013, IN DCIT V/S SMT. SAROJDEVI AGRAWAL, ORDER DATED 10 TH JULY 2015, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY REJECTING THE APPEAL OF THE REVENUE. 3. TO DEMONSTRATE THAT THE FACTS ARE IDENTICAL, THE IMPUGNED ASSESSMENT ORDER DATED 31 ST MARCH 2008, PASSED UNDER SECTION 143(3) OF THE ACT, FOR THE YEAR UNDER CONSIDERATION I.E., ASSESSMENT YEAR 200809, HAS BEEN PERUSED. A RETURN OF INCOME W AS FILED DECLARING SHORT TERM CAPITAL GAIN OF ` 1,44,84,704, AND THE LONG TERM CAPITAL GAIN AT ` 16,60,293. THE ASSESSEE HAD ALSO SHOWN INTEREST INCOME AND DIVIDEND INCOME. THERE WAS AN OBSERVATION THAT THE CAPITAL GAINS HAVE CONSTITUTED 91% OF THE TOTAL INCOME. IT WAS ALSO FOUND THAT THERE WAS A OPENING STOCK OF 5,00,033 SHAR ES, SHARES TRADED WERE 13,85,493, AND SHARES LEFT AT THE CLOSE OF THE ACCOUNTING PERIOD WITH A CLOSING STOCK OF 10,70,455 SHARES. IN TERMS OF VALUE, SMT. SAROJDEVI AGRAWAL 3 THE APPELLANT HAD AN OPENING STOCK OF 2,44,47,900, AN D THE TRADED VOLUME IN RUPEE WAS ` 6,84,41,747. ON THOSE FACTS, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS A TRADER IN SHARES AND NOT AN INVESTOR . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LEARNED CIT(A) HAS FOUND THAT I N THE PRECEDING ASSESSMENT YEAR I.E., ASSESSMENT YEAR 200 708, THE SAID ISSUE WAS EXTENSIVELY DISCUSSED AND AFTER CAREFUL C ONSIDERATION, DECIDED IN FAVOUR OF THE ASSESSEE. IN HIS OPINION, TH E SHARES HAVE BEEN EXCLUSIVELY FINANCED BY THE ASSESSEE FROM HER OWN CAPITAL. THE LEARNED CIT(A) HAS FOUND FROM THE BALANCE SHEET THAT T HERE WERE NO BORROWINGS. HIS NEXT OBSERVATION WAS THAT DURING THE Y EAR UNDER CONSIDERATION, THE SCRIPS DEALT WITH WERE LISTED EI THER IN THE BOMBAY STOCK EXCHANGE OR NATIONAL STOCK EXCHANGE. THE NEXT O BSERVATION WAS THAT THE ASSESSEE WAS THROUGHOUT ACCEPTED BY THE DEPARTMENT AS INVESTOR IN THE PAST YEARS. THE ASSESSEE WAS NOT IN SPECULATING OR SHARE SELLING ACTIVITY. THEREFORE, FOR THE YEAR U NDER CONSIDERATION, THE LEARNED CIT(A) HAS FOLLOWED THE PAST HISTORY AND A LLOWED THE APPEAL. 4. WITH THIS BRIEF FACTUAL BACKGROUND AND AFTER HEARING SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THA T THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL, NAGPUR BENCH , IN ITA NO.253/NAG./2013, ORDER DATED 10 TH JULY 2015, IN ASSESSEES OWN SMT. SAROJDEVI AGRAWAL 4 CASE FOR THE ASSESSMENT YEAR 200708, WHEREIN THE TR IBUNAL HELD AS UNDER: 11. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER PL ACED RELIANCE UPON THE FOLLOWING CASE LAWS. I) CIT V/S. GOPAL PUROHIT 336 ITR 287 II)ACIT V/S. SANJAY RANKA 216/NAG/2009. III) DCIT V/S. SMK SHARES & STOCK 799/MUM/2009. IV) MANAGEMENT STRUCTURE V/S. ITO 41 DTR 426. V) ACIT V/S. NAISHADH VACHHARAJANI 6429/MUM/2009. 12. UPON CAREFUL CONSIDERATION WE NOTE THAT THE ASS ESSING OFFICER IN THIS CASE HAS OPINED THAT ASSESSEES CAP ITAL GAINS ON SHARE TRANSACTION SHOULD BE TREATED AS BUSINESS INC OME PRIMARILY ON THE GROUND THAT INCOME FROM SHARE TRAN SACTIONS CONSTITUTES BULK OF THE INCOME. THE ASSESSEE HAS BE EN REGULARLY ENGAGING IN LARGE VOLUME OF TRANSACTIONS IN SHARES IN SYSTEMATIC AND CONTINUOUS MANNER. HENCE THE ASSESSI NG OFFICER WAS OF THE OPINION THAT THE ASSESSEE WAS IN TRADING IN SHARES AND SHARE TRANSACTION SHOULD BE TREATED AS B USINESS INCOME. 13. AS AGAINST THE ABOVE, IT IS THE CASE OF THE AS SESSEE THAT THE ASSESSEE HAS BEEN DEALING IN THE SHARES IN EARL IER YEARS ALSO. ITS TRANSACTIONS INTO SHARES ARE IDENTICAL T O ONE DEALT IN EARLIER YEARS. IN THOSE YEARS ASSESSEES RETURN AS CAPITAL GAIN WAS ACCEPTED BY THE REVENUE. FURTHER MORE IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS AN INVESTOR IN SHARES AND SECURITIES LISTED IN BSE AND NSE. THE A SSESSEE HAS CONSISTENTLY SHOWN SHARES AS INVESTMENT IN BOOKS OF ACCOUNT. THE ASSESSEE HAS NEVER CONVERTED INVESTMENT INTO ST OCK IN TRADE. THE ASSESSEE HAS ALWAYS USED ITS OWN CAPITAL AND HAS NOT USED BORROWED FUNDS. ALL SHARE TRANSACTIONS HAV E TAKEN PLACE IN RECOGNIZED STOCK EXCHANGE AND SECURITY TRA NSACTION TAX IS PAID. ALL TRANSACTIONS ARE ROUTED THROUGH DE MAT ACCOUNT. THERE IS NO SHORT SALE, SPECULATIVE INTRA DAY TRANSACTIONS. IN THESE CIRCUMSTANCES, IT IS ASSESSE ES CLAIM WHICH HAS BEEN ACCEPTED BY THE LEARNED CIT(APPEALS) THAT THE ASSESSEES RETURN OF CAPITAL GAIN SHOULD BE ACC EPTED. 14, WE FIND THAT ABOVE ARE UNDISPUTED FACTS OF THE CASE AND HAVE NOT BEEN DISPUTED BY THE REVENUE. IN THESE CIRCUMSTANCES, THE CASE LAWS AS REFERRED BY THE LEA RNED COUNSEL OF THE ASSESSEE SUPPORT THE CASE OF THE ASS ESSEE. IN THIS REGARD, WE MAY GAINFULLY REFER TO THE DECISION OF HONBLE SMT. SAROJDEVI AGRAWAL 5 JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. GOPAL PUROHI8T 336 ITR 287. IN THE SAID DECISION THE HONBLE JURIS DICTIONAL HIGH COURT ACCEPTED THE TRIBUNALS VIEW THAT DELIV ERY BASED TRANSACTION SHOULD BE TREATED AS THOSE IN THE NATUR E OF INVESTMENT TRANSACTION AND THE PROFIT RECEIVED THER EFROM SHOULD BE TREATED EITHER AS SHORT TERM OR LONG TERM CAPITAL DEPENDING UPON THE PERIOD OF HOLDING. THE HONBLE H IGH COURT ALSO UPHELD THE TRIBUNALS VIEW THAT WHEN CONSISTE NT PRACTICE IS FOLLOWED, THE SAME SHOULD NOT BE UNNECESSARILY D ISTURBED. WE FIND THAT THIS CASE LAW DULY SUPPORT THE ASSESS EES CASE. ACCORDINGLY, IN THE BACKGROUND OF AFORESAID DISCUSS ION AND PRECEDENT, WE UPHOLD THE VIEW OF THE LEARNED CIT(AP PEALS). SINCE WE ARE DECIDING THE ISSUE ON THE BASIS OF HON BLE JURISDICTIONAL HIGH COURT DECISION, THE TRIBUNAL DE CISION AS REFERRED BY THE LEARNED D.R. IS NOT APPLICABLE. 2. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE T RIBUNAL, WHICH WAS PASSED IN ASSESSEES OWN CASE, WE FIND NO REASON TO DEVIATE FROM THE DECISION ALREADY TAKEN ESPECIALLY WH EN NO NEW OR CONTRADICTORY MATERIAL HAS BEEN PLACED BEFORE US. RESU LTANTLY, WE FIND NO FORCE IN THE GROUNDS RAISED BY THE REVENUE, H ENCE, DISMISSED. 3. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2015 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER NAGPUR, DATED: 28.08.2015 SMT. SAROJDEVI AGRAWAL 6 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A SSISTANT REGISTRAR ITAT, NAGPUR SMT. SAROJDEVI AGRAWAL 7 DATE INITIAL 1. DRAFT DICTATED ON 1920.8.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 21.8.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER - - JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER - - JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.8.2015 SR.PS 6. DATE OF PRONOUNCEMENT 28.8.2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 28.8.2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / 1999798 200001 / !' / !'# / $$ % & / % & / ()* + / , / %- + / . /0 1 -' + / . /0 1 -' %- + 23 4