ASHA ARUN ASHAR, MUMBAI V. ASST CIT WD 19(2), MUMBAI

ITA 3030/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3477 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH A, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3030 /MUM/201 4 ASSESSMENT YEAR: 2008 - 09 ASHA ARUN ASHAR, MUKTANGAN, 10 TH FLOOR, SAROJINI ROAD, SANTACRUZ, MUMBAI - 400054 . PAN: AFMPA8238H VS. ASST. CIT, WARD 19(2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. SAISUDHA MULTANI (A R) REVENUE BY : SHRI R.P. RASTOGI (DR) DATE OF HEARING : 16.05 .201 5 DA TE OF ORDER : 18 .05.2016 O R D E R PER PAWAN SINGH, JM: 1 . THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 23, MUMBAI DATED 03.02.2014 IN RESPECT OF AY 2008 - 0 9. THE ASSESSEE HAS RAISED TWO BASIC GROUND S OF APPEAL: ( I ) CIT(A) ERRED IN CONFIRMING THE ACTION OF AO IN TREATING PROFIT ON SALES OF SHARE AS GAIN FROM BUSINESS & PROFESSION INSTEAD OF STCG OF RS. 1,47,752/ - . ( II ) CIT(A) ERRED IN CONFIRMING THE ACTION OF AO IN NOT ALLOWING THE DEDUCTION IN RESPECT OF SOCIETY MAINTENANCE CHARGES. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 28.07.2007 DECLARING T OTAL INCOME AT RS.18,37,753/ - . THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. AND WHILE FRAMING THE ASSESSMENT ORDER, THE AO BESIDES MAKING OTHER ADDITION/DISALLOWANCE TREATED THE STCG AS INCOME FROM BUSINESS & PROFESSION AND FURTHER DISALLOWED A SUM OF RS. 73,680/ - ON ACCOUNT OF SOCIETY CHARGES IN THE ASSESSMENT ORDER. AGGRIEVED BY WHICH THE ASSESSEE FILED APPEAL 2 ITA NO. 3030/MUM/14 ASHA ARUN ASHAR BEFORE THE CIT(A) .T HE CIT(A) AFTER HEARING THE CONTENTION OF ASSESSEE CONCLUDED THAT THE SALES OF SHARE WHERE THE HOLDING PERIOD IS UPTO 6 MONTH CAN BE TREATED AS BUSINESS INCOME AND THOSE EXCEEDING 6 MONT H SHOULD BE TREATED AS STCG. T HE PROFIT ARISING OUT OF SUCH SHARE WHERE HOLDING PERIO D IS LESS THAN 6 MONTH IS TREATED AS THE TRADING PROFIT OF THE ASSESSEE . THE CIT(A) DIRECTED THE AO TO TREAT RS. 1,47,752/ - AS INCOME FROM BUSINESS AND RS. 5 , 49 , 774/ - WAS EARNING FROM THE SCRIPT HELD FOR MORE THAN 6 MONTH AS A STCG. AGAINST THE ORDER OF CI T(A), THE PRESENT APPEAL IS FILED BEFORE US. 3 . NOW WE SHALL TAKE GROUND NO.1 FOR OUR CONSIDERATION, WE HAVE HEARD LD. AR FOR ASSESSEE AND DR FOR REVENUE . AR OF ASSESSEE HAS ARGUED THAT THIS GROUND OF APPEAL IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN C ASE FOR AY 2006 - 07 WHEREIN IDENTICAL GROUNDS OF APPEAL WAS RAISED AND WAS DECIDED IN FAVOUR OF ASSESSEE . COPY OF WHICH IS PLACED ON RECORD . THE AR OF ASSESSEE FILED A STATEMENT OF CAPITAL GAIN EARNED DURING THE YEAR UNDER CONSIDE RATION , THE ASSESSEE MADE 15 TRANSACTION WHEREIN TRANSACTION OF SHARES WHEREIN HOLDING PERIOD IS UPTO 1 MONTH, 18 TRANSACTION WHEREIN THE HOLDING PERIOD IS 3 TO 6 MONTHS, 34 TRANSACTION WHEREIN THE HOLDING PERIOD IS 6 TO 9 MONTHS AND FILED TRANSACTION WHER EIN THE HOLDING PERIOD IS 9 TO 12 MONTHS. WHEREAS IN THE PREVIOUS YEAR (AY - 2006 - 07) IN 100 TRANSACTIONS, THE PERIOD OF HOLDING WAS 3 TO 6 MONTHS, IN 65 TRANSACTIONS LESS THAN 1 MONTH, THUS THERE WERE 165 TRANSACTIONS. HOWEVER IN THE AY UNDER CONSIDERATION, THE TOTAL TRANSACTION S OF SHARE S FOR LESS THAN YEAR ARE 72 TRANSACTION S ONLY. DR FOR REVENUE HAS ACCEPTED THE SAME. 4 . WE HAVE SEEN THE ORDER OF ITAT IN ASSESSEES OWN CASE FOR AY 2006 - 07 IN ITA NO. 1810/MUM/2012 WHEREIN IDENTICAL GROUND WAS RAISED FOR TREA TING STCG AS PROFIT & GAIN FROM BUSINESS & PROFESSION. AND THE CO - ORDINATE BENCH OF ITAT WHILE DEALING WITH THIS ISSUE OBSERVED AS UNDER: 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THA T THE ASSESSEE HAS BEEN CONSISTENTLY DEALING IN SHARES FOR PAST SEVERAL YEARS. THE REVENUE HAS ACCEPTED THE GAINS OFFERED ON SHARES BASED ON DELIVERY AS CAPITAL GAINS IN THE EARLIER YEARS AND SUBSEQUENT YEARS ALBEIT VIDE INTIMATION'S U/S 143(1) OF THE ACT WHICH ARE PLACED IN PAPER BOOK PAGE13 & 16 FOR ASSESSMENT YEAR 2005 - 06 AND 2003 - 04. THE DETAILS OF SHARES HELD BY THE ASSESSEE ARE PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL AT PAGE NUMBER 9 - 10. THE ASSESSEE HAS FILED DETAILS OF SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS EARNED ON SHARES IN THE PAPER BOOK, PAGE 2 - 8. WE HAVE ALSO OBSERVED 3 ITA NO. 3030/MUM/14 ASHA ARUN ASHAR THAT THE ASSESSEE HAS CLASSIFIED THE TRANSACTIONS IN SHARES IN VARIOUS HEADS WHEREBY IN CASE THE ASSESSEE IS NOT EFFECTING DELIVERY OF SHARE S AT THE TIME OF PURCHASE OR SALE OF SHARES, THE SAME IS CATEGORIZED AS SPECULATIVE INCOME AND WHILE WHERE THE DELIVERY BASED TRANSACTIONS OF SALE AND PURCHASED ARE CATEGORIZED AS LONG TERM OR SHORT TERM CAPITAL GAINS BASED ON PERIOD OF HOLDING OF THE SHAR ES AS PER THE ACT. THE REVENUE HAS ACCEPTED LONG TERM CAPITAL GAINS OF RS 42,24,638/ - OFFERED TO TAX BY THE ASSESSEE AS LONG TERM CAPITAL GA IN CHARGEABLE TO TAX , WHILE SHORT TERM CAPITAL GAINS OF RS.6,76,915/ - OFFERED FOR TAX , IS TREATED AS BUSINESS INCOM E BY THE REVENUE. FROM THE PERUSAL OF THE STATEMENT OF SHORT TERM CAPITAL GAIN, IT IS OBSERVED THAT THE ASSESSEE HAS ENTERED INTO OVER 200 TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR. WE HAVE OBSERVED TH AT THE ASSESSEE IS REGULARLY DEALING IN SHARES WHEREBY THE PERIOD OF HOLDING IN SOME CASES IS EVEN ONE DAY. THE A.O. OBSERVED THAT OUT OF THE TOTAL TRANSACTIONS, THE PERIOD OF HOLDING IN OVER 100 INSTANCES IS LESS THAN THREE MONTHS AND IN 65 INSTANCES, THE HOLDING PERIOD IS LESS THAN ONE MONTH. THE TRANSACTION IN THE SHARES ARE ALSO REPETITIVE LIKE IN THE SHARES OF ZEE TELEFILMS LIM ITED, GARWARE SHIP, GAMMON,CARBORUNDUM UNIVERSAL, SIMBHOLI SUGAR ETC. WHEREBY THE ASSESSEE INDULGED IN REPETITIVE TRANSACTIONS AND ALSO SOLD THE SHARES AFTER HOLDING FOR SHORT PERIOD. UNDER THESE CIRCUMSTANCES IN ORDER 13 ITA 1810/MUM/2012 TO DO COMPLETE JUSTICE IN THE INSTANT CASE BASED ON FACTS AND CIRCUMSTANCE OF THE CASE, WE HOLD THAT THE GAINS ARISING FROM SALE OF SHARES HELD BY THE ASSESSEE UP TO ONE MONTH BE CLASSIFIED AS INCOME FROM BUSINESS DESPITE BEING DELIVERY BASED TRANSACTIONS, WHILE THE GAINS ARISING FROM SALE OF SHARES HELD FOR MORE THAN ONE MONTH AND UP - TO TWELVE MONTHS SHOULD BE CLASSIFIED AS SHORT TERM CAPITAL GA IN. WE HAVE COME TO THE ABOVE DECISION KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AS WE HAVE OBSERVED THAT IN LARGE NUMBER OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES, PERIOD OF HOLDING IS FROM 1 DAY TO 30 DAYS, THE TRANSAC TIONS OF PURCHASE AND SALE OF SHARES BEING REPETITIVE AND THE ASSESSEE HAS DEALT IN LARGE NUMBER OF COMPANIES, THE PRIME OBJECTIVE OF SUCH TRANSACTIONS WHICH ARE CONCLUDED WITHIN ONE MONTH IN OUR CONSIDERED VIEW IS TO EARN AND MAXIMIZE PROFITS IN SHORTEST PERIOD OF TIME WHICH IS AKIN TO INTENTION OF DOING BUSINESS BY MAXIMIZING PROFITS WHILE DEALING IN SALE AND PURCHASE OF SHARES RATHER TO HOLD SHARES AS INVESTMENT WITH A VISION TO EARN DIVIDEND AND OTHER BENEFITS ATTACHED TO HOLDING OF SHARES SUCH AS ENTIT LEMENT TO RIGHT SHARES, BONUS SHARES ETC.. WE ORDER ACCORDINGLY. 5 . KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY AND ORDER OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2006 - 07, AS THIS GROUND IS ALMOST IDENTICAL SO FAR AS NUMBER OF TRANSACTIONS AND PE RIOD OF HOLDING IS CONCERNED, IN THE YEAR UNDER CONSIDERATION, HENCE, THE GROUND NO.1 RAISED IN THE PRESENT APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 6 . THE GROUND N O.2 RAISED IN TH E PRESENT APPEAL IS NOT ALLOWING THE DEDUCTION IN RESPECT OF SOCIETY MAINTENAN CE CHARGES. 7 . LD. AR OF THE ASSESSEE INVITED OUR ATTENTION THAT SIMILAR GROUND OF APPEAL WAS RAISED BY ASSESSEE IN AY 2006 - 07 AND THE SAME WAS ALLOWED BY ITAT VIDE ORDER 4 ITA NO. 3030/MUM/14 ASHA ARUN ASHAR DATED 01.02.2016. WE HAVE SEEN THAT ASSESSEE HAS RAISED THE SIMI LAR GROUND OF APPEAL I N ITA NO. 1810/MUM/2012 AND WHILE CONSIDERING THIS GROUND, THE FOLLOWING OBSERVATION WAS MADE BY THE CO - ORDINATE BENCH OF ITAT : - 13. REGARDING THE SECOND ISSUE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHARMILA TAGORE V. JCIT, (2005) 93 TTJ (MUMBAI) 483 AND ALSO IN THE CASE OF BOMBAY OIL INDUSTRIES LTD. V. DCIT REPORTED IN (2002) 82 ITD 0626(MUM.). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RENTAL I NCOME OF RS. 14,40,000/ - RECEIVED BY THE ASSESSEE FROM THE TENANT INCLUDES THE SOCIETY MAINTENANCE CHARGES AND MUNICIPAL CORPORATION TAXES AND HENCE THE ASSESSEE HAS RIGHTLY REDUCED THE SAID CHARGES ON ACCOUNT OF SOCIETY MAINTENANCE CHARGES AND MUNICIPAL C ORPORATION TAXES AMOUNT TO RS.1,80,000/ - FROM THE GROSS RENTAL RECEIVED . THE LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE AS SESSEE HAS PAID SOCIETY MAINTENANCE CHARGES OF RS. 1,17,825/ - WHICH IS STATED TO BE THE OBLIGATION OF THE LESSEE AND THE SAME IS DULY INCLUDED IN THE RENT RECEIVED BY THE ASSESSEE. IN OUR CONSIDERED VIEW, THIS ISSUE IS SQUARELY COVERED BY THE DECISIONS OF THE TRIBUNAL IN THE CASES OF SHARMILA TAGORE (SUPRA) AND BOMBAY OIL INDUSTRIES (SUPRA). RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUNAL IN THE CASES CITED (SUPRA), WE HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION OF RS. 1,17,825/ - U/S 23 OF THE ACT APA RT FROM THE STANDARD DEDUCTION U/S 24(A) OF THE ACT. WE DIRECT THE AO TO VERIFY THE CLAIM OF DEDUCTION OF THE ASSESSEE OF THE SAID SOCIETY MAINTENANCE CHARGES OF RS.1,17,825/ - PAID BY THE ASSESSEE BUT STATED TO BE OBLIGATION OF THE LESSEE AND STATED TO BE DULY INCLUDED IN THE GROSS RENT RECEIVED BY THE ASSESSEE BEFORE ALLOWING THE CLAIM OF THE ASSESSEE. WE ORDER ACCORDINGLY. 8 . KEEPING IN VIEW THE P RINCIPLE OF C ONSISTENCY AND ORDER OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2006 - 07 , AS THIS GROUND IS IDENTICAL IN THE YEAR UNDER CONSIDERATION, HENCE, THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH MAY, 2016 SD/ - SD/ - (SANJAY ARORA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 18 /05/2016 S.K. PS 5 ITA NO. 3030/MUM/14 ASHA ARUN ASHAR / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/