The ITO, Ward-9(3), Ahmedabad V. Dr. Niranjan Ramanlal Parikh, Ahmedabad

ITA 3082/AHD/2009

• Counselvise Citation: 308220514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Assessee Lawyers: S N DIVOTIA
• Keywords: Capital asset; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 3082/ AHD/2009 (ASSESSMENT YEAR 2006-07) ITO, WARD 9(3), AHMEDABAD VS. DR. NIRANJAN RAMANLAL PARIKH, JAIVIHAR FLATS, NR. NEW RBI, B/H AJANTA COMMERCIAL CENTRE, ASHRAM ROAD, AHMEDABAD PAN/GIR NO. : ABCPP4978M (APPELLANT) .. (RESPONDENT) APPELLANT BY: S.P. TALATI, SR. D.R. RESPONDENT BY: SHRI S N DIVOTIA, AR DATE OF HEARING: 27.09.2011 DATE OF PRONOUNCEMENT: 20 10.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) XV, AHMEDABAD DATED 15.09.2009 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON ACT IN DELET ING THE ADDITION OF RS.47,21,018/- MADE BY TREATING CAPITAL GAIN AS BUSINESS INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C IT(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN PARA 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN OF RS.2,72,668/- (TAXABLE @ 10%) AND LONG TERM CAPITAL GAIN OF I.T.A.NO.3082 /AHD/2009 2 RS.43,21,412/- (CLAIMED AS EXEMPT U/S 10(38). THE A.O. FURTHER NOTED THAT ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN (NON INDEXED) AT RS.1,26,938/- AND AFTER ADJUSTING THE BROUGHT FORWA RD LOSSES, THE SAME WAS SHOWN AT RS. NIL IN THE STATEMENT OF P & L A CCOUNT AND THE A.O. ISSUED SHOW CAUSE NOTICE TO THE A.O. TO EXPLAIN AS TO WHY THE TRANSACTION OF PROFIT ON SALE OF SHARES SHOULD NOT BE TREATED A S BUSINESS ACTIVITY OF THE ASSESSEE LOOKING INTO THE SUBSTANTIAL VOLUME OF TRA NSACTIONS INVOLVED. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE FACT THAT SHARES ARE SHOWN AS INVESTMENT AND THE GAIN OR LOSS REALIZED IS OFFERED AS CAPITAL GAIN SHOWS THAT INTENTION WAS TO HOLD THE S HARES AS CAPITAL ASSETS. IT WAS ALSO SUBMITTED THAT BORROWED FUNDS WERE NOT UTILIZED FOR THE PURPOSE. IT WAS ALSO SUBMITTED THAT SIMPLE MAGNIT UDE OF TRANSACTION DOES NOT MAKE CAPITAL GAIN A BUSINESS PROFIT. IT WAS AL SO SUBMITTED THAT SIMILAR TRANSACTION HAS BEEN INCLUDED IN CAPITAL GAIN FROM YEAR TO YEAR AND IN THE PRESENT YEAR, SIMILAR TRANSACTION SHOULD BE TREATED AS CAPITAL GAIN ONLY. RELIANCE WAS PALED ON VARIOUS JUDGEMENTS BUT THE A. O. WAS NOT SATISFIED AND HE HELD THAT THE GAIN ON PURCHASE AND SALE OF S HARES IS BUSINESS PROFIT. IN THIS MANNER, IT WAS HELD BY THE A.O. THAT CAPITA L GAIN IS TREATED AS BUSINESS INCOME OF RS.47,21,018/-. BEING AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A), WHO HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND NOW, THE REVENUE IS IN APPEAL B EFORE US. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT OR DER. LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH CO URT RENDERED IN THE CASE OF CIT VS REVASHANKER A KOTHARI AS REPORTED I N 283 ITR 338. IT WAS ALSO SUBMITTED THAT LONG TERM CAPITAL GAIN IN R ESPECT OF 17 SCRIPTS ARE FROM SHARES ACQUIRED DURING 01.04. 1999 TO 31.03.20 00, 31 SCRIPTS WERE ACQUIRED DURING FINANCIAL YEAR 2002-03 AND 40 SCRIP TS WERE ACQUIRED DURING FINANCIAL YEAR 2003-04. HE ALSO SUBMITTED T HE DETAILS REGARDING I.T.A.NO.3082 /AHD/2009 3 THOSE TRANSACTIONS WHERE SHARES WERE SOLD BEFORE 30 DAYS FORM THE DATE OF PURCHASE AND SUBMITTED THAT THE DETAILS ARE APPEARI NG ON PAGE 9 OF THE PAPER BOOK AND THERE ARE 20 SUCH TRANSACTIONS. HE HAS SUBMITTED DETAILS REGARDING THE SHORT TERM CAPITAL GAIN OF RS.2,72,66 8/- WHICH IS AVAILABLE ON PAGE 5-8 OF THE PAPER BOOK AND SIMILAR DETAILS I N RESPECT OF LONG TERM CAPITAL GAINS IS AVAILABLE ON PAGE 1-4 OF THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD, ORDERS OF AUTHORITIES BELOW AND THE JUDGMEN T CITED BY THE LD. A.R. OF THE ASSESSEE. WE FIND THAT A CLEAR FINDING IS G IVEN BY LD. CIT(A) THAT ASSESSEE FULFILLED THE TEST LAID DOWN BY HONBLE GU JARAT HIGH COURT IN THE CASE OF REVASHANKER A KOTHARI (SUPRA) THAT ALL THE SHARES HAVE BEEN HELD FOR LONG, BECAUSE THE SHARES SOLD ARE MAINLY LONG T ERM ASSETS AND INCOME IS MAINLY LTCG. THIS FINDING IS ALSO GIVEN BY HIM THAT THERE IS NO FREQUENCY IN A PARTICULAR SCRIPT. IT IS ALSO STATE D BY HIM THAT THE ASSESSEE WAS HOLDING 200 SCRIPTS AND THAT IS WHY THERE WERE SEVERAL TRANSACTIONS. HE HAS ALSO GIVEN FINDING THAT ASSESSEE IS BASICALL Y A MEDICAL PRACTITIONER (ABOUT 73 YEAR OLD) AND HAS SHOWN REASONABLE PROFES SIONAL INCOME. THE LD. D.R. OF THE REVENUE COULD NOT CONTROVERT THESE FINDINGS OF LD. CIT(A) THAT THE ASSESSEE IS FULFILLING THE TESTS LAID DOWN BY HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF REVASHANKER A KOTHARI (SUPRA). WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE IN T HE ORDER OF LD. CIT(A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCT., 2011. SD./- SD./- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 20.10. 2011 SP I.T.A.NO.3082 /AHD/2009 4 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION.17/10 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18/10 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.19/10 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/10 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.20/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20/10/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..