ACIT, New Delhi V. M/s. Gyan Enterprises Pvt. Ltd., New Delhi

ITA 3159/DEL/2013

• Counselvise Citation: 315920114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Keywords: Capital asset; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT & SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3159/DEL/2013 ASSESSMENT YEAR: 2009-10 ACIT, VS. M/S GYAN ENTERPRISES P. LTD., CIRCLE 12(1), 4 TH FLOOR, PUNJABI BHAWAN, NEW DELHI. 10-ROUSE AVENUE NEW DELHI. AAACG0512G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.S. GILL, CIT(DR) RESPONDENT BY : SH. M.P. RASTOGI, ADV. ORDER PER H.S. SIDHU, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 11/02/2013 OF LD. CIT(A)-XV, NEW DELHI. 2. THE GROUNDS RAISED IN THE APPEAL OF THE DEPARTME NT READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE PROFIT ON SALE OF SHARES AS INCOME FROM SHORT TERM CAPITAL GAIN INSTEAD OF TREATING I T AS INCOME FROM BUSINESS & PROFESSION AS HELD BY AO IGNORING THE F ACT THAT THE ASSESSEE BUSINESS IS TRADING IN UNITS OF MUTUAL FUN DS AND INVESTMENTS IN SHARES AND DEBENTURES ETC. 2. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY THE BOTH PARTIES, THEREFORE, NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 4. AT THE OUTSET, IT WAS PLEADED BY THE LD. AR THAT THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS SIMILAR TO THE ISS UE RAISED BY THE REVENUE IN RESPECT OF THE A.Y. 2005-06 & 2007-08. HE SUBMI TTED THAT THE APPEAL ITA NO. 3159/D/2013 M/S GYAN ENTERPRISES P. LTD. 2 FILED BY THE DEPARTMENT ON THIS ISSUE WAS DECIDED B Y THIS TRIBUNAL VIDE ORDER DATED 30 TH MAY, 2011 IN ITA NO. 666/DEL/2010 AND ITA NO. 3211/DEL/2011 VIDE ORDER DATED 20/01/2012. HE HAS PRODUCED BEFORE US A COPY OF THE SAID ORDERS BY WHICH THE TRIBUNAL HAD D ECIDED THESE APPEALS OF THE REVENUE IN FAVOUR OF THE ASSESSEE AND REVENUE A PPEAL HAS BEEN DISMISSED. A COPY OF THE SAID ORDER WAS ALSO GIVEN TO THE LD. DR. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY THE AO. 6. WE HAVE HEARD THE BOTH PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IT IS SEEN THAT WHILE DECIDING TH E ISSUE IN FAVOUR OF THE ASSESSEE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE I TAT PASSED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2005-06 AND 2007-0 8. FOR THE SAKE OF CONVENIENCE RELEVANT PORTION OF PARA 8 PAGE 5-7 OF THE IMPUGNED ORDER IS REPRODUCED AS UNDER: 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE IN THE LIGHT OF THE SUBMISSION MADE BY THE APPELLANT, DECI SION OF THE HONBLE ITAT IN THE CASE OF APPEAL IN A.Y. 2005-06 AND 2007-08 AND APPLICABLE LAW IN THE MATTER. I FIND T HAT THE ONLY OBSERVATION ON THE BASIS OF WHICH THE LD. AO HAS HE LD THE TRANSACTION OF SALE IN SHARES HELD AS INVESTMENT BY THE APPELLANT AS BUSINESS INCOME IS A NOTE OF THE AUDIT OR IN THE AUDIT REPORT IN FORM NO. 3 CD IN WHICH THE NATURE O F THE BUSINESS OF THE COMPANY WAS MENTIONED AS TRADING I N UNITS OF MUTUAL FUND AND INVESTMENT IN SHARES AND DEBENTU RES, ETC. OTHER THAN THIS, THE AO COULD NOT MAKE ANY ADVERSE OBSERVATION TO SUGGEST THAT THE APPELLANT WAS FREQU ENTLY ENGAGED IN TRADE OF SHARES WITH SIGNIFICANT VOLUMES OR MAY HAVE TRADED IN SHARES WITHOUT TAKING PHYSICAL DELIV ERY. MOREOVER, THIS NOTING ALSO SHOWS THAT THE APPELLANT TRADES IN MUTUAL FUND AND (MAKES) INVESTMENT IN SHARES. THE LD. AO HAS NOT EXAMINED THE FACTS OF THE CASE IN THE LIGHT OF THE GUIDELINES GIVEN IN THE CIRCULAR NO. 4 OF 2007 OF C BDT DT. 15.6.2007. WHETHER ANY INVESTMENT WAS FOR TRADING PURPOSES OR WAS FOR THE PURPOSE OF MAKING INVESTMENT AS A CA PITAL ASSET DEPENDS UPON THE UNDERLYING INTENTION OF THE INVESTOR AT THE TIME OF TAKING INVESTMENT DECISION. THE ABOVE REFERRED CIRCULAR OF CBDT, WHICH IS BASED ON THE HONBLE SUP REME COURTS DECISION IN THE CASE OF M/S ACC CEMENT, AND THE SUBSEQUENT RULING OF AAR IN THE CASE OF M/S FIDELIT Y NORTH ITA NO. 3159/D/2013 M/S GYAN ENTERPRISES P. LTD. 3 STAR FUND (SUPRA) PROVIDE USEFUL GUIDELINES ON THE BASIS OF WHICH INTENTION OF THE INVESTOR AT THE TIME OF INVE STMENT COULD BE INFERRED. THE AO HAS NOT DONE ANY GROUND WORK B Y EXAMINING THE FACTS OF THE CASE AND HAS SUMMARILY C HANGED THE TREATMENT OF INVESTMENT IN SHARES FROM CAPITAL TO REVENUE IN NATURE, WITHOUT ANY ADVERSE OBSERVATION WITH REG ARD TO THE ABOVE GUIDELINES. FURTHER, THE APPELLANT HAS BEEN CONSISTENTLY FOLLOWING THE PRACTICE OF TREATING THE INVESTMENT IN SHARES IN INVESTMENT PURPOSES AND THE PLEA THAT SUCH INVESTMENT WAS MADE FOR EARNING DIVIDEND INCOME GET S CREDENCE ON THE BASIS OF THE FACT THAT THE APPELLAN T HAS ACTUALLY EARNED SIGNIFICANT DIVIDEND INCOME OF RS. 15.82 CRORES. IT HAS BEEN HELD IN SEVERAL JUDICIAL DECIS IONS THAT CONSISTENCY IN ACCOUNTING PRACTICE IS AN IMPORTANT PRINCIPLE. IN THIS REGARD, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S RADHA SWAMY SATSANG IS OF D IRECT IMPORT. THE HONBLE ITAT, ON THE IDENTICAL FACTS, IN THE OWN CASE OF APPELLANT IN THE EARLIER YEARS, IN IDENTICA L CIRCUMSTANCES HAVE HELD THE INVESTMENT IN SHARES BY THE APPELLANT AS CAPITAL ASSET IN NATURE. KEEPING IN V IEW THE ABOVE, I HOLD THAT THE APPELLANT HAD RIGHTLY CLAIME D THE PROFIT ON SALE OF SHARES AS SHORT TERM CAPITAL GAINS, WHIC H, IN THE GIVEN CIRCUMSTANCES, KEEPING IN VIEW THE USEFUL PRI NCIPLES LAID DOWN IN THE CIRCULAR NO. 4 OF 2007 OF CBDT AND IN THE LIGHT OF THE RULING OF THE AAR IN THE CASE OF M/S F IDELITY GROUP WAS RIGHTLY TAXED AS SHORT TERM CAPITAL GAIN BY THE APPELLANT. 7. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE TR IBUNAL IN ITA NO. 666/DEL/2010 FOR A.Y. 2005-06 DATED 30/05/2011 AND ITA NO. 3211/DEL/2011 FOR A.Y. 2007-08 DATED 20/01/2012 PAS SED IN THE ASSESSEES OWN CASE AND WE ARE OF THE CONSIDERED VI EW THAT THE ISSUE IN DISPUTE HAS BEEN ADJUDICATE AND DECIDED BY THIS TRI BUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE AND NO MATERIAL HAS BEEN PRODUCED ON RECORD BY THE REVENUE TO SHOW THAT THE FACTS OF THE PRESENT YEAR ARE DIFFERENT FROM THE FACTS FOR THE ASSESSMENT YEARS 2 005-06 AND 2007-08. THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF ASSESS EE BY THE AFORESAID ORDER OF THE TRIBUNAL. ITA NO. 3159/D/2013 M/S GYAN ENTERPRISES P. LTD. 4 8. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES EXPLAINED ABOVE, FOLLOWING THE AFORESAID DECISIONS, WE UPHOLD THE IM PUGNED ORDER OF THE LD. CIT(A) AND DISMISSED THE APPEAL FILED BY THE REVENU E. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/12/2004 SD/- SD/- (G.D. AGARWAL) (H.S. SIDHU ) VICE PRESIDENT JUD ICIAL MEMBER DATED: 10/12/2014 *KAVITA, P.S. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR ITA NO. 3159/D/2013 M/S GYAN ENTERPRISES P. LTD. 5 ITA NO. 3159/D/2013 M/S GYAN ENTERPRISES P. LTD. 6