ACIT, New Delhi V. M/s. R.K. Sons (HUF), New Delhi

ITA 3448/DEL/2013

• Counselvise Citation: 344820114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 06-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI J.S. REDDY, ACCOUNTANT MEMBER ITA NO. 3448/DEL/2013 ASSESSMENT YEAR: 2009-10 ACIT, VS. R.K. SONS (HUF), CIRCLE 2(1), ROOM NO. 905, F-67, INDRAPRASTHA AP ARTMENTS, 9 TH FLOOR, E-2 BLOCK, CIVIC CENTRE, SECTOR-14, ROHIN I. J.L.N. MARG, NEW DELHI. NEW DELHI. AAAHR5911F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR CHOPRA, SR. DR RESPONDENT BY : SH. SALIL AGGARWAL, ADV. & SH. SHA ILESH GUPTA ORDER PER DIVA SINGH, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11/01/2013 OF CIT(A)-XXII, NEW DELHI PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: 1. WHETHER ON THIS FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IS TREATING THE SURPLUS OF RS. 3,00,01,71 0/- ON SALE OF SHARES AS SHORT TERM CAPITAL GAIN AS AGAINST BUSINESS TREA TED BY THE ASSESSING OFFICER. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL AND ADD ANY OTHER GROUNDS OF APPE AL. 2. RIGHT AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUED IS FULLY COVERED IN ASSESSEES FAVOUR BY VIR TUE OF THE ORDER OF THE COORDINATE BENCH PERTAINING TO THE IMMEDIATELY PREC EDING ASSESSMENT YEAR WHICH HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH CO URT. REFERENCE WAS MADE TO THE ASSESSMENT ORDER PAGE 2 PARA 3 AND PARA 8, WHEREIN THE AO IN ORDER TO MAINTAIN CONSISTENCY WITH THE VIEW TAKEN I N 2008-09 ASSESSMENT YEAR MAKES THE ADDITION HEREIN. IT HAS BEEN CONTEN DED THAT THE FACTS AND ITA NO. 3448/D/2013 M/S R.K. & SONS (HUF) 2 CIRCUMSTANCES REMAINED IDENTICAL AND COGNIZANCE OF THIS FACT HAS BEEN TAKEN BY THE CIT(A) WHO AFTER CONSIDERING IN DETAIL THE F ACTS AND POSITION OF LAW IN HIS DETAILED ORDER CONCLUDED THE ISSUE IN ASSESSEE S FAVOUR. SPECIFIC ATTENTION WAS INVITED TO PARA 8.7 OF HIS ORDER. AC CORDINGLY RELIANCE WAS PLACED UPON THE IMPUGNED ORDER WHICH WAS SUPPORTED BY THE ORDER DATED 23/03/2012 IN ITA NO. 17/04/2012 IN THE CASE OF THE ASSESSEE, WHEREIN IDENTICAL GROUND OF THE REVENUE IN 2008-09 WAS DISM ISSED BY THE TRIBUNAL WHICH HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH CO URT VIDE ITS ORDER DATED 17/04/2014 IN ITA NO. 580/2012. 3. THE LD. SR. DR PLACES RELIANCE UPON THE ASSESSME NT ORDER HOWEVER, NO CONTRARY DECISION OPPOSING THE VIEW TAKEN BY THE JURISDICTIONAL HIGH COURT AND THE TRIBUNAL WAS RELIED UPON BY THE LD. D R, NOR ANY ATTEMPT TO DISTINGUISH THE SAME ON FACTS WAS MADE. THE RECORD SHOWS THAT IDENTICAL CLAIM WAS MADE ON BEHALF OF THE ASSESSEE ON 6 TH AUGUST, 2014 AND TIME WAS GIVEN TO THE DEPARTMENT TO GO THROUGH THE DECISIONS OF THETRIBUNAL AND THE HONBLE HIGH COURT FILED AND THE MATERIAL AVAILABLE ON RECORD. 3.1 IN THE LIGHT OF THE ABOVE, PECULIAR FACTS AND C IRCUMSTANCES, WE FIND THAT THE AO IN THE PRESENT PROCEEDINGS HAS TAKEN CO GNIZANCE OF THE FOLLOWING FACTS IN PARA 2 OF HIS ORDER: 2. DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS SHOWN INCOME FROM SHORT TERM CAPITAL GAIN OF RS. 3,00,01,710/- F ROM SALE OF SHARES. IT SEEN FROM THE RECORDS THAT THE ASSESSEE HAD FOR THE A.Y. 2008-09 ALSO SHOWN AN INCOME OF RS. 4.91 CRORES . OUT OF THE TOTAL INCOME DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME, AN AMOUNT OF RS. 4.89 CRORES HAVE BEEN SHOWN UNDER THE HEAD SHORT TERM CAPITAL G AIN. ON COMPLETION OF THE ASSESSMENT U/S 143(3) OF THE I.T. ACT, 1961 FOR A.Y. 2008-09, THE SAME HAD BEEN HELD AS INCOME FROM BUSI NESS & PROFESSION AFTER A THOROUGH EXAMINATION OF THE VARI OUS ASPECTS OF THE ISSUE . (EMPHASIS PROVIDED) 4. IN PARA 3 THE AO PROCEEDS TO ESTABLISH THE SIMIL ARITY OF FACTS WITH THE VIEW TAKEN IN 2008-09 ASSESSMENT YEAR AND IN PARA 8 HOLDS AS UNDER: ITA NO. 3448/D/2013 M/S R.K. & SONS (HUF) 3 8. HENCE, BASED ON THE FACTS OF THE CASE THIS YEA R AS WELL AS THE PRINCIPLE OF CONSISTENCY, THE SHORT TERM CAPITAL GA IN OF RS. 30001710/- FROM SALE AND PURCHASE OF SHARES AND SECURITIES IS BEING TREATED AS BUSINESS INCOME AND TAXED AT FULL RATE INSTEAD OF C ONCESSIONAL RATE U/S 111A AS CLAIMED BY THE ASSESSEE IN HIS COMPUTATION OF INCOME. 5. IT IS SEEN THAT THE CIT(A) DECIDE THE ISSUE IN T HE FOLLOWING MANNER: 8.7 THE AO HAS CLAIMED THAT THE FACTS OF THE CASE ARE SIMILAR TO THAT FOR THE PRECEDING YEAR I.E. FOR A.Y. 2008-09. HOWE VER, ON COMPARING THE FACTS OF THE CASE FOR THE PRESENT YEAR WITH THAT OF THE ASSESSEES CASE FOR THE PRECEDING YEAR, IT IS SEEN THAT THE FACTS OF TH E CASE ARE EVEN MORE IN FAVOUR OF THE ASSESSEE THAN THE PRECEDING YEAR I.E. A.Y. 2008-09. IN THE PRECEDING YEAR THE ASSESSEE HAD PURCHASED AND SOLD THE SHARES ONLY 12 COMPANIES, BUT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE CARRIED OUT TRANSACTION OF SHARES OF ONLY 2 COMPANIES. FURTHER , IN THE PRECEDING YEAR THE ASSESSE HAD CARRIED OUT TRANSACTION OF PUR CHASE ONLY ONCE IN CASE OF 7 SCRIPTS OUT OF 12 SCRIPTS DEALT WITH DURI NG THE F.Y. 2007-08, BUT DURING THE CURRENT YEAR THE ASSESSEE CARRIED OUT TR ANSACTION OF PURCHASE ONLY ONCE IN CASE OF TWO SCRIPTS I.E. BOTH THE SCRI PTS DEAL WITH DURING F.Y. 2008-09. IT IS FURTHER SEEN THAT IN THE PRECEDING YEAR I.E. F.Y. 2007-08, THE ASSESSEE HAD ENTERED INTO TRANSACTIONS OF SHARE S ON ONLY 45 DAYS OUT OF ABOUT 250 DAYS OF TRADING SESSIONS IN THE STOCK EXCHANGE, BUT IN THE CURRENT YEAR, I.E. F.Y. 2008-09, THIS WAS DOWN TO O NLY 17 DAYS IN WHICH TRANSACTIONS WERE MADE. FURTHER, IN THE PRECEDING YEAR I.E. FY 2007-08, THE AVERAGE HOLDING PERIOD WAS MORE THAN 50 DAYS, B UT IN THE YEAR UNDER CONSIDERATION I.E. F.Y. 2008-09 THIS WAS HIGHER AT ABOUT 90 DAYS. IN THE PRECEDING YEAR, THE ASSESSEE HAS DEALT WITH 3 STOCK BROKERS/DEPOSITORIES, BUT IN THE CURRENT YEAR THE ASSESSEE HAS DEALT WITH 4 JUST ONE. IN THE PRECEDING YEAR ALL THE SHARES HAD BEEN BOUGHT AND S OLD DURING THE CAPTIONED ASSESSMENT YEAR ITSELF, BUT IN THE CURREN T YEAR THERE WERE SOME CARRIED FORWARD SHARES ALSO. THE FREQUENCY OF TRAN SACTIONS WAS HELD TO BE QUITE LARGE BY THE AO IN THE PRECEDING YEAR AND MULTIPLICITY OF TRANSACTIONS WAS ALSO ONE OF THE REASONS FOR CONSID ERING THE TRANSACTIONS AS BUSINESS TRANSACTIONS. IN THE CURRENT YEAR THE NUMBER OF TRANSACTIONS ON A COMPARATIVE BASIS IS MUCH LESSER. IT IS ALSO SEEN THAT THE ASSESSEE SHOWED THE INVESTMENT AS CAPITAL ASSES AT COST AND DID NOT ADJUST THE MARKET VALUE OF SHARES AS CLOSING STOCK FOR DETERMI NING THE GAIN DERIVED. IT IS ALSO SEEN THAT ALL THE TRANSACTIONS OF THE AP PELLANT WERE WITH THE ACTUAL DELIVERY OF SHARES AND APPARENTLY NO SPECULA TIVE TRANSACTIONS WERE MADE. IT IS SEEN THAT THE APPELLANT CARRIED O UT TRANSACTIONS OF SHARES IN ONLY TWO SHARES NAMELY M/S HANUNG TOYS & TEXTILES LIMITED AND M/S JINDAL STEEL & POWER LIMITED DURING THE ENT IRE FINANCIAL YEAR OUT OF WHICH SHARES OF M/S HANUNG TOYS & TEXTILES L IMITED WERE PURCHASED IN THE PRECEDING YEAR I.E. F.Y. 2007-08, WHICH WERE SHOWN IN ITA NO. 3448/D/2013 M/S R.K. & SONS (HUF) 4 THE STATEMENT OF AFFAIRS AS ON 31.03.2008. THE AO HAS COMMENTED IN PARA 3 OF THE ASSESSMENT ORDER THAT ALL THE SHARES IN RESPECT OF WHICH SHORT TERM CAPITAL GAINS HAVE BEEN CLAIMED ARE BOUG HT AND SOLD DURING THE RELEVANT ASSESSMENT YEAR ITSELF. HOWEVER, THE AO HAS APPARENTLY NOT EXAMINED ALL THE FACTS OF THE CASE CAREFULLY BE FORE COMING TO SUCH A CONCLUSION AS THE SHARES OF M/S HANUNG TOYS & TEXTI LES LTD. WERE PURCHASED IN THE PRECEDING YEAR I.E. F.Y. 2007-08. THOUGH NO CONCLUSION CAN BE DERIVED MERELY ON ANY ONE OF THESE OR OTHER FACTORS, BUT A CUMULATIVE EFFECT OF SEVERAL FACTORS IS TO BE SEEN AS HELD BY THE HONBLE ITAT, LUCKNOW IN THE CASE OF SARNATH INFRASTRUCTURE (P) LTD. WHICH WAS NOTED WITH APPROVAL BY THE HONBLE ITAT, DELHI IN T HE ABOVEMENTIONED ORDER DATED 23.03.2012. LOOKING INTO CUMULATIVE EF FECT OF ALL THE FACTORS AND THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THERE IS NO JUSTIFICATION FOR ASSESSING THE SHORT TERM CAPIT AL GAINS SHOWN BY THE ASSESSEE AT RS. 3,00,01,710/-, AS BUSINESS INCOME, AND THAT THESE ARE TO BE ASSESSED AS CAPITAL GAINS ONLY. 6. WE HAVE TAKEN OURSELVES THROUGH THE ORDER OF THE COORDINATE BENCH WHICH HAS CONSIDERED THE POSITION OF LAW AND FACTS ON THE ISSUE AND COME TO A CONCLUSION THAT THE ISSUE HAS BEEN EXAMINED FROM ALL ANGLES WARRANTING NO INTERFERENCE THE SAID FINDING OF FACT IN APPEAL HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT IN ITS ORDER DATED 17/04/ 2014 IN ITA NO. 580/2012. SINCE ADMITTEDLY THE FACTS IN THE YEAR UNDER CONSID ERATION WERE BETTER PLACED THAN THE FACTS AS AVAILABLE ON RECORD IN 2008-09 AS SESSMENT YEAR WHICH FINDING OF FACT HAS ALSO NOT BEEN ASSAILED BY THE R EVENUE. IN THE PECULIAR FACTS AND CIRCUMSTANCES WE FIND NO GOOD REASON TO I NTERFERE WITH THE FINDING ARRIVED AT AS THE SAME IS FORTIFIED BY THE JUDGMENT OF THE HIGH COURT IN ASSESSEES OWN CASE. ACCORDINGLY BEING SATISFIED B Y THE REASONING AND FILING ARRIVED AT THEREIN THE DEPARTMENTAL GROUND I S DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE PRONOUNCEMENT IN THE OPEN COURT ON 22 ND AUGUST 2014. SD/- SD/- (J.S. REDDY) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/08/2014 *KAVITA ITA NO. 3448/D/2013 M/S R.K. & SONS (HUF) 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR