ITO, WD-31(3), KOLKATA, Kolkata V. M/s Dilip B. Desai (HUF), Kolkata

ITA 351/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6303 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: PRITI KUMARI RAI ACA
• Keywords: Business income
• Section: 143(3)

Judgement Text

1 ITA NO.351/KOL/2016 DILIP B. DESAI (HUF)., AY- 2011-12 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M.BALAGANESH, AM] I.T.A. NO. 351/KOL/2016 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER, WD-31(3), KOLKATA VS. M/S. DILIP B. DESAI (HUF) (PAN: AABHD7897K) APPELLANT RESPONDENT DATE OF HEARING 21.02.2018 DATE OF PRONOUNCEMENT 09.05.2018 FOR THE APPELLANT SHRI SAURABH KUMAR, ADDL. CIT, SR . DR FOR THE RESPONDENT SMT. PRITI KUMARI RAI, ACA ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF LD. CIT(A)-9, KOLKATA DATED 16.12.2015 FOR AY 2011-12. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ORDER OF LD. CIT(A) IN DIRECTING TO COMPUTE THE INCOME OF THE ASSESSEE UND ER THE HEAD INCOME FROM CAPITAL GAINS INSTEAD OF BUSINESS INCOME AS DETERMINED BY AO. 3. BRIEFLY STATED FACTS OF THE CASE AS OBSERVED BY THE AO ARE THAT THE ASSESSEE IS A HUF AND HAS DECLARED GAIN FROM SHARE INVESTMENT AND MUT UAL FUND. THE SAID GAIN HAS BEEN SHOWN AS SHORT TERM CAPITAL GAIN. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED AS TO WHY THE GAIN ON SHARE TRAN SACTION SHOULD NOT BE TREATED AS TRADING RECEIPT INSTEAD OF INVESTMENT KEEPING IN VIEW THE N UMBER OF SHARES IN WHICH THE ASSESSEE TRANSACTED AND THE AMOUNT INVOLVED, DIVIDEND ON TOT AL OUTLAY, PERIOD OF HOLDING OF SHARES AND TOTAL NUMBER OF COMPANIES IN RESPECT OF WHICH T RANSACTION DONE. IN RESPONSE, THE LD. AR OF THE ASSESSEE FURNISHED WRITTEN SUBMISSION ON ALL THE ABOVE POINTS AND SOME OTHER POINTS ALSO AND PLACED HIS RELIANCE ON VARIOUS CASE LAWS, WHICH IS AVAILABLE IN THE ASSESSMENT ORDER. AFTER CONSIDERING THE DETAILS FUR NISHED BY THE ASSESSEE AND THE FACTS OF THE 2 ITA NO.351/KOL/2016 DILIP B. DESAI (HUF)., AY- 2011-12 CASE, THE AO CONCLUDED THAT THE SHARE TRANSACTION D ONE BY THE ASSESSEE IS IN THE NATURE OF TRADE AND IS NOT INVESTMENT. HENCE, AN AMOUNT OF R S.1,06,51,042/- DECLARED AS STCG ON SALE OF SHARES WAS TREATED AS BUSINESS INCOME OF TH E ASSESSEE INSTEAD OF INCOME FROM CAPITAL GAINS AS STATED BY THE ASSESSEE. ON APPEAL, THE LD . CIT (A) DIRECTED THE AO TO THE COMPUTE INCOME/LOSS OF THE ASSESSEE FOR THE YEAR UNDER CONS IDERATION BY TREATING THE SAME UNDER THE HEAD INCOME FROM CAPITAL GAINS . AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. THE RECENT CBDT CIRCULAR NO. 6/2016 ON 29.02. 2016 HAS GIVEN THE TAX PAYER THE OPTION TO DECIDE THE NATURE OF HIS INCOME ARISING O N ACCOUNT OF SALE OF LISTED SHARES/SECURITIES. THE BASIC IDEA OF ISSUING THE C IRCULAR IS TO HALT THE INCREASING LITIGATION IN THIS REGARD. HOWEVER, IT NEEDS TO BE KEPT IN MIND THAT TAX PAYER HAS TO TAKE A STAND EITHER TO TREAT THE INCOME FROM SALE OF SHARES AS CAPITAL GAI N OR BUSINESS INCOME AND NOT TO CHANGE IT IN SUBSEQUENT YEAR. WE NOTE THAT ASSESSEE HAS BEEN ALWAYS REFLECTED THE SHARES AS INVESTMENT IN ITS BOOKS. THE AO HAS CONTESTED THIS CLAIM OF THE ASSESSEE IN AY 2006-07 AND AY 2009-10, WHICH HAS BEEN REVERSED BY LD. CIT (A)-XIX AS EVIDENT FROM THE IMPUGNED ORDER OF LD. CIT (A)-9. MOREOVER, IT HAS BEEN BROUGHT TO OUR NOTICE THAT AO IN SCRUTINY ASSESSMENT U/S. 143(3) OF THE ACT FOR AY 2 014-15 AND 2015-16, HAS ACCEPTED THE CAPITAL GAIN FROM SALE OF SHARES OF THE ASSESSEE. IN SUCH A S CENARIO, WHEN ASSESSEE HAS BEEN CONSISTENTLY REFLECTING THE SHARES AS INVESTMENTS I N HIS BOOKS AND SHOWN THE GAIN AS CAPITAL GAINS, THE CLAIM OF ASSESSEE OUGHT TO HAVE BEEN ALL OWED. THE LD. CIT (A) HAS RIGHTLY DONE SO. SO, NO INTERFERENCE IS CALLED FOR. THE APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 09.05.2018 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :9 TH MAY, 2018 JD.(SR.P.S.) 3 ITA NO.351/KOL/2016 DILIP B. DESAI (HUF)., AY- 2011-12 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WD-31(3), KOLKATA. 2 RESPONDENT M/S. DILIP B. DESAI (HUF), 1A, DEVAR ATI, 1 ST FLOOR, 8, DR. RAJENDRA ROAD KOLKATA-700 020. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA. DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY