ADDL CIT RG 19(3), MUMBAI V. SATPAL SINGH SETHI, MUMBAI

ITA 3650/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55387 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 28-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: DR P DANIEL; M P MAKHIJA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R.S. SYAL, AM AND SHRI R.S.PADVEKAR, JM ITA NO.3650/MUM/2010 :ASST.YEAR 2006-2007 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 19(3) MUMBAI. VS. SHRI SATPAL SINGH SETHI JEWEL ARCADE, 2 ND FLOOR WATERFIELD ROAD, BANDRA (WEST) MUMBAI 400 050. PAN : AACOS2907N. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : DR. P.DANIEL & SHRI M.P.MAKHIJA DATE OF HEARING : 28.09.2011 DATE OF PRONOUNCEMENT :30.09.2011 O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 22.02.2010 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. THE ONLY ISSUE RAISED THROUGH VARIOUS GROUND IS AGAINST THE TREATMENT GIVEN TO THE PROFIT FROM SHARES AS TAXABLE UNDER THE HEAD `CAPITAL GAINS INSTEAD OF `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`CAPITAL GAINS WAS NOT DISPUTED AND ACCEPTED AS SUCH. WHILE HOLDING THE PROFIT FROM SALE OF SHARES AS BUSINESS INCOME IN TH E INSTANT YEAR, THE ASSESSING OFFICER ON PAGE 10 OF THE ASSESSMENT ORDER HAS ALSO TAKEN INTO CONSIDERATION THE FACTS FOR THE ASSESSMENT YEAR 2004-2005 BY HOLDING THAT THE NUMBER OF TRANSACTIONS WERE VOLUMINOUS IN THAT YEAR AS WELL, SIMILAR TO T HE SITUATION IN THE CURRENT ASSESSMENT YEAR. THUS IT BECOMES PATENT THAT IN ASS ESSMENT YEAR 2004-2005 THE ASSESSING OFFICER HIMSELF, IN THE SCRUTINY ASSESSME NT, TOOK INCOME FROM SHARES AS FALLING UNDER THE HEAD `CAPITAL GAINS AND NOT BUS INESS INCOME. THERE IS NO OTHER ORDER FOR ANY EARLIER ASSESSMENT YEAR IN WHICH THE A.O. TOOK A CONTRARY VIEW. THUS IT BECOMES EVIDENT THAT THE REVENUE IN ALL THE EARL IER YEARS HAS ACCEPTED THE SHARES AS INVESTMENT AND NOT AS STOCK IN TRADE. THE PRINCI PLE OF CONSISTENCY REQUIRES THAT THE VIEW TAKEN IN ONE YEAR SHOULD BE FOLLOWED IN SU BSEQUENT YEARS, UNLESS THE FACTS OR THE LEGAL POSITION JUSTIFY DEPARTURE THEREFROM. RECENTLY THE HONBLE BOMBAY HIGH COURT IN CIT VS. DARIUS PANDOLE [(2011) 330 ITR 485 (BOM.)] HAS HELD THAT INCOME FROM SALE OF SHARES TREATED AS BUSINESS INCO ME IN EARLIER YEAR BY WAY OF ASSESSMENT U/S 143(3) CANNOT BE TAKEN AS CAPITAL G AIN IN SUBSEQUENT YEAR. THE ESSENCE OF THE JUDGEMENT IS THAT THE PRINCIPLE OF C ONSISTENCY SHOULD BE FOLLOWED AND THE PARTIES SHOULD NOT BE ALLOWED TO REGISTER D EPARTURE FROM THE EXISTING POSITION TIME AND AGAIN. IN THE LIKE MANNER, THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GOPAL PUROHIT (2011) 336 ITR 287 (BOM) HAS HELD INCOME FROM SHARES AS BUSINESS INCOME ON THE BASIS OF THE RULE OF CONSIS TENCY. SINCE IN THE EARLIER YEARS THE ITA NO.3650/MUM/2010 SHRI SATPAL SINGH SETHI 3 DEPARTMENT HAS ACCEPTED INCOME FROM SHARES AS FALLI NG UNDER THE HEAD `CAPITAL GAINS, IN OUR CONSIDERED OPINION AND RESPECTFULLY FOLLOWING THE ABOVE JUDGEMENTS, THAT THE LEARNED CIT(A) WAS JUSTIFIED IN UPHOLDING THE ASSESSEES STAND. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (R.S.PADVEKAR) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 30 TH SEPTEMBER, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.