GIBS COMPUTERS LTD, MUMBAI V. ASST CIT CEN CIR 40, MUMBAI

ITA 3844/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3360 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 23-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2013
• Court: TRIBUNAL
• Department Lawyers: RAVI KIRAN
• Keywords: Business income
• Section: 148; 144

Judgement Text

1 .ITA NO.3844/MUM/2013 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACOUNTANT MEMBER) I.T.A. NO.ITA NO.3844/MUM/2013 (ASSESSMENT YEAR : 2005-06 GIBS COMPUTERS LTD RADHA BHAVAN, 1 ST FLOOR 121, NAGINDAS MASTER ROAD MUMBAI-23 VS ACIT, CENT.CIR.40, MUMBAI PAN : AABCG0096L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI NEELKANTH KHANDELWAL RESPONDENT BY SHRI RAVI KIRAN DATE OF HEARING : 23-05-2016 DATE OF PRONOUNCEMENT : 23 -05-2016 O R D E R PER ASHWANI TANEJA THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF LD .CIT(A) DATED 19-03- 2013 PASSED AGAINST THE ASSESSMENT ORDER U/S 144 R. W.S. 147 OF THE ACT DT 14- 10-2010 FOR A.Y. 2005-06 ON THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) - 36, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UP HOLDING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME-TAX,CENTRAL CI RCLE - 40, MUMBAI (HEREIN REFERRED AS THE ASSESSING OFFICER) IN REOPE NING THE ASSESSMENT. 2 .ITA NO.3844/MUM/2013 THE APPELLANTS CONTEND THAT ON THE FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW, THE ISSUE OF NOTICE UNDER SECTION 148 I S BAD IN LAW AND THE REASONS RECORDED UNDER SECTION 148 ARE VAGUE, INSUF FICIENT AND ERRONEOUS IN LAW AND HENCE, THE IMPUGNED ASSESSMENT OUGHT TO HAVE BEEN QUASHED BY THE CIT(A). 2. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN FRAMING AN EX-PARTE ORDER. THE APPELLANTS CONTEND THAT ON THE FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN FRAMING AN EX-PARTE ORDER. 3. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CONSIDERING SHORT-TERM CAPITAL GAINS RS 56,61,041 A S BUSINESS INCOME. THE APPELLANTS CONTEND THAT ON THE FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN CONSIDERING THE SHORT-TERM CAP ITAL GAINS AS BUSINESS INCOME AND HENCE, THE ACTION OF THE CIT(A) NEEDS TO BE REVERSED. 2. DURING THE COURSE OF HEARING, IT WAS BROUGHT OUT BY THE LD.COUNSEL OF THE ASSESSEE THAT ADDITION MADE IN THE ASSESSMENT O RDER IS BLATANTLY INCORRECT AS PER LAW AND FACTS. IT WAS SUBMITTED THAT THERE WAS NO BASIS WITH THE ASSESSING OFFICER TO TREAT THE IMPUGNED AMOUNT OF GAIN EARNED ON THE TRANSFER OF SHARES AS BUSINESS INCOME (SPECULATION) MERELY ON THE GROUND THAT PAYMENT OF SECURITIES TRANSACTION TAX COULD NOT BE ESTABLISHED, WHICH, ACCORDING TO THE ASSESSING OFFICER, WAS PRIME CRITE RIA FOR APPLICABILITY OF SECTION 111A OF THE ACT. IT WAS SUBMITTED THAT IN CASE, SECURITY TRANSACTION TAX WAS NOT PAID, THEN, AT THE BEST, THE ASSESSEE W AS NOT ENTITLED FOR CONCESSIONAL RATE OF TAX. BUT THAT FACT ITSELF WIL L NOT MAKE THE IMPUGNED 3 .ITA NO.3844/MUM/2013 AMOUNT OF CAPITAL GAIN AS BUSINESS INCOME, THAT TOO , SPECULATIVE IN NATURE. IT WAS SUBMITTED THAT THE ASSESSEE HAD SUBMITTED CONTR ACT NOTES IN THE OTHER CASE OF THE GROUP COMPANY WHICH WAS BEING ASSESSED BY THE SAME ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT IF AN OPPOR TUNITY WAS GIVEN THE ASSESSEE IS WILLING TO PRODUCE SOME MORE CONTRACT N OTES TO THE ASSESSING OFFICER ONCE AGAIN TO DEMONSTRATE THAT THERE WAS EX CHANGE OF DELIVERY OF SHARES IN THIS CASE, AND THEREFORE, THE MAIN TRANSA CTION WAS NOT SPECULATIVE AT ALL. 3. ON THE OTHER HAND, THE LD.DR FAIRLY AGREED THAT THIS CASE COULD BE SENT BACK FOR PROPER VERIFICATION BY THE ASSESSING OFFIC ER. 4. WE HAVE GONE THROUGH THE FACTS OF THIS CASE. WI TH THE ASSISTANCE OF THE PARTIES, WE HAVE EXAMINED THE CONTRACT NOTES SUBMIT TED BEFORE THE ASSESSING OFFICER IN THE CASE OF M/S NETSCAPE SOFTWARE PVT LT D, CLAIMED TO BE GROUP COMPANY OF THE ASSESSEE WHICH WAS ASSESSED BY THE S AME ASSESSING OFFICER. A PERUSAL OF THE CONTRACT NOTE SHOWS THAT THE IMPUG NED SHARES WERE MORTGAGED WITH MADHAVPURA MERCANTILE CO-OPERATIVE B ANK LTD AND THESE WERE SOLD TO M/S JM MORGAN STANLEY RETAIL SERVICES PVT LTD. THE SHARES WERE KEPT BY THE SAID COMPANY AND WERE HANDED OVER TO TH E SAID PARTY. THERE WAS CLEARLY AN EXCHANGE OF DELIVERY ON BEHALF OF THE AS SESSEE. UNDER THESE CIRCUMSTANCES, WE FIND THAT THE SAID TRANSACTION IS NEITHER SPECULATIVE NOR IT BECOMES BUSINESS INCOME MERELY ON THE GROUND THAT P AYMENT OF SECURITY TRANSACTION TAX WAS NOT PAID ON THE IMPUGNED TRANSA CTION. SIMILAR TRANSACTIONS HAVE BEEN ACCEPTED BY THE ASSESSING OF FICER AS INCOME FROM CAPITAL GAINS ALL ALONG. THERE WAS NO BASIS TO MA KE DIFFERENT TREATMENT FOR THE IMPUGNED TRANSACTION. UNDER THESE CIRCUMSTANCES , THE IMPUGNED 4 .ITA NO.3844/MUM/2013 TRANSACTION IS HELD TO BE INCOME FROM CAPITAL GAIN AND NON SPECULATIVE IN NATURE. HOWEVER, TO MEET THE ENDS OF JUSTICE, WE S ENT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPO SE OF VERIFICATION OF THE CONTRACT NOTES AS HAS BEEN SHOWN TO US BY THE LD.CO UNSEL OF THE ASSESSEE. THE ASSESSING OFFICER SHALL OBJECTIVELY TAKE INTO ACCOU NT THE DOCUMENTARY EVIDENCE AS MAY BE SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND SHALL DECIDE THE ISSUE AFRESH IN THE LIGHT OF G UIDELINES GIVEN BY US ABOVE. THUS, GROUNDS 2 & 3 MAY BE TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. 5. IN VIEW OF THE ABOVE, GROUND 1 WHICH DEALS WITH REOPENING OF THE ASSESSMENT BECOMES ACADEMIC IN NATURE AND, THEREFOR E, THE SAME IS DISMISSED AS SUCH. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2016. SD/- SD/- (AMIT SHUKLA) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT :23 RD MY, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , G BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES