M/s Sukarma finance Ltd., Delhi V. DCIT, New Delhi

ITA 3883/DEL/2013

• Counselvise Citation: 388320114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 08-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: ROHIT JAIN; SAHI MEHTA
• Keywords: Business income; Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. N.K.SAINI, ACCOUNTANT MEMBER I.T.A .NO.3883 /DEL/201 3 (ASSESSMENT YEAR - 2 008 - 09 ) M/S SUKARMA FINANCE LTD., 4832/24, CHAMBER NO. - 104, PRAHLAD HOUSE, ANSARI ROAD, DARYAGANJ, NEW DELHI - 110003. P AN - AAACS3512L (APPELLANT) VS DCIT, CIRCLE - 9(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. ROHIT JAIN, ADV. & SH. SAHI MEHTA, CA RESPONDENT BY SH.GAURAV DUDEJA, SR. DR ORDER PER DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15 . 10.2012 OF CIT(A) - XII , N EW DELHI PERTAINING TO 200 8 - 0 9 ASSESSMENT YEAR ON VARIOUS GROUNDS . HOWEVER ARGUMENTS ADVANCED WERE LIMITED TO THE ISSUES AGITATED VIDE GROUND NO S . - 2 & 3 AS QUA GROUND NO. - 1 IT WAS SUBMITTED THAT IT IS NOT BEING PRESSED. GROUND NO. - 4 IS PREMATURE AND GROUND NO. - 5 BEING RESIDU ARY IN NATURE REQUIRES NO ADJUDICATION. THE GROUND NOS. - 2 & 3 READ AS UNDER: - 2. LEARNED ASSESSING OFFICER HA S ERRED IN ADDING SUM OF RS.1,01,175/ - U/S 14A UNDER THE GIVEN FACTS AND CIRCUMSTANCES. 3. LEARNED ASSESSING OFFICER HAS ERRED IN TREATING SHORT TERM CAPITAL GAIN AS BUSINESS INCOME AND ADDING SUM OF RS.63,58,456/ - TO THE INCOME OF THE ASSESSEE. 2. ADDRESSING THE FIRST ISSUE IT WAS SUBMITTED BY THE LD. AR THAT THE AO HAD MADE A DISALLOWANCE APPLYING RULE 8D AND THE CIT(A) TAKING INTO CONSIDERATION THE ORDERS OF THE FIRST APPELLATE AUTHORITY IN 2006 - 07 AND 2007 - 08 ASSESSMENT YEARS UPH E LD THE DISALLOWA NCE B Y RELYING UPON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. I NVITING ATTENTION TO THE 2 I.T.A .NO. - 3883 /DEL/2013 CONSOLIDATED ORDER OF THE TRIBUNAL DATED 02.05.2014 IN ITA NO. - 3588 & 3589/DEL/2010 IN THE CASE OF THE ASSESSEE FOR 2006 - 07 & 2007 - 08 ASSESSMENT YEARS IT WAS SUBMITTED THAT THE ISSUE HAD BEEN RESTORED TO THE AO FOLLOWING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT (2012) 347 ITR 372. I N THE CIRCUMSTANCES IT WAS HIS LIMITED PRAYER THAT FOLLOWING THE DIRECTION THE ISSUE MAY BE RESTORED WITH THE FURTHER DIRECTION TO THE AO TO CONSIDER THE DECISION DATED 05.09.2014 IN ITA NO. - 486/14 AND ITA NO. - 299/2014 IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. AND REI AGRO LTD. VS DCIT 144 ITD 141 [KOL.] . THE LD. SR. DR, SH. GAURAV DUDEJ A CONSIDERING THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE HAD NO OBJECTION IF THE ISSUE IS RESTORED BACK TO THE AO TO RE - WORK OUT THE DISALLOWANCE MADE. ACCORDINGLY IN THE LIGHT OF THE SUBMISSIONS ADVANCED THE ISSUE IS RESTORED TO THE AO WITH THE DIRECTION TO TAKE INTO CONSIDERATION THE DECISION OF THE MAXOPP INVESTMENT (CITED SUPRA) AND ALSO CONSIDER THE APPLICABILITY OF THE DECISION RENDERED IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. NEEDLESS TO SAY THAT THE AO SHALL PASS A SPEAKING ORDER I N A C C O R D A N C E W I T H L A W AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE SECOND ISSUE A GITATED BY GROUND NOS. - 3 IS FOUND DISCUSSED IN THE UN - NUMBERED PAGES 2, 3 & 4 OF THE ASSESSMENT ORDER WHEREIN THE AO AT PAGE - 4 FOLLOWING THE VIEW TAKEN IN 2006 - 07 AND 2007 - 08 ASSESSMENT YEARS TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. THE SPECIFIC FINDING IS REPRODUCED HEREUNDER: - THE ISSUE OF TREATMENT OF SHORT TERM CAPITAL GAINS AS BUSINESS INCOME WAS INVOLVED IN THIS CASE FOR A.Y.2006 - 07 & 2007 - 08 WHEREIN THE THEN AO S HAD NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND TREATED THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME. SINCE, THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AR E IDENTICAL TO THOSE IN THE EARLIER YEARS, I AGREE WITH THE OBSERVATIONS MADE IN THE PRECEDING ASSESSMENT YEAR. 3.1 . THE CIT(A) FOLLOWING THE VIEW TAKEN BY THE CIT(A) - XII, NEW DELHI VIDE THEIR ORDERS DATED 19.04.2010 & 30.03.2010 IN 2006 - 07 AND 2007 - 08 ASSESSMENT 3 I.T.A .NO. - 3883 /DEL/2013 YEARS RESPECT I V E L Y UPHELD THE FINDING ARRIVED A T BY THE AO. THE RELEVANT FINDING IS REPRODUCED HEREUNDER FOR READY - REFERENCE: - ASSESSEE S CONTENTION THAT ONLY WHERE DELIVERY OF SHARES WAS INVOLVED THAT HOLDING PERIOD WAS SMALL THEN THOSE SHARES CAME IN THE CATEGORY OF SHORT TERM CAPITAL GAIN , IS NOT ACCEPTABLE BECAUSE SOME SHARES OF THE SAME COMPANY HAVE BEEN HELD FOR LONGER PERIOD AND TREATED AS BUSINESS INCOME BY THE ASSESSEE ITSELF. BESIDES THIS, THE VOLUME AND FREQUENCY OF THE TRANSACTION IS ALSO LARGE. THE PRINCIPAL OF RES JUDICATA DOES NOT APPLY TO ASSESSMENT PROCEEDINGS AND KEEPING IN VIEW THAT IT ONLY AFTER SPECIFIC AMENDMENTS TO THE ACT THAT THE ASSESSEE HAS PUT HIS CLAIM FOR THE SAID TREATMENT OF INCOME, THE SAME IS REJECTED. THE SAM E VIEW WAS TAKEN FOR ASSTT. YEAR 2007 - 08 AND I AM ALSO IN AGREEMENT WITH THE DECISION TAKEN BY MY PREDECESSOR AND CONFIRMED THIS GROUND. 4 . THE LD. AR INVITING A TTENTION TO THE ORDER OF THE TRIBUNAL IN 2006 - 07 & 2007 - 08 ASSESSMENT YEARS WHILE REFERRING T O THE ISSUE UNDER DISCUSSION AT PAGE 2 PARA 4 SU BMITTED THAT FOLLOWING THE VIEW TAKEN IN ON TH E FACTS OF THE ASSESSEE S CASE AND IN THE CASE OF GOPAL PUROHIT 29 SOT 117 (MUM.) WHICH WAS UPHELD BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GOPAL PU ROHIT 228 CTR 582 WHEREIN REVENUE S SLP HAD BEEN DISMISSED BY THE HON BLE APEX COURT AS REPORTED IN 334 ITR 308 (STATUTE) AND THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF ROHIT ANAND VIDE ITA NO.1135/2010 & CIT VS AVINASH JAIN (2014) 362 I TR 441 [DELHI] THE CO - ORDINATE BENCH ON SIMILAR FACTS DECIDED THE ISSUES HOLDING AS UNDER: - 15. THE FACTS OF THE ASSESSEE S CASE ARE IDENTICAL. THEREFORE, THE ABOVE DECISION OF ITAT WHICH IS APPROVED BY HON BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE. CONSIDERING THE TOTALITY OF THE ABOVE FACTS AND RELYING UPON THE DECISION OF ITAT, HON BLE BOMBAY HIGH COURT AS WELL AS HON BLE APEX COURT IN THE CASE OF GOPAL PUROHIT (SUPRA) AND OF THE ITAT AND HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ROHIT ANAND (SUPRA), WE ARE OF THE OPINION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE SHORT TERM CAPITAL GAIN AS INCOME FROM BUSINESS OR PROFESSION. WE, THEREFORE, DIRECT THE ASSESSING OFFICE TO ASSESS THE INCOME FROM SHORT TERM CAPIT AL GAIN UNDER THE HEAD CAPITAL GAINS AND NOT UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. ACCORDINGLY, GROUND NO. - 3 OF THE ASSESSEE S APPEAL IS ALLOWED. 4.1 . TH IS DIRECTION IT WAS POINTED OUT WAS FOLLOWED IN 2007 - 08 ASSESSMENT YEAR A LSO BY THE CO - ORDINATE BENCH IN THE CONSOLIDATED ORDER AS FOUND DISCUSSED IN 4 I.T.A .NO. - 3883 /DEL/2013 PARA 19 . A CCORDINGLY IT WAS HIS SUBMISSION THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES AND T HE DECISION APPLIES IPSO FACTO . 5. THE LD. SR. DR CONSIDERING THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE MERELY RELIED ON THE ASSESSMENT ORDER . N O SUBMISSIONS CANVASSING FOR A CONTRARY VIEW ON FACTS OR LAW WERE ADVANCED ON BEHALF OF THE REVENUE. 6. IN VIEW OF THE FACTS ON RECORD WHERE THE AO AND CIT(A) HAVE BASE D THEIR CONCLUSIONS ON FACTS AS CONSIDERED IN 2006 - 07 & 200708 ASSESSMENT YEARS WHICH VIEW HAS BEEN UPSET BY THE CO - ORDINATE BENCH, WE FIND THAT THE APPEAL OF THE ASSESSEE ON THE ISSUE DESERVES TO BE ALLOWED. R ESPECTFULLY FOLLOWING THE ORDER OF THE TRIB UNAL , GROUND NO. - 3 OF THE ASSESSEE IS ALLOWED. 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 6 T H OF JANUARY 2015 . S D / - S D / - ( N.K.SAINI ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 6 / 01 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 I.T.A .NO. - 3883 /DEL/2013