RAJKAMAL R. BAJAJ, MUMBAI V. ADDL CIT RG 12(1), MUMBAI

ITA 4138/MUM/2012

• Counselvise Citation: 413819914 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Capital asset; Business income; Salary income; Rule of consistency
• Section: 143(3); 153A

Judgement Text

, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI , , ! ' BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.4138/MUM/2012 #$ #$ #$ #$ %$ %$ %$ %$ / ASSESSMENT YEAR: 2008-09 MR. RAJKAMAL R. BAJAJ, 24-B, RAJABAHADUR COMPUND, 1 ST FLOOR, HAMAM STREET, FORT, MUMBAI-400023 VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-12(1), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020 ( #$&' / ASSESSEE) ( ()*+ /RESPONDENT) P.A. NUMBER : AACPB0040M #$&' , ,, , - - - - /ASSESSEE BY : SHRI VIJAY MEHTA ()*+ , ,, , - - - - /RESPONDENT BY SHRI AKHILENDRA YADAV # , ' / DATE OF HEARING : 01/01/2015 ./% , ' / DATE OF PRONOUNCEMENT : 07/01/2015 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER: THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 04/04/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. GROUND NO.1: TREATING GAINS FROM SALE OF SHARES A S INCOME FROM BUSINESS INSTEAD ON CAPITAL GAIN. 2 MR. RAJKAMAL R. BAJAJ . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-12(1) ( THE ASSESSING OFFICER) OF ASSESSING THE GAINS FROM TRA NSFER OF SHARES AMOUNTING TO RS.1,53,35,274/- AS INCOME FRO M BUSINESS INSTEAD OF SHORT TERM CAPITAL GAINS OF RS.1,53,35,274. THE APPELLANT PRAYS THAT IT BE HELD THAT THE GAINS O N TRANSFER OF SHARES BE ASSESSED UNDER THE HEAD CAPIT AL GAINS AS RETURNED BY THE APPELLANT. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE PRINC IPLE OF RES JUDICATA DOES NOT APPLY TO THE FACT OF THE CASE. 2. GROUND NO. 2: DISALLOWANCE OF EXPENSES OF RS.33,3 67/-. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF MAKING DISALLOWANCE OF EXPENSE S OF RS.33,367/-, WHILE CALCULATING INCOME UNDER THE HEA D INCOME FROM OTHER SOURCES. 3. GROUND NO.3: RESTRICTION IN EXEMPTION AVAILABLE U /S 17(2) OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) ERRED IN BY RESTRICTING THE EXEMPTION AVAILABLE U/S 17(2)(VI) OF THE ACT TO RS.15,000/- I N PLACE OF ACTUAL EXPENSES INCURRED BY THE APPELLANT OF RS.90,0 90/- 3 MR. RAJKAMAL R. BAJAJ . WHILE CALCULATING INCOME UNDER THE HEAD INCOME FROM SALARY WITHOUT APPRECIATING THE PROPER FACTS OF TH E CASE. 2. AT THE TIME OF HEARING, SO FAR AS, GROUND NO. 1 IS CONCERNED, SHRI VIJAY MEHTA, LD. COUNSEL FOR THE ASSESSEE CONT ENDED THAT THE ASSESSEE SOLD SHARES OF 33 SCRIPS IN IPO AND SALE T RANSACTIONS FOR SHARES ACQUIRED UNDER IPO ARE ONLY 34. IT WAS PLEA DED THAT THE ASSESSEE SOLD SHARES OF JUST TWO SCRIPS, ACQUIRED I N SECONDARY MARKET, AND THUS THE SALE TRANSACTION OF THE SHARES ARE ONLY TWO. SO FAR AS, EARNING OF LONG TERM CAPITAL GAINS OF RS .15,52,023/-, IS CONCERNED, IT WAS ARGUED TO BE ACCEPTED BY THE ASSE SSING OFFICER. ON THE ISSUE OF CONSISTENCY, IT WAS ARGUED THAT TH E ASSESSEE HAD BEEN OFFERING GAINS FROM INVESTMENT UNDER THE HEAD CAPITAL GAINS WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT, THUS, IN THE ABSENCE OF THE CONTRARY FACTS, NO U TURN IS PERMITTED/EXPEC TED FROM THE DEPARTMENT. THE LD. COUNSEL PLACED RELIANCE ON THE DECISION IN THE CASE OF GOPAL PUROHIT 228 CTR 582 (BOM) AGAINST WHI CH SLP WAS ALSO DISMISSED (334 ITR (ST) 308). PLEA WAS ALSO R AISED THAT NO BORROWED FUNDS WERE USED FOR MAKING THE INVESTMENT AND OWN FUNDS WERE USED. ON THE ISSUE OF FREQUENCY, IT WAS CONTENDED THAT AVERAGE HOLDING PERIOD OF SHARES HELD FOR SHORT TER M IS 34 DAYS FOR SHARES ACQUIRED BY IPO AND 36 DAYS FOR SHARES ACQUI RED IN SECONDARY MARKET. A STRONG PLEA WAS RAISED THAT TH E ASSESSEE HAS NOT CARRIED OUT ANY SPECULATIVE, DERIVED IT AS WELL AS REPETITIVE TRANSACTIONS. IT WAS ALSO PLEADED THAT IDENTICALLY IN THE CASE OF SMT. SEEMA R. BAJAJ (WIFE OF THE ASSESSEE) THE TRIB UNAL VIDE ORDER DATED 23/04/2014 IN ITA NO. 3168/MUM/2012 DECIDED I N FAVOUR OF THE ASSESSEE I.E. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 4 MR. RAJKAMAL R. BAJAJ . 2.1. ON THE OTHER HAND, SHRI AKHILENDRA YADAV, LD. DR STRONGLY DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBMITTING THAT THE TRUE INTENT AND NATURE OF THE T RANSACTION IS REQUIRED TO BE SEEN, WHICH CANNOT BE DETERMINED FRO M THE NATURE OF THE ASSET BEING TRADED. PLEA WAS ALSO RAISED TH AT ALL THE SHARES WERE SOLD AT A PROFIT AND THUS THERE WAS NO DIVIDEN D INCOME. IT WAS ALSO CONTENDED THAT SURROUNDING FACTS/CIRCUMSTA NCES HAS TO BE CONSIDERED. IT WAS EMPATHETICALLY PLEADED THAT PERIOD OF HOLDING IN ALL SCRIPS IS VERY LOW, CONSEQUENTLY, TH E PROFIT FROM SALES OF SHARES IS A BUSINESS INCOME. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED TOTAL INCOME OF RS.17,38,48,385/- IN ITS RETURN FILED ON 22/09/2008. IN THE YEAR UNDER CONSIDERATI ON, THE ASSESSEE MADE INVESTMENT IN THE SHARES AND MUTUAL F UNDS WHICH IS MAINLY CONSIST OF SHARES ALLOTTED BY MAKING APPL ICATIONS IN INITIAL PUBLIC OFFICERS (IPO). THE ASSESSEE INVEST ED HIS OWN FUNDS FOR MAKING THE INVESTMENT AND NO BORROWED FUNDS WER E UTILIZED. THE TOTAL INVESTMENT IN IPO IS OF 35 COMPANIES I.E. THROUGH PRIMARY MARKET AND ALSO MADE INVESTMENT IN SHARES O F FIVE COMPANIES THROUGH SECONDARY MARKET. WE FIND THAT AB OUT 99.99% OF THE TOTAL SHARES TRANSACTED BY THE ASSESSEE (VAL UEWISE) WERE ALLOTTED IN IPOS (PRIMARY MARKET) AND THE ASSESSEE DISCLOSED THE SHARES IN THE BALANCE SHEET AS INVESTMENT. IT IS N OT WORTHY THAT FOR THE LAST MANY YEARS, IDENTICAL DISCLOSURE HAS B EEN MADE AS INVESTMENT WHICH HAS BEEN ACCEPTED BY THE DEPARTMEN T. FOR BETTER APPRECIATION, WE ARE SUMMARIZING THE FACTS H EREUNDER, 5 MR. RAJKAMAL R. BAJAJ . SR. NO. ASSTT. YEAR NO. OF TRANSACTION IN SHORT TERM CAPITAL GAIN TOTAL STGC ( `) `)`) `) TRADED IN SHARES CAPITAL GAINS AS COMPUTED BY THE ASSESSEE ACCEPTED U/S. ASSESSMENT ORDERS AT PAPER BOOK PAGE NO. IN IPO OTHERS TOTAL 1) 2005-06 9 1 10 25,36,635 NO 143(3) 17-18 2) 2006-07 36 11 47 56,44,269 NO 143(3) R.W.S 153A 21-23 3) 2007-08 14 - 14 28,15,011 NO 143(3) R.W.S 153A 26-28 4) 2008-09 34 2 36 1,53,35,274 NO YEAR UNDER CONSIDERATION - 5) 2009-10 7 4 11 2,79,159 YES 143(3) R.W.S. 153A 29-32 6) 2010-11 15 6 21 2,73,77,413 YES 143(3) R.W.S. 153A 33-36 7) 2011-12 34 53 87 2,17,21,564 YES 143(3) R.W.S. 153A 37-40 8) 2012-13 1 - 1 86,690 YES 143(3) R.W.S. 153A 41-46 WE ARE ALSO REPRODUCING HEREUNDER THE RELEVANT PORT ION FROM THE ORDER OF THE TRIBUNAL DATED 23/04/2014:- 2. BRIEF FACTS, QUA THE GROUND NO.1, ARE THAT THE A SSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, CAPITAL GAI N, ETC. SHE IS ALSO A DIRECTOR IN M/S. BAJAJ CONSULTANTS PVT . LTD. A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF SHARE B ROKING. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHO WN SHORT TERM CAPITAL GAIN ON SALE OF SHARES AT RS.2,7 2,721. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HA D CARRIED OUT 34 TRANSACTIONS IN 33 SCRIPS AND THE TOTA L NUMBER OF SCRIPS PURCHASED WAS 3310 AND TOTAL NUMBER OF SCRIPS SOLD WAS ALSO 3310. THE AVERAGE HOLDING PERIO D WAS QUITE LESS. THESE FACTS HAVE BEEN NOTED BY THE ASSES SING OFFICER AT PAGE4 OF THE ASSESSMENT ORDER. BEFORE T HE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE S HARES WERE NOT PURCHASED FROM SECONDARY MARKET BUT WAS ALL OTTED THROUGH IPO, WHICH WAS MOSTLY HELD AS CAPITAL ASSET. AT THE 6 MR. RAJKAMAL R. BAJAJ . TIME OF MAKING THE APPLICATION IN IPO, THE SHARES W ERE NOT LISTED IN EXCHANGE AND, THEREFORE, ARE NOT TRADABLE A T THE TIME OF APPLICATION BEING MADE. THE FUNDS ARE BLOCKE D FOR 3045 DAYS AFTER WHICH THE SHARES ARE ALLOTTED AND TH ERE IS NO CERTAINTY TO THE QUANTITY OF SHARES THAT MAY FIN ALLY BE ALLOTTED TO THE ASSESSEE. THESE SHARES, AFTER ALLOTM ENT, CANNOT BE SOLD BEFORE THEY ARE LISTED IN STOCK EXCHAN GE AND, THEREFORE, THEY CANNOT BE TREATED AS SHARE TRADING A CTIVITY. IN THE EARLIER YEARS, THE DEPARTMENT HAS ASSESSED TH E TRANSACTION OF IOP SHARES AS CAPITAL GAINS. HOWEVER , THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION AND HELD THAT THE NATURE OF TRANSACTIONS HAS TO BE SEEN FROM THE INTENTION BEHIND AND, HENCE, CANNOT BE DETERMINED FROM THE NATURE OF ASSETS BEING TRADED. ONCE THESE IPO SHARES ARE LISTED, THEY BECAME FREELY TRADABLE AND, THEREFORE, T HEY ARE TRADABLE ASSETS. AFTER DETAIL DISCUSSION, HE TREATED THE INCOME FROM SHORT TERM CAPITAL GAIN AT RS.2,74,187 AS BUSINESS INCOME. 3. THE LEARNED COMMISSIONER (APPEALS) HAS CONFIRMED THE FINDING OF THE ASSESSING OFFICER MAINLY ON THE GROUN D THAT THE MAGNITUDE AND THE FREQUENCY OF THE TRANSACTION IS QUITE HIGH AND THERE IS A VERY LOW HOLDING PERIOD I.E., THE Y ARE LESS THAN 20 DAYS WHICH REFLECTS INTENTION OF THE ASSESS EE THAT IT WAS NOT FOR THE PURPOSE OF INVESTMENT BUT FOR GETTI NG INDULGED IN THE ADVENTURE OF TRADE. 4. BEFORE US, THE LEARNED COUNSEL, MR. VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT FIRST OF ALL, THE ASSESSEE HAD PURCHASED SHARES OF 32 COMPANIES IN THE IPO OUT OF 34 SCRIPS. OTHER THAN THE IPO ONLY TWO SALE TRANSACTIONS WERE THROUGH SECONDARY MARKET. IN THE IPO, ONLY SERIOUS INVESTORS WILL MAKE INVESTMENT, BECAUS E THIS IS THE BEST POSSIBLE MODE OF ACQUIRING SHARES AT A LOWE ST PRICE AND SOLD THE SAME AT AN INITIALLY LISTING PERIOD WHI CH GIVES THE BEST POSSIBILITY OF GETTING GOOD SALE PRICE. ALL THROUGHOUT THE VARIOUS ASSESSMENT YEARS, THE ASSESSEE HAS BEEN MOSTLY ENGAGED IN MAKING INVESTMENT IN IPO SHARES ON LY AND SURPLUS ARISING OUT OF SALE OF SUCH IPO SHARES HAVE 7 MR. RAJKAMAL R. BAJAJ . BEEN OFFERED AS CAPITAL GAIN WHICH HAS BEEN ASSESSED BY THE DEPARTMENT MOSTLY UNDER SECTION 143(3) NOT ONLY IN THE EARLIER YEARS BUT ALSO IN THE SUBSEQUENT YEARS. THE COPY OF ASSESSMENT ORDERS HAVE ALSO BEEN PLACED IN THE PAPER BOOK. IN THE CASE OF A BUSINESS VENTURE, HUGE RISK IS UND ERTAKEN, WHEREAS IN THE CASE OF IPO, THERE IS VERY LESS RISK INVOLVED. MOREOVER, THE ASSESSEE HAS NOT BORROWED ANY FUNDS FO R THE PURPOSE OF INVESTMENT AND INVESTMENTS HAS BEEN MADE OUT OF HER OWN FUNDS. IN THE BOOKS ALSO, THE PURCHASE OF SHARES IN IPO HAS BEEN SHOWN AS INVESTMENT. FURTHER, THE A SSESSEE HAS NO EMPLOYEE OR SALARY COST AND THE TOTAL EXPENDI TURE IS ONLY RS.2,170 OUT OF WHICH RS.1,780 IS ON ACCOUNT O F ACCOUNTING CHARGES AND RS. 420 AS BANK CHARGES. ALL THE SHARES ARE DELIVERY BASED AND THERE IS NO REPETITIVE TRANSACTION. ALL THESE FACTS CAN ONLY LEAD TO A CONC LUSION THAT THE ASSESSEES INTENTION WAS NOT TO DO ANY TRA DING IN SHARES BUT ONLY TO BUY THE SHARES AS INVESTOR. THUS , AS A MATTER OF CONSISTENCY AND ALSO ON THE FACTS OF THE C ASE, THE GAINS SHOWN FROM THE SALE OF SHARES SHOULD BE ASSESS ED AS SHORT TERM CAPITAL GAIN AND NOT AS A BUSINESS INCOME . 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O THER HAND, SUBMITTED THAT THE AVERAGE PERIOD OF HOLDING IS VERY LESS AND EVEN THE TRANSACTIONS ARE ONLY 34, THEN ALS O IT HAS TO BE SEEN THAT THE ASSESSEE HAD BROUGHT 3,310 SCRIP S WHICH HAS BEEN SOLD ALSO WITHIN FEW DAYS. THUS, THER E IS FREQUENCY AND VOLUME OF TRANSACTION ALSO. ALL THESE FACTORS CAN ONLY LEAD TO A CONCLUSION THAT THE ASSESSEES IN TENTION WAS TO EARN PROFIT FROM BUSINESS OF BUYING AND SELL ING OF SHARES. HE FURTHER STRONGLY RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPE ALS). 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE F INDINGS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL AV AILABLE ON RECORD. FROM THE RECORDS, IT IS SEEN THAT THE ASSESS EE HAS PURCHASED SHARES OF 34 COMPANIES OUT OF WHICH SHARES OF 32 COMPANIES WERE IN IPO. THE ASSESSEE HAS PURCHASE D AGGREGATE SHARES OF RS.7,71,415, AND HAS SOLD THE SA ME AT RS.10,45,602. THE ASSESSEES CASE HAS BEEN THAT AT THE 8 MR. RAJKAMAL R. BAJAJ . TIME OF MAKING APPLICATION IN THE IPO, THE SHARES W ERE NOT LISTED IN THE STOCK EXCHANGE AND, THEREFORE, THE SAME ARE NOT IMMEDIATE TRADABLE ITEMS. IN THE IPO, THE FUNDS ARE BLOCKED FOR 3045 DAYS AFTER WHICH THE SHARES ARE AL LOTTED AND THAT TOO THE QUANTITY OF SHARES IS NOT CERTAIN. IT IS ONLY WHEN THE SHARES ARE ALLOTTED, THEY ARE LISTED IN STOC K EXCHANGE AND WHEREVER THERE IS SOME RISE IN VALUE OF THE SHARES, THE ASSESSEE IMMEDIATELY USED TO SELL THE SA ME TO BOOK THE GAIN. THIS PRACTICE OF INVESTMENT IN IPO H AS BEEN CONSISTENT SINCE LAST SEVERAL YEARS AND ALSO IN THE SUBSEQUENT YEARS, WHEREIN THE INCOME HAS BEEN OFFER ED AS CAPITAL GAIN AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT UNDER SCRUTINY PROCEEDINGS UNDER SECTION 143(3). FURTHER, THE INVESTMENTS HAVE BEEN MADE THR OUGH OWN FUNDS AND NO BORROWED FUNDS HAVE BEEN UTILIZED. THUS , THE INTENTION OF THE ASSESSEE WAS ONLY FOR THE INVE STMENT AND NOT FOR TRADING OF SHARES. MOREOVER, THERE IS N O REPETITIVE TRANSACTION AND ALL ARE DELIVERY BASED, HENCE, ANY G AIN ARISING OUT OF SUCH TRANSACTION IS TO BE ASSESSED AS CAPITAL GAIN. ON THE OTHER HAND, REVENUES CASE IS THAT THE PERIOD OF HOLDINGS IS QUITE LESS AND NUMBER OF TRANSACTIONS IS ALSO HUGE, THEREFORE, IT SHOULD BE ASSESSED AS BUSINESS IN COME. WHILE ADJUDICATING SUCH KIND OF CASES, THE PRIMARY PARAMETER IS TO GAUGE THE INTENTION OF THE ASSESSEE . THE PERIOD OF HOLDING MAY NOT BE ALL RELEVANT IN THE GIV EN FACTS OF THE CASE. IN THE PRESENT CASE, MOST OF THE INVESTME NTS HAVE BEEN MADE IN IPO, WHICH IS ONLY REFLECTS THE INTENT ION OF INVESTMENT FOR GETTING QUICK GAIN FROM SALES IMMEDI ATELY AS AND WHEN THE SHARES ARE LISTED IN THE STOCK EXCHANGE . THE PURCHASE OF IPO IS MOSTLY DONE BY THE INVESTORS AS THERE IS LESS RISK OF LOSS. FURTHER, THE OTHER ATTENDANT FAC TS LIKE; THE ASSESSEE HAS UTILIZED ITS OWN FUNDS AND HAS SHOWN THE SHARES UNDER THE HEAD INVESTMENT AND MOST IMPORTANT T HAT EXACTLY SIMILAR NATURE OF TRANSACTIONS HAVE BEEN HE LD BY THE DEPARTMENT TO BE CAPITAL GAIN NOT ONLY IN THE EARLI ER ASSESSMENT YEARS BUT ALSO IN THE SUBSEQUENT ASSESSM ENT YEAR. THUS, THERE HAS BEEN CONSISTENCY WHICH HAS BE EN ACCEPTED. THIS GOES TO SHOW THAT THE INTENTION OF T HE 9 MR. RAJKAMAL R. BAJAJ . ASSESSEE WAS ONLY FOR THE PURPOSE OF MAKING INVESTM ENT AND NOT FOR ENTERING INTO ANY VENTURE OF TRADE. UNDE R THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE GAIN ARISI NG OUT OF SALE OF SHARES SHOULD BE ASSESSED AS CAPITAL GAIN AND NOT AS A BUSINESS INCOME. THE FUNDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) ARE BASED ON VARIOUS DECISIONS WHICH CANNOT BE HELD TO BE APPLICAB LE UNIVERSALLY IN ALL THE CASES, BECAUSE IN SUCH KIND O F TRANSACTION, EACH FACT OF THE CASE HAS TO BE ANALYS ED, DEPENDING UPON THE INTENTION OF THE ASSESSEE AND ALS O THE OTHER ATTENDANT CIRCUMSTANCES. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ALLOW THE GROUND NO.1, RAISED BY THE ASSESSEE. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R TREATING THE INCOME AS BUSINESS INCOME, AFFIRMATION OF THE SAME MADE IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, CONCL USION DRAWN BY THE TRIBUNAL ON IDENTICAL FACTS AND THE ASSERTIO NS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AN D ANALYZED, WE FIND THAT ON IDENTICAL FACT, THE TRIBUNAL CONSIDERE D AND FOUND THAT THE INTENTION OF THE ASSESSEE WAS SIMPLY TO MAKE TH E INVESTMENT FROM ITS OWN FUNDS AND THERE IS NO ENTERING INTO VE NTURE OF TRADE AND THUS THE GAINS, ARISING OUT OF SALE OF SHARES W AS HELD AS CAPITAL GAINS AND NOT BUSINESS INCOME. THE FACTS I N THE CASE OF MS. SEEMA R. BAJAJ ARE IDENTICAL, WHEREIN ALSO THE ASSESSEE PURCHASED SHARES OF 32 COMPANIES IN IPO OUT OF 34 S CRIPS. IN THE PRESENT APPEAL, THE ASSESSEE TRANSACTED IN 36 TRANS ACTIONS OUT OF WHICH 34 ARE THROUGH IPOS (PRIMARY MARKET). IT IS NOT WORTHY THAT THE DEPARTMENT ITSELF IN EARLIER AND ASSESSMENT YEA RS AS IS EVIDENT FROM THE PAPER BOOK (SUMMARIZED IN THE AFORESAID TA BLE) HAD BEEN ACCEPTING THE CLAIM OF THE ASSESSEE AS SHORT TERM C APITAL GAIN, 10 MR. RAJKAMAL R. BAJAJ . WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, THUS, FOR THE SAKE OF CONSISTENCY ALSO, THE ASSESSEE IS HAVING A GOOD CASE IN HIS FAVOUR. THE TOTALITY OF FACTS, INDICATES THAT THE INTENTION OF THE ASSESSEE WAS MAKING THE INVESTMENT, THUS GAINS ARIS ING OUT OF SALE OF SHARES SHOULD BE ASSESSED AS CAPITAL GAIN A ND NOT BUSINESS INCOME AS HAS BEEN CANVASSED BY THE LD. CIT-DR. AD MITTEDLY, NO BORROWED FUNDS WERE UTILIZED FOR MAKING THE INVESTM ENT, FREQUENCY OF TRANSACTIONS, INTENTION OF THE ASSESSEE MAKING I NVESTMENTS MAIN THROUGH IPOS, BEING BEST POSSIBLE MODE OF ACQU IRING SHARES AT LOWEST PRICE AND SOLD THE SAME AT INITIAL PERIOD , BEING THE BEST POSSIBLE OPPORTUNITY TO SELL AT THE PICK PRICE, AS IS EVIDENT FROM PAGE 67 OF THE PAPER BOOK, WHEREIN, WE FIND THAT TH E ASSESSEE HELD THE INVESTMENT TILL THE ACCOUNTING PERIOD I.E. 31/0 3/2008 AND SOLD THE SHARES AT PREVAILING PRICE AS ON THAT DATE EARN ING SHORT TERM CAPITAL GAIN OF RS.50,73,057, WHICH IS AT THE RATE OF 13.71% OF RETURNED INCOME AS AGAINST ACTUAL SHORT TERM CAPITA L GAIN OF RS.1,53,51,497/- WHICH FETCHED RETURNED INCOME AT T HE RATE OF 41.48%. IT IS ALSO NOT WORTHY, THE ASSESSEE RETAIN ED 41% OF THE TOTAL SALES ACQUIRED DURING THE YEAR AND SOLD IN SU BSEQUENT YEARS AND THE CAPITAL GAINS EARNED THERE FROM HAS BEEN AC CEPTED AS CAPITAL GAINS BY THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT. SO FAR AS, MANNER OF ACCOUNTING IS CONCERNED, IT HAS B EEN SHOWN AS INVESTMENT (PAGE-13 OF THE PAPER BOOK) IN HIS FINAN CIAL STATEMENT AND CONSISTENTLY FOLLOWED IN ALL THE YEARS AND ACCE PTED BY THE DEPARTMENT. SO FAR AS, METHOD OF VALUATION IS CONC ERNED, THE ASSESSEE VALUED AT COST AND NOT AT COST ARE MARK ET PRICE 11 MR. RAJKAMAL R. BAJAJ . WHICHEVER IS LESS. THEREFORE, THE ASSESSEE IS HAVI NG MERIT IN ITS CONTENTION. 2.4. IF THIS ISSUE IS ANALYZED, KEEPING IN VIEW, TH E PRINCIPLE OF CONSISTENCY, AS IN EARLIER ASSESSMENT YEAR, THE ISS UE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, CONSEQUE NTLY, THE DEPARTMENT IS EXPECTED TO FOLLOW THE SAME. THE RATI O LAID DOWN IN THE FOLLOWING CASES SUPPORTS OUR VIEW:- 1. CWT V. ALLIED FINANCE PVT. LTD.;289 ITR 318(DEL) 2. BERGER PAINTS INDIA LTD. VS. DCIT; 266 ITR 99 (S C) 3. CIT V NEO POLYPACK PVT. LTD.; 245 ITR 492 (DEL) 4. CIT V. A.R.J. SECURITY PRINTERS; 264 ITR 276 (DE L) 5. UOI V. KUMUDINI N.DALAL; 249 ITR 219 (SC) 6. UOI VS. SATISH PANNALAL SHAH; 249 ITR 221 (SC) 7. CIT V. SHIVSAGAR ESTATE; 257 ITR 59 (SC) 8. DCIT V. UNITED VANSAPATI LTD.; 275 ITR 124(CHD. ITAT) 9. CIT V. NARENDRA DOSI; 254 ITR 606 10.RADHASWAOMY SATSANG V. CIT; 193 ITR 321 (SC) 11. UNION OF INDIA VS SATISH PANNALAL SHAHA (249 IT R 211) (SC) 12. PARSHURAM POTTRY WORKS COM. LTD. VS ITO (106 IT R 1) (SC) 13. PRADIP RAMANLAL SHETH [1993] 204 ITR 866 (GUJ) IN THE AFORESAID CASES, THE RATIO LAID DOWN BY HON BLE APEX COURT AND HONBLE HIGH COURTS IS THAT ONCE THE COR RECTNESS OF A PARTICULAR DECISION IS NOT CHALLENGED/UPHELD BY THE HONBLE HIGHER FORUM/COURTS THEN THE REVENUE IS BOUND BY TH E PRINCIPLE LAID DOWN THEREIN, MEANING THEREBY, THE CONSISTENCY HAS TO BE FOLLOWED, CONSEQUENTLY, WE ARE OF THE VIEW THAT UNL ESS AND UNTIL CONTRARY FACTS ARE BROUGHT ON RECORD BY THE REVENUE , THE DEPARTMENT IS EXPECTED TO FOLLOW THE SAME OTHERWISE THERE WILL BE NO END TO THE LITIGATION. IN SUCH A SITUATION, WE A RE QUOTING THE 12 MR. RAJKAMAL R. BAJAJ . DECISION OF THE HON'BLE MADHYA PRADESH HIGH COURT I N AGRAWAL WAREHOUSING & LEASING LIMITED (257 ITR 235)(MP) WHE REIN IT WAS HELD AS UNDER :- 'THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON A LL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIPLE OF JUDI CIAL DISCIPLINE REQUIRE THAT THE ORDER OF THE HIGHER AUT HORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES.........' THEREFORE, FROM THIS ANGLE ALSO, THE ASSESSEE IS H AVING MERIT IN ITS CONTENTION, IN VIEW OF THESE FACTS AND JUDIC IAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, THIS GROUND O F THE ASSESSEE IS ALLOWED. 2.5. THE NEXT GROUND PERTAINS TO DISALLOWANCE OF EX PENSES OF RS.33,367/- WHILE CALCULATING INCOME UNDER THE HEAD INCOME FROM OTHER SOURCE. THIS GROUND WAS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE DISMISSED AS NO T PRESSED. 2.6. THE LAST GROUND PERTAINS TO RESTRICTING THE EX EMPTION AVAILABLE U/S 17(2)(VI) OF THE ACT AMOUNTING TO RS. 15,000/- IN PLACE OF ACTUAL EXPENSES INCURRED AT RS.90,090/-, W HILE CALCULATING INCOME UNDER THE HEAD INCOME FROM SAL ARY. THE LD. ASSESSING OFFICER HEAD DEALT WITH THIS ISSUE AT PAR A 5 (PAGE-16) OF THE ASSESSMENT ORDER. THE ASSESSEE RECEIVED A SUM OF RS.90,090/- TOWARDS REIMBURSEMENT OF MEDICAL EXPENS ES FROM THE COMPANY M/S BAJAJ CONSULTANTS PVT. LTD., WHEREIN, H E IS A DIRECTOR AND CLAIMED THE SAME AS EXEMPT U/S 17(2) O F THE ACT. THE LD. ASSESSING OFFICER IN VIEW OF SECTION 17(2)( VI) BROUGHT TO TAX 13 MR. RAJKAMAL R. BAJAJ . BY TREATING IT AS PERQUISITE UNDER THE HEAD INCOME FROM SALARY AND TAXED ACCORDINGLY. THE CLAIM OF THE ASSESSEE IS TH AT THE ASSESSEE WAS ADMITTED IN THE HOSPITAL TO CARRY OUT ANGIOPLAS TY (ANGIOGRAPHY). THE ASSESSEE ALSO SUBMITTED THE BIL LS OF HOSPITAL IN SUPPORT OF ITS CLAIM. THE EXPENSES WERE FIRST INCU RRED BY THE ASSESSEE FOR TREATMENT OF CORONARY ANGIOGRAPHY COST IN RS.90,090/- AND CLAIMED AS MEDICAL REIMBURSEMENT AS PER THE PROVISION OF SECTION 17(2), WHILE COMPUTING THE SAL ARY INCOME. IN VIEW OF THESE FACTS, IT IS ALLOWABLE EXPENSES AND C ANNOT BE SAID TO BE PERQUISITE U/S 17(2) OF THE ACT. THIS GROUND OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSI ON OF THE HEARING ON 01/01/2015. SD/- SD/- (RAJENDRA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED - 07/01/2015 F{X~{T? P.S/. # . . 0 0 0 0 , ,, , ('1 ('1 ('1 ('1 21%' 21%' 21%' 21%' / COPY OF THE ORDER FORWARDED TO : 1. *+ / THE APPELLANT 2. ()*+ / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. 145 ('# , , / DR, ITAT, MUMBAI 6. 5$ 6 / GUARD FILE. 0# 0# 0# 0# / BY ORDER, )1' (' //TRUE COPY// 7 77 7 / 8 8 8 8 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI