DCIT 24(2), MUMBAI V. SUNITA N MAHESHWARI, MUMBAI

ITA 4197/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101004 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 4197/MUM/2011 ( / ASSESSMENT YEAR : 2008 - 09 THE DCIT - 24(2), PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400 051 / VS. MS. SUNITS N. MAHESHWARI 601, KALSARIA APARTMENTS, UPPER GOVIND NAGAR, OPP. SHIKHAR KUNJ, MALAD (E), MUMBAI - 400 097 ./ ./ PAN/GIR NO. : ABPPM 5035P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI AJAY MODI / RESPONDENT BY: SHRI SANJIV M. SHAH / DATE OF HEARING : 10 .0 9 .2015 / DATE OF PRONOUNCEMENT : 10 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 34 ,MUMBAI D ATED 28 . 3 .201 1 PERTAINING TO ASSESSMENT YEAR 2008 - 09. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN HOLDING THE INCOME OF RS. 49,14,152/ - AS SHORT TERM CAPITAL GAIN AND RS. 27,21,412/ - AS LONG TERM CAPITAL GAIN INSTEAD OF INCOME FROM BUSIN ESS. ITA. NO. 4197/M/2011 2 3. THE ASSESSEE IS A RESIDENT INDIVIDUAL AND FOR THE YEAR UNDER CONSIDERATION, TOTAL INCOME OF RS. 50,24,500/ - WAS RETURNED BY THE ASSESSEE WHICH INCLUDED SPECULATION PROFIT FROM SHARES OF RS. 90.918/ - , STCG AT RS. 49,14,152/ - AND LTCG RS. 27,21,4 12/ - AND ALSO INCOME FROM OTHER SOURCES AT RS. 3,497/ - . WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY STCG AND LTCG SHOULD NOT BE TREATED AS BUSINESS INCOME. 3.1. THE ASSESSEE EXPLAINED THAT SHE IS AN I NVESTOR IN SHARES AND SHE HAS BEEN SHOWING THE SHARES UNDER THE HEAD INVESTMENT FROM PAST MANY YEARS. IT WAS FURTHER EXPLAINED THAT HAVING BEEN ACCEPTED AS AN INVESTOR IN EARLIER YEARS, THE MAGNITUDE AND FREQUENCY OF TRANSACTION CANNOT BE A DECISIVE FA CTOR FOR DECIDING WHETHER THE SHARES ARE INVESTMENT OR STOCK - IN - TRADE. IT WAS STRONGLY CONTENDED THAT THE INTENTION FOR BUYING OF SHARES IS VERY IMPORTANT AND THE INTENTION OF THE ASSESSEE FOR MAKING THE INVESTMENT WAS FOR EARNING CAPITAL GAINS AND THE TRANSACTION HAVE NOT BEEN DONE WITH THE INTENTION OF TRADING. 3.2. THE EXPLANATION OF THE ASSESSEE WAS DISMISSED BY THE AO IN THE LIGHT OF THE JUDICIAL DECISION RELIED UPON BY HIM IN THE ASSESSMENT ORDER. THE AO COMPLETED THE ASSESSMENT BY TREATING STCG AND LTCG AS BUSINESS INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED THE FACTUAL MATRI X, THE HOLDING PERIOD IN RESPECT OF STCG AND THE HOLDING PERIOD IN RESPECT OF LTCG. IT WAS STRONGLY CONTENDED THAT THE STCG HAS ITA. NO. 4197/M/2011 3 ARISEN IN RESPECT OF THREE COMPANIES WHEREIN THE HOLDING PERIOD OF SCRIPS WAS MORE THAN 2 YEARS. 4.1. AFTER CONSIDERING THE FAC TS AND THE SUBMISSIONS IN THE LIGHT OF THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GOPAL PUROHIT 228 CTR 582. THE LD. CIT(A) WAS CONVINCED THAT THE ASSESSEE IS AN INVESTOR AND THERE IS NO JUSTIFICATION IN THE FINDINGS OF THE AO IN TREA TING THE DISCLOSED CAPITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE. THE LD. CIT(A) WAS ALSO CONVINCED WITH THE CLAIM OF THE ASSESSEE THAT SHE HAD NO INTENTION TO INDULGE IN THE BUSINESS OF SHARE TRADING. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE AO TO TREAT THE CAPITAL GAINS AS SUCH. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE AO. 7. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES PLACED ON RECORD IN THE FO RM OF PAPER BOOK. IT IS AN UNDISPUTED FACT THAT IN THE EARLIER ASSESSMENT YEARS, THE ASSESSEE HAS BEEN ACCEPTED AS AN INVESTOR AND THE CAPITAL GAINS HAVE BEEN ASSESSED AS SUCH. THE AO HAS FAILED TO BRING ON RECORD ANY MATERIALLY DIFFERENT FACTS FROM EARL IER ASSESSMENT YEARS TO JUSTIFY A DIFFERENT VIEW TAKEN BY HIM IN THE IMPUGNED ASSESSMENT YEAR. WE ALSO FIND THAT THE INVESTMENTS HAVE BEEN MADE OUT OF OWN FUNDS AND THERE IS NO FINDING OF THE AO ITA. NO. 4197/M/2011 4 THAT THE ASSESSEE HAS DONE TRANSACTIONS THROUGH BORROWED FUN DS. ALL THE TRANSACTIONS HAVE BEEN ROUTED THROUGH DEMAT ACCOUNT IN RESPECT OF SHORT TERM CAPITAL GAIN. THE HOLDING PERIOD RANGES FROM 45 DAYS TO 225 DAYS. THE SHARES GIVING RISE TO LONG TERM CAPITAL GAINS WERE HELD FOR MORE THAN 2 YEARS. CONSIDERING TH E ENTIRE FACTUAL MATRIX IN THE LIGHT OF THE PROVISIONS OF THE LAW, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 10 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI