BRIJBALLABH D CHANDAK, MUMBAI V. ADDL CIAT 14(3), MUMBAI

ITA 4201/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4228 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBE
• Assessee Lawyers: H N MOTIWALLA
• Keywords: Business income; General deduction
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH B, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4201/MUM/2012 ASSESSMENT YEAR: 2008-09 MR. BRIJBALLABH D. CHANDAK B/202, LABH DARSHAN, SOUTH POND ROAD, VILE-PARLE(W), MUMBAI-4001056. PAN: ACZPC9836F VS. ACIT 14(3), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI H.N.MOTIWALLA (AR) REVENUE BY : SHRI SACHCHIDANAND DUBE (DR) DATE OF HEARING : 02.02.2016 DATE OF PRONOUNCEMENT : 10.02.2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 28.03.2012 PASSED BY THE CIT(A)-28, MUMBAI IN RESPECT OF ASSESSMENT YEAR (AY) 2008-09 ON THE FOLLOWING GROUNDS: 1.CIT(A) ERRED IN CONFIRMING THE SHORT TERM CAPITAL GAIN (STCG) OF RS. 24,38,729/- AND LONG TERM CAPITAL GAIN (LTCG) OF RS. 35,93,756/- AS INCOME FROM BUSINESS. 2.CIT(A) ERRED IN CONFIRMING THE BROKERAGE AMOUNTIN G TO RS. 18,750/- FOR LETTING OUT OF THE HOUSE PROPERTY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED RETURN OF INCOME FOR AY-2008-09 ON 30.09.2008 FOR AY-2008-09 DECLARING TOTAL INCOME OF RS. 2,14,50,540/- ALONG WITH COMPUTATION OF TOTAL INCOME WITH AUDIT REPORT AND P ROFIT & LOSS ACCOUNT, BALANCE-SHEET, TDS CERTIFICATE, CHALLEN ETC. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND AFTER SERVING THE STATUTORY NOTICE, THE AO MADE CERTAIN ADDITION/DISA LLOWANCE IN THE ASSESSMENT ORDER DATED 2 ITA NO. 4201/M/2012 MR. BRIJBALLABH D. CHANDAK 02.12.2010 INCLUDING STCG AND LTCG AS BUSINESS INCO ME AND DISALLOWANCE OF BROKERAGE PAID ON ACCOUNT OF LETTING OUT OF HOUSE PROPERTY. 3. AGAINST THE ORDER OF AO DATED 02.12.2010, THE AS SESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONFIRMED THE DISALLOWANCE OF BROKERAGE AND TREATING THE STCG AND LTCG AS BUSINESS INCOME VIDE ORDER DATED 28.03.2012 AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US. 4. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND DEPARTMENTAL REPRESENTATIVE (DR) OF THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AR OF THE ASSESSEE HAS ARGUED THAT FOR THE AY-2005-06 & 2007- 08, THE ASSESSMENT ORDER U/S. 143(3) WAS PASSED BY REVENUE (COPY OF WHICH IS PLACED ON RECOR D) WHEREIN STCG AND LTCG WAS ACCEPTED AND ARGUED THAT IN VIEW OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT PASSED IN CIT VS. GOPAL PUROHIT IN ITA NO. 1121/09 DATED 06.01.20 10, THE INCOME MADE FROM INVESTMENT MUST NOT TREAT THE INCOME FROM BUSINESS AND THE PRI NCIPLE OF CONSISTENCY MUST BE FOLLOWED . 5. LD. DR OF THE REVENUE HAS ARGUED THAT CIT (A) IN PARAGRAPH NO.4 OF ITS ORDER HAS DISCUSSED AND CONCLUDED THAT MAJOR SOURCE OF THE AS SESSEE IS TRADING IN SHARE AND SECURITY IN VARIOUS FORM AND OVERALL PURCHASE AND SALE MADE BY THE ASSESSEE DURING THE YEAR SHOWS A CLEAR PICTURE THAT ASSESSEE IS IN BUSINESS ACTIVITY AND IS DEALING WITH SHARE AND SECURITY AND EARNING HUGE PROFIT. 6. WE HAVE SEEN THE COPY OF BALANCE-SHEET AND CAPIT AL ACCOUNT FOR THE INCOME FROM ENDED ON 31.03.2005 AND ON 31.03.2008 AND PERUSED T HE ASSESSMENT ORDER FOR AY-2005-06 AND 2007-08 WHEREIN THE STCG & LTCG WAS ACCEPTED BY DEPARTMENT. THE ASSESSEE HAS ALSO FILED DETAILS OF LTCG & STCG IN RESPECT OF PRESENT AY, WHEREIN THE ASSESSEE HAS MADE THE COMPUTATION OF SHARE HELD FOR LESS THAN 30 DAYS OR LESS THAN 120 DAYS. 1. PROFIT ON SHARES ACQUIRED FROM IPO AND SOLD 1 90313 2. SHARES HELD FOR LESS THAN 30 DAYS 467394 3. SHARES HELD FOR PERIOD 30 TO 90 DAYS 264246 4. SHARES HELD FOR PERIOD 30 TO 120 DAYS 985594 5. SHARES HELD FOR PERIOD MORE THAN 120 DAYS 506 078 2413626 7. THE DR HAS NOT DISPUTED THE TABLE/COMPUTA TION MADE BY THE ASSESSEE. 3 ITA NO. 4201/M/2012 MR. BRIJBALLABH D. CHANDAK 8. WE FURTHER NOTICED THAT THE ASSESSEE THAT THE ASSES SEE DID NOT BORROWED ANY INTEREST BEARING FUNDS FOR MAKING INVESTMENT IN SHARE. FURT HER THE ASSESSEE HAS MAINTAINED TWO PORTFOLIO ONE FOR TRADING AND ANOTHER FOR INVESTMEN T ACTIVITY. THE HON,BLE BOMBAY HIGH COURT IN CASE OF GOPAL PUROHIT (SUPRA) HAS HELD THA T THE ASSESSEE IS ENTITLED TO ACT BOTH AS TRADER AS WELL AS INVESTOR. THE ASSESSEE HAS DECLA RED THE PROFIT FROM TRADING AS INCOME FROM BUSINESS FURTHER THE ASSESSEE HAS ALSO DECLARED LTC G, WHICH SUPPORT THE CASE OF ASSESSEE THAT HE HAS ALSO ACTED AS INVESTOR. THE ASSESSEE HAS ALS O RECEIVED INCOME DIVIDEND INCOME TO THE TUNE OF RS. 5.82 LACK. ALL THESE FACTS SHOWS THAT T HE ASSESSEE HAS ALSO ACTED AS INVESTOR IN RESPECT OF CERTAIN SECURITIES. 9. SINCE THE REVENUE HAS ACCEPTED CONSISTENTLY STCG AND LTCG FOR AY-2005-06 AND 2007-08, THUS WE DEEM IT APPROPRIATE THAT ASSESSEE IS ALSO ENTITLED FOR THE SIMILAR BELIEF IN THE YEAR UNDER CONSIDERATION, HENCE THIS GROUND RAISED BY THE ASSESSEE IS ACCEPTED AND THE ORDER PASSED BY THE AO AND CONFIRMED BY THE CIT(A) ARE HE REBY SET-ASIDE, AND THE APPEAL OF THE ASSESSEE IS ON THIS GROUND IS ACCEPTED. 10. NEXT GROUND FOR OUR CONSIDERATION IS DISALLOWAN CE OF BROKERAGE AMOUNTING TO RS. 18,750/-. THE AO WHILE DEALING WITH THE DISALLOWANC E HAS OBSERVED THAT ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF SOCIETY CHARGES OF RS. 67,8 07/- AND BROKERAGE PAID OF RS. 18,750/- AND CLAIMED DEDUCTION @ 30% U/S 24 OF THE ACT, AND CONCLUDED THAT THE REPLY OF THE QUERIES WAS GENERAL IN NATURE AND HELD THAT ASSESSEE HAS FA ILED TO SPECIFICALLY MENTIONED UNDER WHICH PROVISION, THE DEDUCTION WAS CLAIMED ON ACCOUNT OF BROKERAGE CHARGES AND MADE THE DISALLOWANCE. 11. THE CIT(A) WHILE DEALING WITH THIS GROUND CONCL UDED THAT THE ASSESSEE IS BOUND TO COMPUTE THE INCOME UNDER THE HEAD INCOME FROM HOUS E PROPERTY AS PER SCHEME OF THE ACT AND THERE IS NO SCOPE FOR ALLOWING ANY DEDUCTION WH ICH IS NOT PROVIDED UNDER THE ACT AND FURTHER CONCLUDED THAT WHILE DETERMINING THE ANNUAL LETTING VALUE (ALV) DUE REGARD TO BE GIVEN FOR THE AMOUNT OF RENT RECEIPT, IF FRV IS LES S THAN THE ACTUAL AMOUNT RECEIVED THE BROKERAGE MAY INDIRECTLY AFFECT THE ACTUAL RENT REC EIVED. 12. WE HAVE PERUSED THE ORDER OF AO AS WELL AS CIT( A) AND FOUND THAT THE BROKERAGE WAS PAID OUT OF THE RENTAL INCOME EARNED FROM THE HOUSE PROPERTY FOR WHICH THE ASSESSEE HAS ALREADY CLAIMED DEDUCTION @ 30% U/S 24 OF THE ACT. THE CLAIM OF GENERAL DEDUCTION IS PROVIDED U/S 37 OF THE ACT WHICH SPECIFIED ABOUT TH E EXPENDITURE LED OR EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON SHALL BE ALLOWED IN COMPUTING THE 4 ITA NO. 4201/M/2012 MR. BRIJBALLABH D. CHANDAK INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAIN AN D BUSINESS & PROFESSION. THE ASSESSEE HAS NOT SPECIFIED ANY EXIGENCIES OF BUSINE SS, MOREOVER, THE ASSESSEE HAS ALREADY CLAIMED DEDUCTION @ 30%, HENCE WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF THE CIT(A) CONFIRMING THE DISALLOWANCE OF BROKERAGE, HENCE, TH IS GROUND OF APPEAL IS REJECTED. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON THIS 10 TH FEBRUARY, 2016. SD/- SD/- ( B.R.BASKARAN ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 10/02/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/