SANJAY AMRUTLAL SHAH, MUMBAI V. ITO 12(1)(1), MUMBAI

ITA 4212/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83575 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SAMI
• Assessee Lawyers: H N MOTIWALLA
• Keywords: Business income; Rule of consistency

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.4212/MUM/2012 ( ( ( ( ( / ASSESSMENT YEAR :2008-09 SHRI SANJAY AMRUTLAL SHAH, C/O H.N. MOTIWALLA & CO., 508, SHARDA CHAMBERS, 33, NEW MARINE LINES, MUMBAI-400 020 / VS. THE ITO 12(1)(1), MUMBAI #) ! ./ %* ./ PAN/GIR NO. : AAKPS 3573Q ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI H.N. MOTIWALLA ,-)+ / . / RESPONDENT BY: SHRI VIJAY KUMAR SAMI / 01! / DATE OF HEARING :12.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :20.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)- 23, MUMBAI DT.10.4.2012 PERTAINING TO A.Y.2 008-09. 2. THE SOLE GRIEVANCE OF THE ASSESSEE RELATES TO TH E TREATMENT OF SHORT TERM CAPITAL GAINS (STCG) OF RS. 9,97,467/- AS BUSI NESS INCOME. ITA NO. 4212/M/2012 2 3. THE ASSESSEE IS IN THE BUSINESS OF FREIGHT BROKE RAGE ALSO HAVING SHARE INVESTMENT AND SALARY FROM PARTNERSHIP FIRM. RETURN WAS FILED ON 12.9.2008 DECLARING TOTAL INCOME AT RS. 1,71,202/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT. 3.1. DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED STCG AT RS. 9,97,467/- AND LTCG AT RS. 57,629/- FROM PURCHASE AND SALE OF EQUI TY SHARES. THE ASSESSEE WAS ASKED TO EXPLAIN WHY STCG SHOULD NOT B E TREATED AS BUSINESS INCOME. THE ASSESSEE FILED A DETAILED REPL Y DT. 29.12.2010 STATING THAT HE IS AN INVESTOR AND HAS BEEN SHOWING CAPITAL GAINS IN EARLIER YEARS ALSO WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT. TH E SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTED BY THE AO WHO WAS OF THE OPINION THAT PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. CONSIDERING THE VOLUME OF TRANSACTIONS AND DRAWING SUPPORT FROM THE CBDT CIRCULAR NO. 4/2007, THE AO TREATED THE STCG A S BUSINESS INCOME OF THE ASSESSEE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. THE L D. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN EARLIER ASSESSMENT YEA RS I.E. A.Y. 2006-07 AND 2007-08 ON IDENTICAL FACTS UNDER SCRUTINY ASSES SMENT, THE CAPITAL GAINS HAS SHOWN BY THE ASSESSEE HAVE BEEN ACCEPTED. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE DECISION OF THE T RIBUNAL IN THE CASE OF ASSESSEES FATHER SHRI AMRUTLAL C. SHAH IN ITA NO. 7710/M/2007. IT IS ITA NO. 4212/M/2012 3 THE SAY OF THE LD. COUNSEL THAT ON IDENTICAL FACTS THE TRIBUNAL HAS ACCEPTED THE CAPITAL GAINS. THE ORDER OF THE TRIBU NAL HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 1708 OF 2011. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STATED THAT DURING THE YEAR THE NO. OF TRANSACTIONS OF THE ASSESSEE HA S INCREASED SUBSTANTIALLY AND THEREFORE THE FACTS ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF EARLIER YEARS. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCE BROUGHT BEFORE US . DURING THE YEAR , THE ASSESSEE HAS TRANSACTED IN 145 SCRIPS AS AGAINS T 116 SCRIPS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE NO. OF TRANSACTIONS DURING THE YEAR UNDER CONSIDERATION IS 409 SCRIPS AS AGAIN ST 182 SCRIPS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. EXCEPT FOR THIS, THERE ARE NO DISTINGUISHING FACTS FROM EARLIER ASSESSMENT YEARS. FURTHER, WE FIND THAT IN SUBSEQUENT ASSESSMENT YEARS, THE CAPITAL GAINS S HOWN BY THE ASSESSEE HAVE BEEN ACCEPTED BY THE REVENUE. WE ALSO FIND TH AT THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES FATHERS CA SE IN ITA NO. 1708 OF 2011 HAS ACCEPTED THE RULE OF CONSISTENCY AND UNIFO RMITY OF TREATMENT WHEN FACTS ARE IDENTICAL. A PERUSAL OF THE STATEME NT OF STCG SHOWS THAT THERE IS NOT MUCH CHURNING OF SHARES. FURTHER ONCE THE LTCG HAVE BEEN ACCEPTED AS SUCH THERE SHOULD NOT BE ANY DIFFERENT VIEW FOR TREATING THE STCG AS BUSINESS INCOME OF THE ASSESSEE. CONSIDERI NG THE FACTS OF THE CASE IN THE LIGHT OF THE DECISION DISCUSSED HEREINA BOVE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO TRE AT THE STCG AS DECLARED BY THE ASSESSEE. ITA NO. 4212/M/2012 4 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2014 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 5' DATED : 20 TH AUGUST, 2014 . . ./ RJ , SR. PS '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 6(0 6(0 6(0 6(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 8& ,0 , , / DR, ITAT, MUMBAI 6. &9 : / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// ; ;; ; / < < < < % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI