RAMESH PHOOTERMAL JAIN, MUMBAI V. ACIT CIR 18(3), MUMBAI

ITA 4232/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2590 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2013
• Court: TRIBUNAL
• Department Lawyers: CAPT PRADEEP S ARYA
• Assessee Lawyers: N M PORWAL
• Keywords: Business income; Question of law
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACOUNTANT MEMBER) I.T.A. NO.4232/MUM/2013 (ASSESSMENT YEAR: 2008-09) SHRI RAMESH PHOOTERMAL JAIN 221, BLOCK NO.1, GROUND FLOOR, PRABHU BHAVAN, L.J. ROAD, SHIVAJI PARK, MUMBAI - 16. VS ACIT, CIR 18(3), MUMBAI PAN :ADIPJ0733C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI N.M. PORWAL RESPONDENT BY CAPT PRADEEP S ARYA (SR DR) DATE OF HEARING : 27-06-2016 DATE OF PRONOUNCEMENT : 13 -07-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX-12, MUMBAI [HEREINAFTER CALLED THE LD.CIT(A)] DATED 12-02-2013 PASSED AGAINST ASSESSMENT ORDER U/ S 143(3) DT 29-11-2010 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE APPELLANT WAS CA RRYING ON THE BUSINESS OF INVESTMENT IN SHARES FOR E LAST TEN YEA RS AND WAS 2 I.T.A. NO.5160 /MUM/2013 ASSESSED TO INCOME-TAX UNDER THE 'CAPITAL GAINS' AN D NOT UNDER THE HEAD PROFITS AND GAINS OF THE BUSINESS'. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE BEFORE US IS THAT THE CAPITAL GAIN EARNED BY THE ASSESSEE ON ACCOUNT OF PURCHASE AND SALE OF SHARES HAS BEEN SHOWN BY THE ASSESSEE UNDER THE HEAD INC OME FROM CAPITAL GAIN WHICH HAS BEEN WRONGLY ASSESSED UNDER THE HEAD INC OME FROM PROFITS AND GAINS OF BUSINESS / PROFESSION. 3. THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN OF RS. 1 5,31,166 ON SALE OF SHARES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN NOTED BY THE AO THAT ASSESSEE WAS DEALING IN NUMBER OF SCRIPS WITH HIGH FREQUENCY AS WELL AS LOW HOLDING PERIOD AND, THEREFORE, IT CONSTITUTED BUSIN ESS OF THE ASSESSEE; THEREFORE, THE RESULTANT GAIN WAS BROUGHT TO TAX UN DER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE FILED APPEAL BEFORE LD. CIT (A), WHERE THE ORDER OF AO WAS UPHELD. 4. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE US AN D SUBMITTED THAT SINCE ASSESSMENT YEAR 1999-2000, THE ASSESSEE HAS B EEN DEALING IN SHARES AND HAS BEEN SHOWING THE SAME AS PART OF INVESTMENT AN D RESULTANT GAIN IS TAXABLE UNDER THE HEAD INCOME FROM CAPITAL GAIN. IN A.Y. 2001-02 & 2002-03, IDENTICAL INCOME WAS ASSESSED U/S 143(3) UNDER THE HEAD INCOME FROM CAPITAL GAIN. IN THE REMAINING YEARS ALSO THE CLAIM OF TH E ASSESSEE HAS BEEN ACCEPTED AS SUCH ALBEIT NO ASSESSMENT HAS BEEN MADE U/S 143( 3) BY THE AO. RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS DILIP V VARIYA DT 09-01-2013 IN I.T.A. NO.1088 OF 2011 AND CIT VS GOPAL PUROHIT 336 ITR 287 (BOM) . 3 I.T.A. NO.5160 /MUM/2013 5. PER CONTRA, THE LD. DR MERELY SUBMITTED THAT SINCE ASSESSEE HAD LARGE VOLUME OF TRANSACTIONS, HIS INCOME SHOULD BE ASSESS ED UNDER THE HEAD INCOME FROM BUSINESS AND PRINCIPLES OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. 6. WE HAVE GONE THROUGH THE FACTS OF THE CASE, HEARD B OTH THE PARTIES AND ALSO GONE THROUGH THE ORDERS OF LOWER AUTHORITIES A S WELL AS JUDGEMENTS OF HONBLE BOMBAY HIGH COURT PLACED BEFORE US. IT IS NOTED BY US AT THE VERY OUTSET THAT THE ASSESSEE HAS BEEN SHOWING IDENTICAL INCOME UNDER THE HEAD INCOME FROM CAPITAL GAIN SINCE A.Y. 1999-2000 TIL L DATE. THE AMOUNT OF SHARES HAS ALWAYS BEEN DISCLOSED UNDER THE HEAD INVESTMEN TS AND THESE ARE STATED TO HAVE NEVER BEEN DISCLOSED AS PART OF STOCK-IN-T RADE. THIS INCOME HAS ALWAYS BEEN ASSESSED UNDER THE HEAD CAPITAL GAINS . OUR ATTENTION WAS DRAWN TO ASSESSMENT ORDERS PASSED U/S 143(3) FOR A.YS 200 0-01 AND 2002-03 WHEREIN IDENTICAL INCOME HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM CAPITAL GAINS. IT WAS FURTHER SUBMITTED THAT THE AO DID N OT CHOOSE TO SCRUTINISE OTHER RETURNS OF REMAINING ASSESSMENT YEARS. IT INDICATE S THAT STANCE OF THE ASSESSEE HAS ALWAYS BEEN ACCEPTED AND NO FAULT HAS BEEN FOUN D THEREIN. OUR ATTENTION WAS DRAWN ON UPON JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS DILIP V VARIYA WHEREIN IN THE IDENTICAL CIRC UMSTANCES, HONBLE HIGH COURT OBSERVED AS UNDER:- 3) THE DISPUTE IN THE PRESENT CASE IS WHETHER THE INCOME EARNED FROM THE SALE OF SHARES IS ADMISSIBLE AS BUSINESS INCOME UNDER THE HEAD CAPITAL GAIN. IT IS THE CASE OF THE REVENUE THAT THE ASSESSING OFFICER TAKING INTO ACCOUNT THE VOLUME AND TURN OVER COUPLED WITH PERIOD OF SHARE HOLDING AND THE VALUE OF TRANSACTION IN SHARES CONCLUDED THAT THE RESPONDENT ASSESSEE WAS CARRYING ON SHARE TRADING BUSINESS. THUS, THE INCOME WAS LIABLE TO TAX. 4 I.T.A. NO.5160 /MUM/2013 4) HOWEVER, BOTH THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS TRIBUNAL HAVE RECORDED A FINDI NG OF FACT THAT THE RESPONDENT ASSESSEE WAS CARRYING BUSINESS OF INVEST MENT IN SHARES FOR LAST 30 YEARS AND FOR THE LAST 25 YEARS WAS ASS ESSED TO TAX UNDER THE HEAD CAPITAL GAINS AND NOT UNDER THE HEAD OF PR OFIT AND GAINS OF BUSINESS BY THE REVENUE. THE REVENUE NEVER TREATED THE SHARES AS STOCK IN TRADE OF THE RESPONDENT ASSESSEE. THIS FIN DING THAT THE RESPONDENT ASSESSEE IS NOT CARRYING ON BUSINESS OF SHARES TRADING IS A CONCURRENT FINDING OF FACT ARRIVED AT AND BOTH BY T HE CIT (APPEALS) AND THE TRIBUNAL. THE APPELLANT REVENUE HAS NOT BEE N ABLE TO SHOW THAT THIS FINDING OF FACT IS PERVERSE. IN THE CIRCU MSTANCES, NO QUESTION OF LAW ARISES. 7. IT IS FURTHER NOTED THAT IDENTICAL VIEW HAS BEEN A DOPTED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GOP AL PUROHIT (SUPRA). WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE REVENUE TO SUDDENLY TAKE A CONTRARY STAND IN THE YEAR BEFORE US. THUS, WE DIRECT THE AO TO ACCEPT THE ST AND OF THE ASSESSEE AND ASSESSEE THIS INCOME UNDER THE HEAD I NCOME FROM CAPITAL GAINS AS HAS BEEN ASSESSED IN ALL THE PRECEDING YEARS. 8. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON THIS 13TH DAY OF J ULY, 2016. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 13 TH JULY, 2016 PK/- & PATEL 5 I.T.A. NO.5160 /MUM/2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , D-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES