ACIT 19(3), MUMBAI V. KANTI VANECHAND SHAH (HUF), MUMBAI

ITA 4252/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0868 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.4252/M/2012 ASSESSMENT YEAR: 2008-09 ACIT-19(3), R.NO.305, 3 RD FLOOR, PRIRAMAL CHAMBERS, PAREL, MUMBAI-400012 VS. SHRI KANTI VANECHAND SHAH (HUF), TEJAL 35, PALI HILL, BANDRA (W), MUMBAI -400050 PAN: AAAHK0748K (APPELLANT) (RESPONDENT) PRESENT FOR: REVENUE BY : SHRI VIKRAM BATRA D.R. RESPONDENT BY : MRS. SANJUKTA CHOWDHURY, A.R. DATE OF HEARING :20.07.2015 DATE OF PRONOUNCEMENT : 31.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 25/04/2012, PASSED BY THE LEARNED COMMISSIONER (APP EALS)30, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3), FOR THE ASSESSMENT YEAR 2008-09 BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- (1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HE ERRED IN DIRECTING THE ASSESSING OFFI CER TO TREAT THE LONG TERM CAPITAL GAINS RS.3,55,20,677/- AND SHORT TERM CAPITAL GAINS OF RS. 1,38,0111- AS SUCH AND NOT BUSINESS INCOME WITH OUT APPRECIATING THE FACT THAT THE MAGNITUDE OF TRANSACTIONS AT VOLUMINOUS IN VERY FREQUENT INTERVAL WHICH CLEARLY ESTABLISH THAT THE MOTIVE FL TRANSACTIONS WAS TO EARN PROFIT BY PURSUING AN ADVE NTURE IN THE NATURE OF TRADE. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HE FAILED TO APPRECIATE THE FACT THAT THE DE CISION IN THE CASE OF GOPAL PUROHIT [122 (MUM) 87] HAS NOT BEEN ACCEPTED BY THE ITA NO.4252/M/2012 KANTI VANECHAND SHAH. 2 DEPARTMENT AND ALSO THAT THE DECISION IN THIS CASE IS NOT APPLICABLE IN THE INSTANT CASE AS THE FACTS ARE DISTINGUISHABLE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HE FAILED TO APPRECIATE THE GUIDELINES LAID DOWN IN CBDT CIRCULAR NO. 4/2007 DATE 15/06/2007. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THIS YEAR ALSO THE GAI N SHOULD BE TREATED AS CAPITAL GAINS IN VIEW OF THE FACT THAT IN PAST THE DEPARTMENT HAD ACCEPTED THE GAINS AS CAPITAL GAINS WITHOUT EXAMINI NG WHETHER THE FACTS WERE SIMILAR OR WHETHER THE DEPARTMENT'S STAND IN E ARLIER YEAR WAS CORRECT. (5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE DECISION OF HON'BLE ITA T IN THE ASSESSEE'S OWN CASE FOR A.Y. 2006-07 HAS N OT BEEN ACCEPTED BY THE DEPARTMENT. (6) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. THE FACTS OF THE MATTER ARE THAT THE ASSESSEE HA S BEEN DOING PURCHASE AND SALES OF EQUITY SHARES. THE ASSESSEE HAD RETURN ED THE LONG TERM CAPITAL GAIN OF RS.3,55,20,377/- CLAIMING THE SAME TO BE EX EMPT U/S 10(38) FROM A SALES CONSIDERATION OF RS.5,42,31,226/- AND SHORT T ERM CAPITAL GAIN OF RS.1,38,39,011/- ON SALES OF RS. 4,05,26747 /- PAYING THE DUE TAXES THEREON. 3. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO A S AO) TREATED THE LONG TERM CAPITAL GAIN OF RS. 3,55,20,377/- AND SHORT TE RM CAPITAL GAIN OF RS. 1,38,39,011/- AS BUSINESS INCOME AND ASSESSED THE A SSESSEE ACCORDINGLY HOLDING THAT THE ASSESSEE HAS BEEN INTO THE BUSINES S OF PURCHASE AND SALES OF SHARES AS THE TURNOVER IN NUMBER WERE IN LACS AND I N MONETARY TERMS IN CRORES AND ALSO THAT THERE WAS PROFIT MOTIVE AND QUICK FRE QUENCY IN ALL THESE TRANSACTIONS. ITA NO.4252/M/2012 KANTI VANECHAND SHAH. 3 4. THE COMMISSIONER OF INCOME TAX (APPEALS) (HEREI NAFTER REFERRED TO AS CIT(A) REVERSED THE ORDER OF THE LD. AO BY OBSERVIN G THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON THE SAME ISSUE IN HIS OWN CASE IN THE ASSESSMENT YEAR 2006-07 BY ITAT A BENCH MUMBAI IN ITA N O. 4859/MUM/2010. FOR THIS REASON THE ACTION OF LD AO IN TREATING THE LTCG AND STCG AS BUSINESS INCOME CAN NOT BE SUSTAINED. FURTHER THE ACTION OF AO IS IN VARIANCE OF THE PAST PRACTICE WHERE THE CAPITAL GAIN BOTH LONG AND SHOR T TERM HAVE BEEN ASSESSED AS SUCH AND ACCEPTED BY THE DEPARTMENT. THE CIT(A)) FURTHER OBSERVED THAT THOUGH THE VOLUME OF TRANSACTION WAS QUITE SUBSTANT IAL BUT ASSESSEE COULD NOT BE TRADER WHEN FACTORS SUCH AS MAKING INVESTMENTS OUT OF OWN FUNDS WITHOUT UTILIZING ANY BORROWED FUNDS FOR INVESTMENTS IN SHA RES , NOT INDULGING IN DAY TRADING, REFLECTING THE AMOUNT OF INVESTMENTS IN SH ARES IN THE BALANCE SHEET AT COST AND DIVIDEND EARNINGS ARE PRESENT IN THE CASE OF ASSESSEE AND THEREFORE THE ASSESSEE CANNOT BE HELD TO BE TRADERS IN RESPECT OF TRANSACTIONS WHICH ARE DELIVERY BASED. SINCE IN THE PAST THE DEPARTMENTS H AS ACCEPTED THE SHARES HELD BY THE ASSESSEE AS INVESTMENTS, THE THEORY OF CONSI STENCY AS PROPOUNDED IN GOPAL PUROHIT CASE DEMANDS THAT THE DEPARTMENT C AN NOT TAKE A SUMMERSAULT ALL OF SUDDEN AND TAKE A DIFFERENT APPROACH. THEREF ORE FOR THIS YEAR ALSO THE ASSESSEE SHOULD BE TREATED AS AN INVESTOR AND NOT T RADER IN SHARES. IN RESPECT OF LONG TERM CAPITAL GAIN , THE A.O. HAS TAKEN A SUMME RSAULT AND TREATED THE SAME AS BUSINESS INCOME WHICH WAS HITHERTO NOT DONE. THI S IS A DEPARTURE FROM THE PAST WITHOUT ANY REASON AND CAN NOT BE JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND PERUS ED THE RECORDS WITH US AND FIND THAT THE ORDER OF CIT(A) DOES NOT SUFFER F ROM ANY INFIRMITY AND SAME IS UPHELD. THEREFORE THE GROUND NO 1 IS DISMISSED . 6. SINCE THE GROUND NO 1 IS DECIDED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE DEPARTMENTS, THE GROUND NO 2, 3, 4, 5, 6 AND 7 DO NOT REQUIRE ADJUDICATION. ITA NO.4252/M/2012 KANTI VANECHAND SHAH. 4 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2015 SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.07.2015. * PATEL, P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.