AUTO FINANCE ENTERPRISES, MUMBAI V. ADDL CIT RG 12(3), MUMBAI

ITA 4458/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4232 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI .. , , , BEFORE, SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.4458/MUM/2012 ASSESSMENT YEAR: 2008-09 AUTO FINANCE ENTERPRISES, 41, NARIMAN BHAVAN, 227, NARIMAN POINT, MUMBAI-400021 / VS. ADDL. CIT, RANGE-12(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( !'#$ /ASSESSEE) ( % / REVENUE) PAN. NO. AAAFA2325G !'#$ / ASSESSEE BY SHRI VIJAY MEHTA % / REVENUE BY SHRI YOGESH KAMAT & %'($) / DATE OF HEARING : 10/02/2016 ($) / DATE OF ORDER: 01/03/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 14/05/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. ITA NO.4458/MUM/2012 AUTO FINANCE ENTERPRISES 2 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI VIJAY MEHTA, ONLY PRESSED GROUND NO.1 (A) BY CONTENDING THAT (B) AND (C) IS IN SUPPORT OF THE ABOVE GROUND AND DID NOT PRESS SUB-GROUND (D) & (E) OF GR OUND NO.1, GROUND NO.2 AND 3, THEREFORE, THE GROUNDS, W HICH WERE NOT PRESSED/NOT AGITATED ARE DISMISSED AS NOT PRESS ED. 3. THE ONLY GROUND WHICH WAS ARGUED BY THE LD. COUNSEL PERTAINS TO ASSESSING INCOME DECLARED UNDER THE HEAD CAPITAL GAIN (LONG TERM AND SHORT TERM) AS PRO FIT & GAINS FROM BUSINESS OR PROFESSION WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE IN ITS ACTIVITY HAS MADE INVESTME NT FROM THE LAST NUMBER OF YEARS AND THE INCOME THEREFROM W AS DECLARED AND ASSESSED UNDER THE HEAD LONG TERM CAPI TAL GAINS OR SHORT TERM CAPITAL GAINS, AS THE CASE MAY BE, AF TER DUE VERIFICATION AND PASSING A ORDER U/S 143(3) OF THE ACT. RELIANCE WAS PLACED UPON THE DECISION IN CIT VS GOP AL PUROHIT 336 ITR 287 AGAINST WHICH THE SLP WAS DISM ISSED BY THE HONBLE APEX COURT. THE LD. DR, SHRI YOGESH KAMAT, ON THE OTHER HAND, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE INVEST MENT IN SHARES AND DERIVATIVES (FUTURES AND OPTIONS) FOR TH E LAST NUMBER OF YEARS. THE ASSESSEE IN HIS RETURN DECLARE D CAPITAL GAIN BOTH LONG TERM AND SHORT TERM IN ITS RETURN FI LED ON ITA NO.4458/MUM/2012 AUTO FINANCE ENTERPRISES 3 16/09/2008, DECLARING INCOME OF RS.1,29,41,877/-, SPECULATION LOSS OF RS.31,00,229/-, LONG TERM CAPIT AL GAIN OF RS.29,52,771/-, SHORT TERM CAPITAL GAIN OF RS.70,7 8,206/- AND DIVIDEND OF RS.2,84,500/- AS EXEMPT. THE ASSESS EE DID SHARE TRANSATION AND SHOWN AS INVESTMENT IN ITS ACC OUNTS. THE LD. ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3) ON A INCOME OF RS.2,58,25,380/- TREATING THE CAPITA L GAINS (SHORT TERM GAIN OF RS.70,78,206/- AND RS.29,52,771 /- AS LONG TERM CAPITAL GAIN ) AS PROFIT & GAINS FROM BU SINESS OR PROFESSION. ON APPEAL, THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) AFFIRMED THE STAND TAKEN IN THE ASSESSMEN T ORDER. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE T HIS TRIBUNAL. 3.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS BEEN SHOWING THE AMOUNT AS INVESTMENT IN SHARES AND SECURITIES FOR NUMBER OF Y EARS. THE ASSESSEE ALSO OFFERED THE INCOME UNDER THE HEAD LON G TERM AND SHORT TERM GAINS, AS THE CASE MAY BE AND THE DE PARTMENT HAD BEEN ASSESSING AS SUCH IN NUMBER OF YEARS IN TH E PAST. IT SEEMS THAT THE ASSESSEE TREATED THE LONG TERM CAPIT AL GAIN AND SHORT TERM CAPITAL GAIN AS PROFIT AND GAINS FRO M BUSINESS OR PROFESSION ON THE GROUND THAT ASSESSEE FIRM IS P ROMOTED ITA NO.4458/MUM/2012 AUTO FINANCE ENTERPRISES 4 BY PARTNERS, WHO ARE RUNNING BIG BROKERAGE HOUSE AN D THE ASSESSEE IS ALSO DEALING IN DERIVATIVES AND SPECULA TIONS IN SHARES AND FURTHER THE FREQUENCY OF THE TRADE IS HI GH. IN SUCH A SITUATION, THE DECISION OF THE TRIBUNAL AND ALSO FROM THE HONBLE HIGH COURT IN CIT VS GOPAL PUROHIT (336 ITR 287) (BOM.) ORDER DATED 06/01/2010, SLP DISMISSED BY HON BLE APEX COURT COMES TO THE RESCUE OF THE ASSESSEE. THE TRIBUNAL IN THAT CASE HELD THAT THE DELIVERY BASED TRANSACTI ON SHOULD BE TREATED AS THOSE IN THE NATURE OF INVESTMENT TRA NSACTIONS AND THE PROFIT RECEIVED THEREFROM SHOULD BE TREATED EITHER AS LONG TERM OR SHORT TERM AS THE CASE MAY BE DEPENDIN G UPON THE PERIOD OF HOLDING. WE HAVE PERUSED THE RECORDS ALONG WITH THE PERIOD OF HOLDING, BOOKS OF ACCOUNTS MAINT AINED BY THE ASSESSEE AND THE FACT THAT IDENTICALLY THE DEPA RTMENT HAD BEEN ACCEPTING THE CLAIM OF THE ASSESSEE, THEREFORE , WE ARE OF THE VIEW THAT THE ASSESSEE IS HAVING A GOOD CASE IN ITS FAVOUR. OUR CONCLUSION IS EVEN BASED UPON THE CONDUCT OF TH E DEPARTMENT ITSELF WHEREIN, THE ASSESSING OFFICER HA D BEEN ACCEPTING SUCH GAINS IN THE PAST EITHER AS LONG TER M CAPITAL GAIN OR SHORT TERM CAPITAL GAIN, AS THE CASE MAY BE , WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT IN SUB SEQUENT ASSESSMENT YEARS. IT IS ALSO NOTED THAT AVERAGE PER IOD OF HOLDING IS 113 DAYS (PAGE -11 OF THE PAPER BOOK) AN D DETAILS OF THE SHARES IS AVAILABLE AT PAGE 7, 11 OF THE PAP ER BOOK. EVEN ON THE ISSUE OF CONSISTENCY, THE ASSESSEE IS H AVING A GOOD CASE IN ITS FAVOUR AS UNLESS AND UNTIL CONTRAR Y FACTS ARE BROUGHT ON RECORD, CONSISTENCY HAS TO BE FOLLOWED. ON THE ITA NO.4458/MUM/2012 AUTO FINANCE ENTERPRISES 5 ISSUE OF CONSISTENCY, WE ARE SUPPORTED BY THE FOLLO WING JUDICIAL PRONOUNCEMENTS:- I. PARSHURAM POTTERY WORKS LTD. VS ITO 106 ITR 1 (SC) II. SECURITY PRINTERS 264 ITR 276(DEL.) III. CIT VS NEO POLYPACK PVT. LTD. 245 ITR 492 (DEL.) IV. CWT VS ALLIED FINANCE PVT. LTD. 289 ITR 318 (DEL.) V. BERGER PAINTS INDIA LTD. VS CIT 266 ITR 99 (SC) VI. DCIT VS UNITED VANASPATI (275 ITR 124) (AT)(CHANDIGARH ITAT) VII. UNION OF INDIA VS KUMUDINI N. DALAL 249 ITR 219 (SC ) VIII. UNION OF INDIA VS SATISH PANNALAL SHAH 249 ITR 221 IX. B.F.VARGHESE VS STATE OF KERALA 72 ITR 726 (KER.) X. CIT VS NARENDRA DOSHI 254 ITR 606 (SC) XI. CIT VS SHIVSAGAR ESTATE 257 ITR 59 (SC) XII. PRADIP RAMANLAL SETH VS UOI 204 ITR 866 (GUJ.) XIII. RADHASWAMY SATSANG VS CIT 193 ITR 321 (SC) XIV. AGGARWAL WAREHOUSING & LEASING LTD. 257 ITR 235 (MP) THE SUM AND SUBSTANCE OF THE AFORESAID JUDICIAL PRONOUNCEMENTS IS THAT ON THE BASIS OF PRINCIPLE OF JUDICIAL DISCIPLINE, CONSISTENCY HAS TO BE FOLLOWED AND ONCE IN A PARTICULAR YEAR, IF ANY VIEW IS TAKEN, IN THE ABSEN CE OF ANY CONTRARY MATERIAL, NO CONTRARY VIEW IS TO BE TAKEN AS FINALITY TO THE LITIGATION IS ALSO A PRINCIPLE WHICH HAS TO BE FOLLOWED. BEFORE US, NO CONTRARY FACTS OR ANY ADVERSE MATERIA L WAS BROUGHT ON RECORD BY THE REVENUE, THEREFORE, WE FIN D MERIT IN ITA NO.4458/MUM/2012 AUTO FINANCE ENTERPRISES 6 THE ARGUMENT OF THE ASSESSEE, THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 10/02/2016. SD/- SD/- ( G.S. PANNU ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; + DATED : 01/02/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. , -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 11 & 2$ ( , ) / THE CIT, MUMBAI. 4. 11 & 2$ / CIT(A)- , MUMBAI 5. 4%5/$! , 1, ),!6 , & ' / DR, ITAT, MUMBAI 6. 7'8' / GUARD FILE. / BY ORDER, 04$/$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI