DCIT, New Delhi V. M/s. S.A. Developers Pvt. Ltd, New Delhi

ITA 4573/DEL/2009

• Counselvise Citation: 457320114 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 4573/DEL/2009 ASSTT. YR: 2006-07 DCIT, CIR. 7(1), VS. M/S S.A. DEVELOPERS PVT. LT D., NEW DELHI. F-88, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. PAN/GIR NO. AAGCS6779R (APPELLANT) ( RESPONDENT ) APPELLANT BY : MRS. ANUSHA KHURANA SR. DR RESPONDENT BY : SH. M.P. RASTOGI & SH. DEEPAK MA LIK ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 23-9-2009 RELATING TO A.Y. 2006-07. SOLE GROUND RAISED IS AS UNDER: LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AND ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE, BY HOLDING THAT THE INCOME DERIVED BY THE ASSESSEE FROM PURCHA SE AND SALE OF SHARES WILL BE TAXED AS SHORT TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME. 2. LEARNED DR RELIED ON THE ORDER OF AO. 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS: IN O RDER TO UTILIZE THE IDLE FUNDS AND SURP0LUS, FRUITFUL INVESTMENT WAS MADE FR OM TIME TO TIME SINCE LAST SEVERAL YEARS AND HAS BEEN SHOWN IN THE BALANC E-SHEET UNDER THE HEAD NON TRADING INVESTMENT YEAR AFTER YEAR. THE PROF ITS EARNED BY THE ASSESSEE FROM PURCHASE/ SALE OF SHARES WENT INTO RE SERVES OF THE COMPANY YEAR AFTER YEAR. THE SHORT TERM PROFITS IN THIS PER IOD AROSE MAINLY IN THE 2 SHARES OF NTPC AS IN ORDER TO ENCASH THE VOLATILIT Y IN THE SHARE MARKET ASSESSEE SOLD THE NTPC SHARES AT SHORT INTERVALS AN D OFFERED THE PROFITS AS SHORT TERM CAPITAL GAINS. THUS THE SHORT TERM SALE OF THESE SHARES HELD AS INVESTMENT WAS MADE TO EARN CAPITAL GAINS AND NOT A S A BUSINESS PROPOSITION. 3.1. ASSESSEE WAS NOT ENGAGED IN BUSINESS OF DEALI NG IN SHARES, WHICH IS EVIDENT FROM THE PAST CONDUCT AND IN ALL THESE YEAR S PROFITS WERE OFFERED UNDER THE HEAD LONG TERM CAPITAL GAIN OR SHORT T ERM CAPITAL GAINS. 3.2. THE INTENTION OF THE ASSESSEE CAN BE GATHERED FROM THE FACT THAT YEAR AFTER YEAR THE AMOUNT OF INVESTMENT HELD IS IN INCR EASING PROPORTION, AO ERRONEOUSLY HELD THAT THE INCOME SHOULD BE OFFERED UNDER THE HEAD BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAINS. 3.3. LEARNED CIT(A) DELETED THE ADDITION BY HOLDING THAT ASSESSEES SHARE INVESTMENT WAS ONLY IN 9 SCRIPTS AND THE IMPUGNED P ROFIT WAS ONLY ON ACCOUNT OF SALE OF NTPC SHARES AND THE ASSESSEE WA S NOT A DEALER IN SHARE BUT INVESTOR, WHICH IS RELIED ON. 4. WE HAVE HERD RIVAL CONTENTION AND GONE THROUGH T HE ENTIRE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW THE PAST HISTORY A ND METHOD OF REFLECTING THE INVESTMENT IN SHARES AS INVESTMENT, THE RESULTANT P ROFIT ON SALE OF NTPC WAS NOT IN THE FIELD OF STOCK IN TRADE BUT CLEARLY AS I NVESTMENT. THE IMPUGNED CBDT CIRCULAR RELIED ON BY AO, ITSELF DEMARCATES BE TWEEN SHARES HELD IN INVESTMENT AND IN STOCK IN TRADE AND VARIOUS PARAME TERS HAVE BEEN PRESCRIBED IN THIS BEHALF. IN THE LIGHT OF THE ABOV E FACTS, IT IS TO BE ASCERTAINED, WHETHER THE ASSESSEE WAS CARRYING ON A SYSTEMATIC ACTIVITY OF BUSINESS OF SHARES OR INVESTMENT IN SHARES. IN OUR VIEW, SALE AND PURCHASE OF IMPUGNED NTPC SHARES IS AS INVESTMENT AND NOT AS ST OCK IN TRADE. IN VIEW THEREOF, THE ASSESSEES EXPLANATION THAT THE SHORT SALES OUT OF INVESTMENT WERE MADE TO ENCASH OPPORTUNITY OFFERED BY THE VOLA TILITY OF INVESTMENT AND 3 NOT AS BUSINESS. IN THE ENTIRETY OF FACTS AND CIRCU MSTANCES, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A), HOLDING THE PROFI TS TO BE BY SHORT TERM CAPITAL GAINS, WHICH IS UPHELD. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13-01-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-01-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 4