ACIT 9(3), MUMBAI V. SILGO PROPERTIES & INVESTMENT P. LTD, MUMBAI

ITA 4579/MUM/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71156 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 12-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: HARIOM TULSYAN ITA NOS; MUM A Y
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI . , !' #$ #$ #$ #$ %& ' (, ) !' * BEFORE SHRI B. RAMAKOTAIAH, AM AND SHRI AMIT SHUKLA , JM ./ I.T.A. NO. 4578/MUM/2009 ( ), - $.- ), - $.- ), - $.- ), - $.- / / / / ASSESSMENT YEAR: 2006-07) ASST. CIT - 9(3), 2 ND FLOOR, ROOM NO.229, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 , , , , / VS. M/S. SILGO FINANCE PVT. LTD. 85/2, THE BANDRA HILL VIEW CO-OP. HSG. SOC. LTD., HILL ROAD, BANDRA (W), MUMBAI-400 050 '/ ./ 01 ./PAN/GIR NO. AABCS 3562 P ( /2 /APPELLANT ) : ( 34/2 / RESPONDENT ) ./ I.T.A. NO. 4579/MUM/2009 ( ), - $.- ), - $.- ), - $.- ), - $.- / / / / ASSESSMENT YEAR: 2006-07) ASST. CIT - 9(3), 2 ND FLOOR, ROOM NO.229, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 , , , , / VS. M/S. SILGO PROPERTIES & INVESTMENT PVT. LTD. 85/2, THE BANDRA HILL VIEW CO-OP. HSG. SOC. LTD., HILL ROAD, BANDRA (W), MUMBAI-400 050 '/ ./ 01 ./PAN/GIR NO. AABCS 3562 P ( /2 /APPELLANT ) : ( 34/2 / RESPONDENT ) /2 5 / APPELLANT BY : SHRI O. P. SINGH 34/2 6 5 / RESPONDENT BY : SHRI HARIOM TULSYAN 2 ITA NOS. 4578 & 4579/MUM/2009 (A.Y. 2006-07) ,$ 6 & / // / DATE OF HEARING : 14.08.2013 7. 6 & / DATE OF PRONOUNCEMENT : 17.09.2013 !' / O R D E R PER B. RAMAKOTAIAH, A. M.: THESE ARE THE REVENUES APPEALS AGAINST THE RESPECT IVE ASSESSEES AGAINST THE ORDERS OF THE LD. CIT(A)-IX, MUMBAI DATED 21.05 .2009 FOR THE A.Y. 2006-07. THE REVENUE HAS RAISED A COMMON GROUND IN THESE APP EALS HOLDING THAT THE LD.CIT(A) HAD IN TREATING THE INCOME ARISING FROM P URCHASE AND SALE OF SHARES ASSESSABLE AS SHORT TERM CAPITAL GAIN (STCG) WITHOU T APPRECIATING THAT THE ASSESSEE WAS ENGAGED IN REGULAR SYSTEMATIC AND SUBS TANTIAL ACTIVITY OF PURCHASE AND SALE OF SHARES. 2. WE HAVE HEARD THE LEARNED DR AND THE LEARNED COU NSEL FOR THE ASSESSEE AND PERUSED THE PAPER BOOKS PLACED ON RECORD. BRIEF LY STATING, BOTH THE ASSESSEES CASES STCG OF RS.2,28,91,318/- IN THE CA SE OF M/S. SILGO FINANCE PVT. LTD. AND RS.2,04,40,794/- IN THE CASE OF M/S. SILGO PROPERTIES & INVESTMENT PVT. LTD WAS TREATED AS BUSINESS INCOME BY AO ON THE REASON THAT THE ASSESSEES HAD DEALT IN VOLUMINOUS SHARE TRANSA CTIONS AND FREQUENCY OF TRANSACTIONS WAS VERY HIGH AND THAT MOST OF THE SHA RES WERE HELD FOR SHORT PERIOD AND THERE BEING NO LONG TERM CAPITAL GAINS ( LTCG) AND FURTHER THE ASSESSEE HAS BORROWED FUNDS ON WHICH INTEREST WAS P AID. THE A.O. TREATED THE STCG OFFERED AS BUSINESS INCOME. THE LD. CIT(A) AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND RELYING ON VARIOUS CASE LAWS DIRECTED THE A.O. TO TREAT IT AS STCG ONLY. HENCE, THE REVENUE IS AGG RIEVED. 3 ITA NOS. 4578 & 4579/MUM/2009 (A.Y. 2006-07) 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE UNABLE TO APPROVE THE ACTION OF THE LD. CIT(A). AS SEEN FROM THE FACTS IN THE CASE OF M/S. SILGO FINANCE PVT. LTD., THE SAID COMPANY HAS SPECULATION PROFIT ON SHARES, LTCG, STCG AND PAYMENT OF INTEREST. THE ONLY RECEIPTS SHOWN IN THE INCOME SCHEDULE IS PURCHASE AND SALE OF SHARES AND DIVIDEND. THERE IS NO OTHER ACTIVITY OF THIS COMPANY. LIKEWISE IN THE CASE OF M/S. SILGO PROPERT IES & INVESTMENT PVT. LTD., THIS ASSESSEE ALSO HAS SPECULATION PROFIT AND ONLY STCG, THE ENTIRE INTEREST CLAIMED AS A DEDUCTION RELATABLE TO THE BORROWING F UNDS INVESTED IN SHARES IN BOTH THE CASES. EVEN THOUGH THE ASSESSEE SUBMITTED THAT MOST OF THE BORROWALS ARE INTEREST FREE AND ONLY A PART OF IT IS INVESTED IN SHARES, THERE IS NO DENIAL OF THE FACT THAT THE BORROWED FUNDS ARE ALSO UTILIZED FOR PURCHASE AND SALE OF SHARES. THEREFORE, WE ARE OF THE OPINION THAT THE O RDER OF THE LD. CIT(A) CANNOT BE UPHELD WHICH MAINLY FOCUS ON LEGAL PRINCIPLES OF THE ISSUE. WE ALSO CALLED FOR DETAILS AND TRIED TO RECONCILE THE BORROWALS, A ND CLAIM OF INTEREST, TO EXAMINE THE PERIOD OF HOLDING THE SHARES BUT IN THE ABSENCE OF COMPLETE DETAILS, WE ARE NOT ABLE TO COME TO A CONCLUSION WH ETHER THE GAINS ARE TO BE TREATED AS BUSINESS INCOME OR CAPITAL GAINS. THEREF ORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDERS OF THE A.O. AND THE LD. CIT (A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO EXAMINE WITH REFERENCE TO T HE PERIOD OF HOLDING, BORROWING OF FUNDS, CLAIM OF INTEREST AND TO SEE THE RECORD W HETHER THE ASSESSEE IS INVOLVED ANY OTHER BUSINESS ACTIVITY OR IN ONLY PU RCHASE AND SALE OF SHARES . 4. THERE SHOULD ALSO BE AN EXAMINATION OF COR RELATION WITH REFERENCE TO THE SPECULATIVE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE S WHICH INCOME WAS OFFERED AS BUSINESS INCOME/LOSS VIS A VIS PURCHASE OF SHARES SO AS TO UNDERSTAND THE INTENTION OF ASSESSEE WHETHER THE TR ANSACTIONS ARE UNDERTAKEN FOR THE PURPOSE OF BUSINESS OR FOR THE PURPOSE OF I NVESTMENT. THE A.O. IS DIRECTED TO EXAMINE ALL THE FACTUAL ASPECT FIRST AN D THEN DRAW RELEVANT LEGAL PRINCIPLES. THE ASSESSEE SHOULD BE GIVEN DUE OPPORT UNITY TO MAKE ITS SUBMISSIONS. WITH THESE DIRECTIONS, THE ISSUE CONT ESTED BY THE REVENUE IS 4 ITA NOS. 4578 & 4579/MUM/2009 (A.Y. 2006-07) RESTORED TO THE FILE OF THE A.O. IN BOTH THE APPEAL S. THE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEALS OF THE REVENUE ARE AL LOWED FOR STATISTICAL PURPOSES. 8 &9 0'$ 6 :6 ;<= %# '$ > & 6 0& ?@ ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 17 TH , 2013 SD/- SD/- (AMIT SHUKLA) (B. RAMAKOTAIAH) ) !' / JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; A!, DATED : 17.09.2013 $.),. ./ ROSHANI , SR. PS !' 6 3)&%B CB.& !' 6 3)&%B CB.& !' 6 3)&%B CB.& !' 6 3)&%B CB.&/ COPY OF THE ORDER FORWARDED TO : 1. /2 / THE APPELLANT 2. 34/2 / THE RESPONDENT 3. D ( ) / THE CIT(A) 4. D / CIT - CONCERNED 5. B$GH 3)&), , , / DR, ITAT, MUMBAI 6. HI- J / GUARD FILE !', !', !', !', / BY ORDER, ; ;; ;/ // / ? 0 ? 0 ? 0 ? 0 (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI