A.C.I.T.-17(2), MUMBAI V. RAJOO V. SHAH, MUMBAI

ITA 5098/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9282 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Business income; Speculative transactions

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, ( JM) . . , , ./I.T.A. NO.5098/MUM/2012 ( / ASSESSMENT YEAR : 2008-09) ASSISTANT COMMISSIONER OF INCOME TAX 17(2), ROOM NO.217, 2 ND FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012. / VS. SHRI RAJOO V SHAH, 14/43 VASHINDEVI, BEHIND DON BOSCO HIGH SCHOOL, MATUNGA, MUMBAI-400019 ( / APPELLANT) .. ( / RESPONDENT) ./ ! ./PAN/GIR NO. :ABBPS2719L ' / APPELLANT BY SHRI LOVE KUMAR # ' / RESPONDENT BY SHRI PRAKASH PANDIT $ % # &' / DATE OF HEARING : 2.3.2015 () # &' /DATE OF PRONOUNCEMENT : 11.3.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10.5.2012 PASSED BY THE LD. CIT(A)-29, MUMBAI AND I T RELATES TO ASSESSMENT YEAR 2008-09. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD.C IT(A) IN HOLDING THAT THE GAIN REALIZED ON SALE OF SHARES IS TO BE ASSESS ED AS SHORT TERM ITA. NO.5098/MUM/2012 2 CAPITAL GAIN (STCG) INSTEAD OF BUSINESS INCOME A S HELD BY THE ASSESSING OFFICER. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN (LTCG) AS WEL L AS SHORT TERM CAPITAL GAINS (STCG) ON SALE OF SHARES. THE ASSESSE E HAD ALSO RECEIVED THE DIVIDEND INCOME OF RS.2,85,911/-. THE AO ALLOWED TH E CLAIM OF LTCG BUT HELD THAT STCG HAS TO BE ASSESSED AS BUSINESS INCOM E, SINCE THE ASSESSEE CONDUCTED THE ACTIVITIES IN SHARE DEALINGS AS A TRA DER. THE LD. CIT(A), HOWEVER, HELD THAT THE ASSESSEE IS NOT A TRADER AND HE WAS ONLY INVESTING IN SHARES. ACCORDINGLY, HE DIRECTED THE AO TO ASSES S THE GAINS AS STCG. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. BEFORE US, THE LD. DR PLACED STRONG RELIANCE ON THE ASSESSMENT ORDER WHEREAS THE LD. AR STRONGLY SUPPORTED THE ORDER OF LD. CIT(A). 5. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSMENT OF IMMEDIATELY PROCEEDING THREE YEARS HAVE BEEN COMPLETED U/S 143( 3) OF THE ACT AND AO HAS ACCEPTED THE STCG DECLARED BY THE ASSESSEE. 6. WE NOTICE THAT THE LD.CIT(A) HAS GRANTED THE REL IEF TO THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ARGUMENTS OF THE ASSESSING OFFICERS AND THE WRITTEN SUBMISSIONS OF THE AUTHORISED REPRESENTATIVE OF THE APPELLANT. THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED FOR THE FOLLOWING REASO NS. (I) THE APPELLANT HAS MADE SHORT TERM INVESTMENT IN SHARES AND HAS MOSTLY STAYED INVESTED FOR PERIODS EXCEEDIN G TWO MONTHS. ONLY IN 9 INSTANCES THE PERIOD OF HOLDING I S LESS THAN ONE MONTH. EVEN THE UNCERTAINTIES OF STOCK MARKET O NLY AN ITA. NO.5098/MUM/2012 3 INVESTOR CAN HOLD THE SHARES FOR SUCH A LONG PERIOD . (II) THERE IS NO DAY-TO-DAY TRADING IN SHARES OR ANY SPECULATIVE TRANSACTIONS. (III) NO INTEREST HAS BEEN CLAIMED AS EXPENDITU RE. (IV) THE ISSUE OF BORROWED CAPITAL WAS NOT TOWARDS TRADING IN SHARES. THERE WERE BORROWINGS FOR INVESTMENT IN IPO. THERE ARE ONLY TWO IPO APPLICATIONS. THE IPO SUBSCRIPTION CANNOT SAID TO BE A BUSINESS. THE APPELLANT HAS APP LIED FOR IPO IN POWER GRID CORPORATION AND HAS BEEN ALLO TTED 81968 SHARES. ONLY 5000 SHARES HAVE BEEN SOLD AFTER 63 DAYS. THE REST OF THE SHARES ARE STILL IN INVESTMEN T PORTFOLIO. AS REGARDS IPO IN MUNDRA PORT ENTIRE SHARES OF 3269 IN NUMBER HAS BEEN HELD AS INVESTMENT IN BALANCE SHEET . (V) THE OUTSTANDING LOAN OF RS.5,04,30,065/- DOES NOT RELATE TO TRADING IN SHARES. THEY ARE FOR INVESTMEN T IN PROPERTIES. (VI) THE APPELLANT HAS DISCLOSED THE SHARES AS INVESTMENT IN THE BALANCE SHEET AND HE HAS CONSISTE NTLY DONE SO FROM YEAR TO YEAR. (VII) THE APPELLANT IS ALSO SUPPORTED BY THE DECISI ON OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PURO HIT IN ITA NO. 1121 OF 2009 WHEREIN IT IS HELD THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL FROM YEAR TO YEAR. FROM THE FACTS ABOVE, IT CAN BE SEEN THAT APPELLANT IS AN INVESTOR IN SHARES AND NOT A TRADER. THEREFORE THE GAIN HAS TO BE TAXED AS SHORT TERM CAPITAL GAIN. THE TREATMENT GIVEN BY THE ASSESSING OFFICER IS DELETED. 7. THUS, WE NOTICE THAT THE ASSESSEE HAS BEEN DE CLARING SHORT TERM CAPITAL GAINS SINCE LAST THREE YEARS AND HIS STATUS AS INVESTOR HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. FURTHER THE LON G TERM CAPITAL GAINS DECLARED BY THE ASSESSEE HAS ALSO BEEN ACCEPTED. W ITH REGARD TO THE SHORT TERM CAPITAL GAINS, WE NOTICE THAT THE LD CIT (A) HAS ANALYSED THE ITA. NO.5098/MUM/2012 4 TRANSACTIONS AS PER THE CRITERIA PRESCRIBED BY THE CBDT/COURTS AND HAS COME TO THE CONCLUSION THAT THE SHARE TRANSACTIONS CARRIED ON BY THE ASSESSEE FALL IN THE CATEGORY OF INVESTMENTS. HENC E, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 TH MAR, 2015. () $ * + ,- 11TH MARCH, 2015 ) # % . SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * $ % MUMBAI: 11TH MARCH,2015. . . ./ SRL , SR. PS !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ 0& ( ) / THE CIT(A)- CONCERNED 4. $ 0& / CIT CONCERNED 5. 12 &3 , ' 3 , * $ % / DR, ITAT, MUMBAI CONCERNED 6. 4% / GUARD FILE. 5 $ / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) ' 3 , * $ % /ITAT, MUMBAI