DCIT, New Delhi V. M/s Committed Trading Pvt. Ltd., New Delhi

ITA 5126/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7513 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: T N CHOPRA
• Keywords: Capital asset; Business income; Earning of tax free income; Wrong claim
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI GEORGE GEORGE K , JM ITA NO. 5126 /DEL/2012 AY : - 200 9 - 10 DCIT, CIRCLE 3(1) VS. COMMITTED TRADING P.LTD. NEW DELHI B 82, 2 ND FLOOR, NARAINA VIHAR NEW DELHI 110 028 PAN: AACCC 4073 A (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.PARWINDER KAUR, SR.D.R. RESPONDENT BY : S H. TN CHOPRA, ADV. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) DATED 3.7.2012 FOR THE AY 2009 - 10. 2. FACTS IN BRIEF: - THE ASSESSEE IS A COMPANY CARRYING ON THE BUSINESS OF BUYERS, SELLERS, IMPORTERS, EXPORTERS, DISTRIBUTORS, BROKERS, COMMISSION AGENTS AND DEALERS. IT FILED ITS RETURN OF INCOME ELECTRONICALLY DECLARING INCOME OF RS.2,41,18,350/ - . THE AO PASSED AN ORDER U/S 143(3) ON 8 TH DECEMBER,2011 DETERMINING THE TOTAL INCOME AT RS.2,42,20,140/ - INTER ALIA DISALLOWING RS.1,01,790/ - U/S 14A AND TREATING THE SHOR T TERM CAPITAL GAIN EARNED AND CLAIMED BY THE ASSESSEE, AS BUSINESS INCOME. 2.1. THE SOLE BASIS ON WHICH THE AO CAME TO A CONCLUSION THAT THE INCOME FROM PURCHASE AND SALE OF SHARES BY THE ASSESSEE BE ASSESSED UNDER THE HEAD BUSINESS AND NOT UNDER THE H EAD SHORT TERM CAPITAL GAINS, WAS THAT THE ASSESSEE IN THE EARLIER AY 2008 - 09 CLAIMED LOSS ON DIMINUTION OF VALUE OF SHARES BELONGING TO M/S BHUSHAN STEEL AND STRIPS AT RS.1,39,55,045/ - . THERE IS NO OTHER GROUND TAKEN BY THE AO FOR COMING TO SUCH CONCLU SION. ITA 5126/DEL/2012 AY 2009 - 10 COMMITTED TRADING PVT.LTD . 2 3. THE LD.CIT(A) HAS REVERSED THIS FINDING OF THE AO BY HOLDING THAT (A) THE SHARES WERE HELD BY THE ASSESSEE AS INVESTMENTS IN ITS BALANCE SHEET; (B) THE AO HAS NOT ESTABLISHED THAT THE SHARES HELD AS INVESTMENTS BY THE APPELLANT WERE STOCK IN TRA DE AND NOT CAPITAL ASSETS; (C ) MERELY BECAUSE THE ASSESSEE MADE A WRONG CLAIM FOR DEDUCTION IN THE AY 2008 - 09, THE INCOME FROM CAPITAL GAINS DOES NOT GET CONVERTED INTO INCOME FROM BUSINESS, AS TWO WRONGS DO NOT MAKE A RIGHT; (D) THE CLAIM FOR DEDUCTION F OR THE AY 2008 - 09, ON THE GROUND OF DIMINUTION IN THE VALUE OF INVESTMENTS, IS BLATANTLY WRONG AND THE AO SHOULD TAKE REMEDIAL MEASURES AS PER LAW. 3.1. ON THE DEDUCTION U/S 14A HE HELD THAT (A) RULE 8D CANNOT BE APPLIED IN A MECHANICAL MANNER; (B) THE AO HAS NOT RECORDED HIS SATISFACTION REGARDING THE CLAIM OF THE ASSESSEE COMPANY THAT NO EXPENDITURE HAS BEEN INCURRED BY THEM FOR EARNING OF EXEMPT INCOME IN THE FORM OF DIVIDEND. THUS HE APPLIED THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF J INDAL PHOTO IN ITA 814/DEL/2011 AND GRANTED RELIEF. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 4. LD.SR.D.R. SMT.PARWINDER KAUR SUBMITTED THAT THE ASSESSEE HAD, IN THE AY 2008 - 09, CLAIMED INCOME/LOSS CONNECTED WITH THE PURCHASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND THIS IS CLEAR FROM PAGE 8 PARA 1 OF THE ASSESSMEN T ORDER. SHE SUBMITS THAT THE FIRST APPELLATE AUTHORITY HAS ERRED IN NOT CONSIDERING THIS FACTUAL DECISION. 5. THE LD.COUNSEL FOR THE ASSESSEE SHRI TN CHOPRA ON THE OTHER HAND SUBMITTED THAT MERELY BECAUSE THE ASSESSEE HAD MADE A WRONG CLAIM IN THE YEAR 2008 - 09, THE AO CANNOT IN THE CURRENT YEAR COME TO A CONCLUSION THAT THE INCOME FROM PURCHASE AND SALE OF SHARES, WHICH IS DISCLOSED AS INVESTMENTS, IS TO BE ASSESSED AS INCOME FROM BUSINESS. HE FILED AN ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF TH E ACT ON 13.12.2013 FOR THE AY 2008 - 09 AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE ON ACCOUNT OF DIMINUTION IN THE VALUE OF SHARES, WAS SPECIFICALLY DISALLOWED AND THE ASSESSEE HAS ACCEPTED THIS ORDER. THUS HE CONTENDS THAT THE VERY BASIS ON ITA 5126/DEL/2012 AY 2009 - 10 COMMITTED TRADING PVT.LTD . 3 WHICH THE AO HAS COME TO A CONCLUSION THAT THE INCOME FROM SALE AND PURCHASE OF SHARES OF THE ASSESSEE IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS , IS NO MORE IN EXISTENCE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS NEVER DECLARED THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AND THE AO S OBSERVATION AT PAGE 8 OF THE ASSESSMENT ORDER IS WRONG. HE RELIED ON THE ORDER OF THE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE REVENUE SHOULD TAKE A CONSISTENT STAND FOR BOTH THE AYS AND CANNOT BE ALLOWED TO FLIP FLOP. 6. AFTER HEARING RIVAL CONTENTIONS, WE FIND FORCE IN THE SUBMISSIONS OF SHRI TN CHOPRA. THE SOLE GROUND ON WHICH THE AO CAME TO A CONCLUSION THAT THE INCOME FROM PURCHASE AND SALE OF SHARES HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD INCOME FROM CAPITAL GAINS , IS A CLAIM OF RS.1,38,55,045/ - MADE BY THE ASSESSEE ON ACCOUNT OF DIMINUTION IN THE VALUE OF INVESTMENTS, DURING THE PY 2008 - 09. THE ASSESSMENT ORDER DT. 13.1 2.2012 FOR THE AY 2008 - 09 PASSED U/S 143(3) R.W.S. 147 OF THE ACT, THE AO DISALLOWED THIS CLAIM. HENCE THE FINDINGS OF THE AO HAS NO LEGS TO STAND ON. IF THE REVENUE S APPEAL IS TO BE ACCEPTED, THEN THE LOSS CLAIMED BY THE ASSESSEE ON DIMINUTION IN THE V ALUE OF SHARES CANNOT BE DISALLOWED FOR THE AY 2008 - 09. BUT THIS IS NOT THE CASE OF THE ASSESSEE. THUS IN OUR VIEW THE FIRST APPELLATE AUTHORITY WAS RIGHT IN HIS FINDINGS. 6.1. BE IT AS IT MAY, THE PAPERS WHICH WOULD DEMONSTRATE THAT THE ASSESSEE HAS N OT DISCLOSED ANY INCOME FROM SALE AND PURCHASE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION , AS CLAIMED BY THE LD.COUNSEL FOR THE ASSESSEE, IS NOT BEFORE US . THUS , WE DEEM IT APPROPRIATE TO SET ASIDE THE MATTER TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFYING THE SAME. IF THE ASSESSEE HAS NOT OFFERED INCOME FROM SALE AND PURCHASE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS FOR THE AY 2008 - 09, THE QUESTION OF ASSESSING THE INCOME IN QUESTION UNDER THE HEAD INCOME FROM BUSI NESS OR PROFESSION DURING THE CURRENT AY DOES NOT ARISE. ITA 5126/DEL/2012 AY 2009 - 10 COMMITTED TRADING PVT.LTD . 4 7. IN THE RESULT THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER ,2014. SD/ - SD/ - ( GEORGE GEORGE K ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 11 TH DECEMBER , ,2014 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR ITA 5126/DEL/2012 AY 2009 - 10 COMMITTED TRADING PVT.LTD . 5