Siddeswar Prasad Agarwal, Boudh V. ACIT, Berhampur

ITA 518/CTK/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7842 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A BHATACHARJEE
• Assessee Lawyers: D K SETH
• Keywords: Business income

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK (BEFORE S/SHRI K.K. GUPTA AM & K.S.S.PRASAD RAO, J M) I.T.A.NO. 518/CTK/2011 ASSESSMENT YEAR: 2008-09 SIDDESWAR PRASAD AGARWAL, PURUNA KATAK, DIST: BOUDH PA NO.ACEPA 5177 A VS ACIT, BERHAMPUR CIRCLE, BERHAMPUR APPELLANT RESPONDENT APPELLANT BY: SHRI D.K.SETH RESPONDENT BY: SHRI A. BHATACHARJEE DATE OF HEARING: 22.6.2012 DATE OF PRONOUNCEMENT:29.6.2012 ORDER PER K.S.S.PRASAD RAO, JM THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AG GRIEVED BY THE ORDER DATED 24.10.2011 OF THE CIT (A) BERHAMPUR FOR THE ASSESSM ENT YEAR 2008-09 IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS RAISED FOLLOWING TW O ISSUES IN THIS APPEAL: 1. FOR THAT THE ACTION OF THE AO IN TREATING THE P ROFIT ON SALE OF SHARES AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AND CONFIR MING THE SAME BY CIT(A) IS UNJUST, ARBITRARY AND UNLAWFUL. 2. FOR THAT ADDITION OF RS.1,75,000 ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR AND CONFIRMING THE SAME BY CIT(A) IS UNJUS T AND UNLAWFUL. 2. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEAL AND ITS LEGAL IMPLICATIONS. 3. ON CAREFUL ANALYSIS OF THE ORDER OF THE CIT (A) IN THE LIGHT OF MATERIAL MADE AVAILABLE BEFORE THE TRIBUNAL AS WELL AS RIVAL SUBM ISSIONS OF BOTH PARTIES, THE UNDISPUTED I.T.A.NO. 518/CTK/2011 ASSESSMENT YEAR: 2008-09 2 FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE MAINLY ENGAGED IN TRADING OF SPICES AND ALSO MAKING INVESTMENT IN SHARES SINCE LAST SO MANY YEARS AND THE INCOME DERIVED BY HIM IN THE SALE OF SHARES SHOWS AS SHORT TERM CAPIT AL GAIN AND LONG TERM CAPITAL GAINS AND THE DEPARTMENT IS ACCEPTING THE SAID CLAIM OF T HE ASSESSEE. BUT IN THE PRESENT YEAR UNDER CONSIDERATION, THE DEPARTMENT HAS NOT ACCEPTE D THE CLAIM OF THE ASSESSEE REGARDING SHORT TERM CAPITAL GAIN AND LONG TERM CAP ITAL GAIN RETURNED BY THE ASSESSEE BUT TREATED THE SAID INCOME AS INCOME FROM BUSINESS . AGGRIEVED BY THIS VIEW OF THE AO, ASSESSEE WENT IN APPEAL BEFORE LD CIT(A) BUT UNSUCC ESSFUL. HENCE, THE PRESENT APPEAL IS BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, LD REPRESENTATIVE OF ASSESSEE HAS MADE AVAILABLE A COPY OF ORDER DATED 25.8.2011 PASSED BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.290/ CTK/2011, WHEREIN, UNDER SIMILAR FACTS, SUCH ISSUES WERE CONSIDERED AND RELYING ON T HAT ORDER, LD A.R. CONTENDED THAT RETURN MADE BY THE ASSESSEE AS SHORT TERM CAPITAL G AIN AND LONG TERM CAPITAL GAIN IS TO BE ACCEPTED BY THE DEPARTMENT. HENCE, CONTRARY ACT ION TAKEN BY THE DEPARTMENT IN THIS YEAR IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ACCOR DINGLY, HE SOUGHT FOR SETTING ASIDE OF THE SAME. 5. CONTRARY TO THIS, LD D.R. HAS VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF AUTHORITIES BELOW, CONTENDING INTER ALIA, THAT SINC E THE ASSESSEE HAS MADE INVESTMENT IN SHARES WHICH IS EVIDENT FROM THE FACT THAT THE ASSE SSEE HAS HELD THE SHARES UNDER THE HEAD SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS, WHICH ITSELF INDICATE THAT THE ASSESSEE IS TRADING IN SHARES ALSO. THEREFORE, THE DEPARTMENTAL AUTHORITIES ARE VERY MUCH RIGHT IN BRINGING THESE SHORT TERM CAPITAL GAI NS AND LONG TERM CAPITAL GAINS AS BUSINESS INCOME. ACCORDINGLY, HE SOUGHT FOR UPHOLD ING THE ORDERS OF AUTHORITIES BELOW. 6. ON CAREFUL CONSIDERATION OF THE ORDER OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05(SUPRA) AND ALSO CONSIDE RING THE CBDT CIRCULAR NO.4/2007 DATED 15.6.2007 APPLICABLE TO THE ISSUE, WE FIND TH AT THE TRIBUNAL HAS HELD THAT SINCE THE ASSESSEES MAIN BUSINESS IS IN TRADING OF SPICES AN D NOT IN TRADING IN SHARES,, THEREFORE, THE INCOME OR LOSS DERIVED FROM SALE OF SHARES IS T O BE TAKEN AS CAPITAL GAIN OR CAPITAL I.T.A.NO. 518/CTK/2011 ASSESSMENT YEAR: 2008-09 3 LOSS AS THE CASE MAY BE. RESPECTFULLY FOLLOWING TH E ORDER OF THE TRIBUNAL, WE FIND THAT IF THE ASSESSEE SOLD THE SHARES WITHIN A SHORT PERIOD AND CLAIMED SHORT TERM CAPITAL GAIN, IT SHOWS THAT THE ASSESSEE STARTED TRADING IN SHARES A LSO. HENCE, THE VIEW OF THE DEPARTMENTAL AUTHORITIES THAT THE AMOUNT OF RS.15,6 1,752 SHOWN BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN ARE RIGHTLY CONSIDERED AS B USINESS INCOME. AT THE SAME TIME, WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ASSESSEE HAS INVESTED IN SHARES AND KEPT FOR A LONG TIME AND THE INCOME DERIVED FROM SALE OF THOSE SHARES RETURNED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN ARE TO BE TREATED AS LONG TE RM CAPITAL GAIN BECAUSE THE ASSESSEE HAS MADE INVESTMENT IN SHARES FOR A LONG TIME. 7. THE ONLY OTHER ISSUE IS REGARDING CONFIRMATION O F ADDITION OF RS.1,75,000 ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR. 8. ON CAREFUL CONSIDERATION OF THE IMPUGNED ORDER, IT IS FOUND THAT LD CIT(A) HAS NOTED IN PARA 5.4.2 OF HIS ORDER THAT SUNDRY CREDIT OR HAS APPEARED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND HAS CONFIRMED CLEARL Y THAT HE HAD NO BUSINESS TRANSACTION BUT SUBSEQUENT PAYMENT WAS IN F.Y. 2009 -10 I.E. AFTER ALMOST A LAPSE OF 13 MONTHS THAT TOO ALL PAYMENTS IN CASH JUST WITHIN TH E LIMIT OF SECTION 40(A)(3) OF THE ACT. THEREFORE, IN VIEW OF THE FACT THAT THE SUNDRY CRED ITOR WAS PAID IN CASH IN THE SUBSEQUENT PERIOD ITSELF SHOWS THAT THE SUNDRY CRED ITOR IS NOT BOGUS ONE AND HENCE, THE ADDITION MADE BY THE AO AND SUSTAINED BY LD CIT(A) AS UNEXPLAINED SUNDRY CREDITOR IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. THEREFORE, WE DIRECT THE AO TO DELETE THE SAID ADDITION OF RS.1,75,000. 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED. SD/- SD/- (K.K.GUPTA) (K.S.S.PRASAD RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH JUNE, 2012 PARIDA I.T.A.NO. 518/CTK/2011 ASSESSMENT YEAR: 2008-09 4 COPY TO : 1. ASSESSEE- SIDDESWAR PRASAD AGARWAL, PURUNA KATA K, DIST: BOUDH 2. ASSESSING OFFICER- ACIT, BERHAMPUR CIRCLE, BERH AMPUR 3. CIT, BHUBANESWAR 4. CIT (A), BERHAMPUR 5. D.R., ITAT, CUTTACK. 6. GUARD FILE. TRUE COPY BY ORDER SR. PVT. SECRETARY