ACIT, CIRCLE- 1, Nagpur V. SHRI SANJAY ISHWARLAL RANKA, Nagpur

ITA 524/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3145 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Business income; Question of law
• Section: 14A

Judgement Text

1 ITA NO. 524/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. ITA NO. 524/NAG/2014 ASSESSMENT YEAR : 2005 - 06. ASSTT. COMMISSIONER OF INCOME - TAX, SHRI SANJAY ISHWARLAL RANKA, CIRCLE - 1, NAGPUR. VS. NAGPUR. PAN ABWPR8236N. APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF HEARING : 05 - 01 - 2016. DATE OF PRONOUNC EMENT : 15 TH JAN., 2016. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 27 - 08 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2005 - 06. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS ERRED IN HOLDING THAT THE INCOME ARISING OUT OF TRANSACTIONS IN SHARES CARRIED OUT BY THE ASSESSEE ARE ASSESSABLE AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. 2. ON THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS ERRED IN NOT APPRECIATING THAT THE QUANTUM OF SHARES PURCHASED AND SOLD, THE PERIOD OF SHARE HOLDING, THE FREQUENCY OF TRANSACTIONS LEAD TO THE CONCLUSION THAT THE ASSESSEE IS TRADING IN SHARES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS ERRED IN DELETING THE DISALLOWANCE OF RS.25,000/ - MADE BY ASSESSING OFFICER U/S 14A OF THE I.T. ACT. 2 ITA NO. 524/NAG/2014 2. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE ISSUE AS TO WHETHE R THE INCOME ARISING OUT OF TRANSACTIONS IN SHARES CARRIED OUT BY THE ASSESSEE ARE ASSESSABLE AS CAPITAL GAINS OR AS BUSINESS INCOME IS DULY SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, NAGPUR BENCH IN THE CASE OF ASSESSEE HIMSELF. THE DECISI ON BY THE ITAT, NAGPUR BENCH HAS ALSO BEEN UPHELD BY T HE HONBLE JURISDICTIONAL HIGH COURT. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE REFERRED TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 8 OF 2013 VIDE ORDER DATED OCTOBER 24, 2013 IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07. IN THIS CASE THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT IS AS UNDER : ON HEARING THE LEARNED COUNSEL FOR THE PARTIES, WE FIND THAT THE TRIBUNAL HAS, ON A CONSIDERATION OF THE JUDGMENT OF THI S COURT IN COMMISSIONER OF INCOME TAX VS. GOPAL PUROHIT, REPORTED IN (2010) 228 CTR (BOM) 582, RECORDED A FINDING THAT THE ASSESSEE WAS NOT HOLDING THE SHARES OR UNITS AS STOCK - IN - TRADE AND WAS HOLDING THE SAME AS AN INVESTMENT. THE FACTS INVOLVED IN THE C ASE IN HAND ARE SIMILAR TO THE FACTS INVOLVED IN THE JUDGMENT REPORTED IN (2010) 228 CTR (BOM) 582 (SUPRA) AND IT CANNOT THEREFORE, BE SAID THAT THE TRIBUNAL WAS NOT JUSTIFIED IN RECORDING THE AFORESAID FINDING OF FACT. SINCE NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THIS APPEAL, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 3. LEARNED COUNSEL FURTHER REFERRED TO HONBLE JURISDICTIONAL HIGH COURT DECISION IN ITA NO. 94 OF 2013 VIDE ORDER DATED 25 - 06 - 2015 IN THE CASE OF SAME ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 . IN THIS CASE THE HONBLE JURISDICTIONAL HIGH COURT REFERRED TO ITS EARLIER DECISION AND DISMISSED THE REVENUES APPEAL. 4. LEARNED D.R. COULD NOT CONTRADICT THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE. 5. UPON CAREFUL CONSIDERATION WE FIND THAT THE LEARNED CIT(APPEALS) HAS GIVEN A FINDING THAT THE FACTS IN THIS CASE ARE IDENTICAL TO THE ONE DEALT BY THE 3 ITA NO. 524/NAG/2014 ITAT, NAGPUR BENCH IN THE CASE OF THE ASSESSEE IN EARLIER YEARS. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECED ENTS AS ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS) AND HOLD THAT THE INCOME ARISING OUT OF TRANSACTIONS IN SHARES CARRIED OUT BY THE ASSESSEE ARE ASSESSABLE AS CAPITAL GAINS AND NOT AS INCOME FROM BUSINESS. 6. ANOTHER ISSUE RAISED RELATES TO THE DE LETION OF DISALLOWANCE OF RS.25,000/ - MADE BY THE AO U/S 14A. ON THIS ISSUE LEARNED CIT(APPEALS) HAS DELETED THE ADDITION BY OBSERVING AS UNDER : THE AO HAS TREATED THE STCG RETURNED BY THE APPELLANT AS HIS BUSINESS INCOME AND DISALLOWED EXPENDITURE O F RS.25,000/ - ON THE GROUND THE SAME BEING ATTRIBUTABLE TO THE EXEMPT DIVIDEND INCOME. THE APPELLANT, HOWEVER, HAS CONTENDED THAT NO PART OF EXPENDITURE IS ATTRIBUTABLE TO DIVIDEND INCOME. IT IS PERUSED FROM RECORDS THAT THE LD. AO HAS NOT CO - RELATED THE E XPENDITURE, IF ANY INCURRED BY THE APPELLANT TO THAT OF EARNING OF THE DIVIDEND, COUPLED WITH THE FACT THAT THE ADDITION HAS BEEN MADE PURELY ON AD - HOC BASIS. 7. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON PERUSING THE RECORDS AND HEARING BOTH THE COUNSEL, WE AGREE WITH THE LEARNED CIT(APPEALS) THAT THE AO HAS MADE THE DISALLOWANCE ON AN ADHOC BASIS WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS) THAT THE ASSESSEES CLAIM THAT NO PART OF THE EXPENDITURE HAS BEEN INCURRED TOWARDS THE DIVIDEND INCOME COUPLED WITH THE FACT THAT THE ADDITION HAS BEEN MADE PURELY ON ADHOC BASIS . THUS IT DOES NOT NEED ANY INFERENCE ON O UR PART. ACCORDINGLY WE UPHOLD THE SAME. 4 ITA NO. 524/NAG/2014 9. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JAN., 2016. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 15 TH JANUARY, 201 6. COPY FORWARDED TO : 1. SHRI SANJAY ISHWARLAQL RANKA, 110, RANKA BHAVAN, DHANTOLI, NAGPUR - 440012. 2. A.C.I.T., CIRCLE - 1, NAGPUR. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE