ACIT, New Delhi V. Ms. Swati Goel, New Delhi

ITA 5369/DEL/2011

• Counselvise Citation: 536920114 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 31-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA SENIOR
• Assessee Lawyers: SUNIL JAIN
• Keywords: Capital asset; Business income; Transactions in derivatives

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) SHRI I.C. SUDHIR, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5369/DEL./2011 (ASSESSMENT YEAR : 2008-09) ACIT, CIRCLE 28 (1), VS. MS. SWATI GOEL, NEW DELHI. 1197, GALI NILAWALI, BAZAR SITA RAM, DELHI. (PAN : AJIPG3164C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL JAIN, FCA REVENUE BY : SMT. RENUKA JAIN GUPTA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXV, NEW DELHI DATED 08.09.2011. 2. THE RETURN OF INCOME WAS FILED FOR ASSESSMENT YE AR 2008-09 DECLARING INCOME AT RS.73,53,300/- WHICH ALSO INCLUDED SHORT TERM CAPITAL GAIN OF RS.44,86,380/-. THE ASSESSING OFFICER TREATED THE S HORT TERM CAPITAL GAIN AS BUSINESS INCOME TAXABLE AT NORMAL RATE AND INSTEAD OF SPECIAL RATE APPLICABLE ITA NO.5369/DEL./2011 2 TO SHORT TERM CAPITAL GAIN. THE CIT (A) GRANTED THE RELIEF BY HOLDING AS UNDER:- 4.8 I HAVE CONSIDERED THE ADDITION OF THE AO AND T HE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE AND IT IS APPAREN T THAT THE AO IS NOT JUSTIFIED TO MAKE THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE TO TAX THE STCG AT THE NOMINA L RATE @ 10%. IT IS APPARENT THAT THE ASSESSEE IS HAVING S EPARATE PORTFOLIOS FOR THE INVESTMENTS AND ALSO FOR THE SHA RE TRADING AND IS ALSO MAINTAINING SEPARATE LEDGER ACC OUNTS AND SEPARATE BOOKS OF ACCOUNTS AS DISCUSSED EARLIER . THE BOARD HAS ALSO ISSUED THE CIRCULAR NO.4/2007 DATED 15/06/2007 AND HAS ONLY GIVEN BROAD GUIDELINES AND HAS EMPHASIZED THAT THE ASSESSEE MAY HAVE TWO SEPARATE PORTFOLIOS AND NO SINGLE PRINCIPLE WOULD BE A DECIS IVE FACTOR AND THE TOTAL EFFECT OF ALL THE PRINCIPLES A RE TO BE SEEN VIDE PARAS-10 AND 11 OF THE CIRCULAR WHICH REA DS AS UNDER :- '10. CBDT ALSO WISHES TO EMPHASISE THAT IT IS POSSI BLE FOR A TAXPAYER TO HAVE TWO PORTFOLIOS, I.E., AN INV ESTMENT PORTFOLIO COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSETS AND A TRADING PORTFOLIO COMPRISIN G OF STOCK-IN-TRADE WHICH ARE TO BE TREATED AS TRADING A SSETS. WHERE AN ASSESSEE HAS TWO PORTFOLIOS, THE ASSESSEE MAY HAVE INCOME UNDER BOTH HEADS, I.E., CAPITAL GAINS A S WELL AS BUSINESS INCOME. 11. ASSESSING OFFICERS ARE ADVISED THAT THE ABOVE PRINCIPLES SHOULD GUIDE THEM IN DETERMINING WHETHE R, IN A GIVEN CASE, THE SHARES ARE HELD BY THE ASSESSEE A S INVESTMENT (AND THEREFORE GIVING RISE TO CAPITAL GA INS) OR AS STOCK-IN-TRADE (AND THEREFORE GIVING RISE TO BUS INESS PROFITS). THE ASSESSING OFFICERS ARE FURTHER ADVISE D THAT NO SINGLE PRINCIPLE WOULD BE DECISIVE AND THE TOTAL EFFECT OF ALL THE PRINCIPLES SHOULD BE CONSIDERED TO DETER MINE WHETHER, IN A GIVEN CASE, THE SHARES ARE HELD BY TH E ASSESSEE AS INVESTMENT OR STOCK-IN-TRADE.' ITA NO.5369/DEL./2011 3 4.9. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THE AO IS NOT JUSTI FIED TO DISALLOW THE CLAIM OF TAXATION OF STCG AT THE NOMIN AL RATE @ 10% OF THE ASSESSEE AND ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE AND THE APPEAL OF THE ASSESSEE AS SUCH IS ALLOWED. 3. NOW, THE REVENUE IS IN APPEAL BEFORE US BY TAKIN G THE FOLLOWING GROUND:- 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS, IGNORIN G THE FACT THAT: THE ASSESSEE HAS NOT DERIVED ANY INCOME BY WAY OF DIVIDEND ON SHARES, THEREFORE SHARES HELD BY HER WE RE TAKEN AS STOCK IN TRADE AND NOT AS AN INVESTMENT. MOREOVER, THE FREQUENCY AND THE VOLUME OF THE TRANSACTION OF THE ASSESSEE DOES NOT APPEAR TO BE A NORMAL TRANSACTION OF AN INVESTO R BUT OF A BUSINESS NATURE AND NEED TO BE TREATED AS BUSINESS INCOME .IN VIEW OF THE ABOVE FACTS THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIONS ON THE GROUND THAT THIS INCO ME IS NOT A BUSINESS INCOME BUT A STCG. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE FI ND THAT THE ASSESSEE IS SHOWING SHORT TERM CAPITAL GAIN INCOME IN VARIOUS Y EARS, THE CHART OF THE SAME IS AS UNDER :- S.NO. AY F&O SPECULATION STCG INTEREST COMMISSION DIVIDEND 1 2007-08 RS. 1,98,425 RS.12,86,190 RS. 14,519 R S.3,35554 0 2 2008-09 RS.21,48,067 RS.44,86,380 RS. 5,371 R S.7,83,483 RS.14,400 3 2009-10 RS. 13,413 RS. 8,11,597 RS.1,50,990 RS.7,49,600 RS. 4,275 4 2010-11 RS.24,92,398 RS.10,20,850 RS.3,11,940 0 0 THE ASSESSEE IS ALSO MAKING REGULAR INVESTMENT IN T HE PAST YEAR AND SUBSEQUENT YEARS AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED FOR DIFFERENT ITA NO.5369/DEL./2011 4 PORTFOLIOS. THE FUNDS UTILIZED FOR INVESTMENT ARE ASSESSEES OWN FUNDS AND THE ASSESSEE IS NOT INDULGING INTO DAY-TO-DAY TRADING. SEPARATE LEDGER ACCOUNT WAS MAINTAINED FOR INVESTMENT. FURTHER, THE ASSESSEE IS ALSO DEALT IN FEW SCRIPS/ STOCKS DURING THE YEAR. IT IS ALSO FOUND THAT THE ASSESSEE IS HAVING A SEPARATE BROKER FOR SPECULATION PURPOSE AND A SEPARATE BROKE R FOR INVESTMENT PURPOSES. FURTHER THE ASSESSEES PLEA ALSO GET STRENGTHEN FRO M VARIOUS DECISIONS INCLUDING THE FOLLOWING :- (I) ACIT VS. NAISHADH V VACHHARANJANI, ITA NO.6429/ MUM/2009, AY 2006-07 (II) CIT VS. GOPAL PUROHIT, 188 TAXMAN 140 (BOM) [2 010] (III) CIT VS. ROHIT ANAND, 327 ITR 445 (DEL) [2010] KEEPING ALL THESE FACTS IN VIEW, WE FIND THAT THERE IS NO FAULT IN THE ORDER OF CIT (A) AND WE DISMISS THE REVENUES APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF NOVEMBER, 2013. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 28 TH DAY OF NOVEMBER, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.