ACIT (OSD) -I CITY -2, MUMBAI V. ASHOK CONSTRUCTION CO. P. LTD, MUMBAI

ITA 5409/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8964 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Assessee Lawyers: N A JAPEE
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI R.S. PADVEKAR (JM) I.T.A.NO.5409/MUM/2009 (A.Y. 2005-06) ACIT (OSD)-2(1), R.NO.561, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI-400 020. VS. M/S. ASHOK CONSTRUCTION CO.PVT.LTD., RAHIMTULLA HOUSE, 2 ND FLOOR, 7, HOMJI STREET, FORT, MUMBAI-400 002. PAN: AAACT3150F APPELLANT RESPONDENT APPELLANT BY SHRI SHRAVAN KUMAR. RESPONDENT BY SHRI N. A. JAPEE. O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 31-07-2009 IN RELATION TO THE ASSTT. YEAR 2005-0 6. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE TREATMENT OF PROFIT FROM PURCHASE AND SALE OF SHARES HELD BY THE LD. CIT(A) AND AS CLAIMED BY THE ASSESS EE TO BE SHORT-TERM CAPITAL GAIN AS AGAINST THAT ASSESSED BY THE AO AS BUSINESS INCOME. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE CLAIMED SHORT-TERM CAPITAL GAIN IN RESPECT OF PURCHASE AND SALE OF SHA RES. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THIS GAIN BE NOT TREATED AS BUSIN ESS INCOME, THE ASSESSEE STATED THAT THE SHORT-TERM CAPITAL GAIN INCLUDES A GAIN OF RS.12,67,695/- ON SALE OF ADITYA FLAT AND THE TOTAL GAIN ON SALE OF SHARES COMES TO RS.1,05,991/-. IN ADDITION TO THE ABOVE, THE SHORT-TERM CAPITAL GAIN OF RS.7,00,819/- WAS EARNED BY ITA 6610 & 6836M/08 BAJAJ AUTO HOLDINGS LTD. 2 THE ASSESSEE ON SALE OF SECURITIES LIABLE TO STT T HEREBY TAKING THE FIGURE OF SHORT-TERM CAPITAL GAIN ON SALE OF SHARES AND SECUR ITIES AT RS.8,06,810/-. IT WAS ALSO STATED THAT THE COMPANY STARTED MAKING INVESTM ENT IN SHARES AND CLASSIFIED THE SAME AS SUCH IN THE BALANCE-SHEET. RELIANCE WAS PLACED ON CIRCULAR NO.4/2007 DATED 15-06-2007 FOR THE CONTENTION THAT THE SHARES WERE HELD AS INVESTMENT AND NOT AS STOCK IN TRADE. THE AO DID NO T ACCEPT THE ASSESSEES CONTENTION. THE ENTIRE REASONING OF THE AO FOR NOT ACCEPTING THE ASSESSEES POINT OF VIEW IS CONTAINED IN PARA 5.1 WHICH READS AS UND ER : 5.1 REPLY OF THE ASSESSEE HAS BEEN CONSIDERED. HOW EVER, CONSIDERING THE FACTS OF THE CASE AND VOLUME OF HE TRANSACTIONS IT APPEARS THAT THE INTENTION AND MOTIVE OF THE ASSESS EE WAS TO CARRY OUT BUSINESS ACTIVITIES IN RESPECT OF SHARES. ACCOR DINGLY, THE SAME HAS TO BE TREATED AS BUSINESS INCOME AND NOT SHORT- TERM GAIN. ACCORDINGLY, SHORT-TERM CAPITAL GAIN ON SALE OF SEC URITIES AMOUNTING TO RS.8,06,810/- HAS BEEN CONSIDERED AS BUSINESS INCOME . 3. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A), H E ACCEPTED THE ASSESSEES CLAIM BY RECORDING A FINDING THAT THE AS SESSEE HAD ALSO SHOWN LONG- TERM CAPITAL GAIN ON SALE OF CERTAIN SHARES WHICH W AS ACCEPTED BY THE AO. AS THE ASSESSEE HAD SHOWN SHARES IN THE BALANCE-SHEET AS I NVESTMENT, THE LD. CIT(A), FOLLOWING CERTAIN TRIBUNAL ORDERS, OVERTURNED THE A SSESSMENT ORDER ON THIS ISSUE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. STATEMENT OF SHORT-TERM CAPITAL GAIN WITHOU T AND WITH SECURITIES TRANSACTIONS TAX HAS BEEN PLACED ON RECORD. IT CAN BE SEEN THAT OUT OF TOTAL 25 TRANSACTIONS IN THE PERIOD BEFORE 01-01-2004, THE P ERIOD OF HOLDING IN 18 CASES VARIES FROM 111 TO 327 DAYS. SIMILARLY, IN THE PERI OD AFTER 01-10-2004, THERE ARE 51 TRANSACTIONS AND THE NUMBER OF SHARES, WHICH WER E HELD FOR MORE THAN 100 DAYS, IS 32 STARTING FROM 100 AND GOING UPTO 359 DA YS. THESE FACTS ALONG WITH ITA 6610 & 6836M/08 BAJAJ AUTO HOLDINGS LTD. 3 OTHER ATTENDING FACTS, AS TAKEN NOTE OF BY THE LD. CIT(A), AMPLY PROVE THAT THE SHARES WERE HELD BY THE ASSESSEE AS INVESTMENT AND NOT STOCK IN TRADE. FURTHER FROM THE REASONING OF THE AO, AS EXTRACTED ABOVE, I T IS SEEN THAT THERE IS NO PROPER ANALYSIS OF THE ASSESSEES CASE. WE, THEREF ORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A). 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THE 12TH DAY OF JANUARY, 2 011. SD/- SD/- (R.S. PADVEKAR) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12TH JANUARY , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-II,,MUMBAI. 4 CIT-2,MUMBAI. 5.DR,A BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA 6610 & 6836M/08 BAJAJ AUTO HOLDINGS LTD. 4 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 10-01-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 10-01-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *