ACIT 17(3), MUMBAI V. SRIRAM KAPUR, MUMBAI

ITA 5418/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0222 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDYADHAR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 5418/MUM/2016 (ASSESSMENT YEAR: 2010-11) A C I T - 17(3) ROOM NO. 137, 1ST FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. SHRI SRIRAM KAPUR 5, JAMSHEDJI TATA ROAD CHURCHGATE MUMBAI 400020 PAN AAIPK3526B APPELLANT RESPONDENT APPELLANT BY: SHRI V. VIDYADHAR RESPONDENT BY: SHRI MADHUR AGRAWAL DATE OF HEARING: 21.02.2018 DATE OF PRONOUNCEMENT: 21.02.2018 O R D E R PER C.N. PRASAD, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-46, MUMBAI DATED 21.06.2016 FOR A.Y. 2010-11 . 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE APPEAL IS THAT THE CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE GAINS OF ` 1,95,02,896/- DERIVED FROM SHARE TRADING AS SHORT TERM CAPITAL GAIN AS AGAINST BUSINESS INCOME ASSESSED BY THE AO. THE REVENUE IN THE GROUNDS OF A PPEAL ALSO CONTENDED THAT THE DECISION OF THE HON'BLE ITAT IN ASSESSEES ON CASE FOR ASSESSMENT YEARS 2005-06 TO 2008-09, WHICH HAS BEEN RELIED UPO N BY THE CIT(A) TO DECIDE THE ISSUE IN ASSESSEES FAVOUR, HAS NOT BEEN ACCEPTED BY THE DEPARTMENT ON MERITS AND APPEAL UNDER SECTION 270A OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) HAS BEEN FILED BE FORE THE HON'BLE HIGH COURT. ITA NO. 5418/MUM/2016 SHRI SRIRAM KAPUR 2 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN THE APPEAL IS WHETHER THE GAINS ON SALE OF SHARES BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD SHORT TERM CAPITAL GA INS OR UNDER THE HEAD INCOME FROM BUSINESS FROM A.Y. 2005-06 ONWARDS AN D THE HON'BLE ITAT HAS HELD THAT GAINS FROM SALE OF SHARES IN THE CASE OF THE ASSESSEE IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN. COPY OF T HE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEARS 2005-06 TO 2008-09 IN ITA NOS. 2413/MUM/2009 AND 4534/MUM/2011 DATED 25.02.2015 AND ITA NOS. 89 52/MUM/2010, 1412 & 1413/MUM/2012 DATED 16.10.2015 ARE PLACED ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A), FOLLOWING THE ORDERS OF THE HON'BLE TRIBUNAL, HELD THAT THE GAINS ARISING FROM SALE OF SHARES DURING THE CURRENT ASSESSMENT YEAR IS ASSESS ABLE UNDER THE HEAD CAPITAL GAIN AND NOT AS BUSINESS INCOME AS HELD B Y THE AO. THE LEARNED COUNSEL, THEREFORE, PLEADED THAT THE SAME MAY BE FO LLOWED FOR THE CURRENT ASSESSMENT YEAR ALSO. 4. THE LEARNED D.R., ON THE OTHER HAND, VEHEMENTLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER. 5. ON HEARING BOTH THE PARTIES AND PERUSING THE ORDERS OF THE AUTHORITIES BELOW AND THE COORDINATE BENCHS DECISI ON WE FIND THAT DURING THE CURRENT ASSESSMENT YEAR THE AO TREATED THE GAIN S FROM SALE OF SHARES AS BUSINESS INCOME BY OBSERVING AS UNDER: - 6.1 FROM THE RATIO OF THE ABOVE SAID ORDERS & JUDG MENT IT IS CLEAR THAT THE ASSESSEE IS ALSO CARRYING OUT TRANSACTIONS IN SHARES FREQUENTLY WITHIN A PERIOD OF FEW DAYS AND ALSO UPT O 200 DAYS. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT HE I S A INVESTOR IS DISPROVED BY THE ABOVE SAID JUDGMENT. ACCORDINGLY, THE SAME CANNOT BE GIVEN CONCESSIONAL TREATMENT OF STCG. C) THE ASSESSEE HAS CONTENTED THAT THE DEMAT AC COUNT PROVED THE DELIVERY OF SHARES TAKEN AND GIVEN BY HI M. THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE B ECAUSE THE JUDGMENT CITED ABOVE CLEARLY SHOW THAT EVEN IF THE SHARES ARE SOLD WITHIN THE SAID PERIOD OF FEW DAYS AND ALSO UPTO 200 DAYS THE SAME PARTAKE THE CHARACTER O F SHARE TRADING. ITA NO. 5418/MUM/2016 SHRI SRIRAM KAPUR 3 D) IT IS FURTHER NOTICED THAT APPEAL OF THE ASSE SSEE ON THE SAME GROUNDS AND SAME FACTS IS ALREADY DISMISSED BY THE LD.CIT(A) FOR THE AY 2005-06, 2006-07 AND 2007-08. E) THE ASSESSEE HAS ENTERED INTO HUGE NUMBER OF TRANSACTIONS WITHIN A SHORT PERIOD OF TIME AND WITH FREQUENCY OF VARIOUS SCRIPS. THIS ALL GO TO PROVE THAT THE ASSESSEE IS OF WELL VERSED TRADER AND NOT A INVESTO R AS CLAIMED IN THE RETURN OF INCOME. F) THE CASE LAWS RELIED UPON BY THE ASSESSEE VIDE LETTER DT.25.03.2013 ARE DISTINGUISHABLE. 6.2 IN VIEW OF ALL THE FACTS DISCUSSED ABOVE AND I N VIEW OF THE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY, IT IS HELD THAT THE ASSESSEE IS A TRADER IN SHARES AND THEREFORE, THE I NCOME CLAIMED UNDER THE HEAD CAPITAL GAINS AMOUNTING TO RS. 1,95, 02,896/- IS CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS FROM B USINESS OR PROFESSION.' THE CIT(A), FOLLOWING THE ORDER OF THE COORDINATE B ENCH FOR ASSESSMENT YEARS 2005-06 TO 2009-10 DELETED THE ADDITION MADE BY THE AO AS BUSINESS INCOME. 6. ON A PERUSAL OF THE DECISION OF THE COORDINATE BEN CH IN ASSESSEES CASE FOR EARLIER ASSESSMENT YEARS WE FIND THAT THE TRIBUNAL, FOR ASSESSMENT YEARS 2005-06 TO 2008-09, HAS HELD THAT THE GAINS O N SALE OF SHARES IN THE CASE OF THE ASSESSEE IS ASSESSABLE UNDER THE HEAD C APITAL GAINS AND NOT AS BUSINESS INCOME. THE LEARNED CIT(A) FOLLOWED THE CO ORDINATE BENCHS DECISION AND DELETED THE ADDITION MADE BY THE AO. I N THE CIRCUMSTANCES WE DO NOT SEE ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THUS, THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2018. SD/ - SD/ - (A.L. SAINI) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21 ST FEBRUARY, 2018 ITA NO. 5418/MUM/2016 SHRI SRIRAM KAPUR 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -46, MUMBAI 4. THE CIT - 17, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.