DCIT 4, Kanpur V. Shri Atul Kanodia, Kanpur

ITA 545/LKW/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3219 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-05-2013
• Assessment Year: misc
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: S K JAIN; SWARN SINGH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 545 /LKW/ 2011 ASSESSMENT YEAR: 2004 - 05 DY. C.I.T. - 4, VS. SHRI ATUL KANODIA, KANPUR. 511, KRISHNA TOWER, KANPUR. PAN:AAZPK2316C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RANU BISWAS, SR. D.R. RESPONDENT BY : S/SHRI S.K. JAIN & SWARN SINGH DATE OF HEARING : 30 /0 5 /201 3 DATE OF PRONOUNCEMENT :28/06/2013 ORDER PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF PROFIT ON SALE OF SHARES AS BUSINESS INCOME WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE BRIEF FACTS, BORNE OUT FROM THE RECORD, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND MEMBER OF U.P. STOCK EXCHANGE LTD. THE RETURN OF INCOME WAS FILED SHOWING TOTAL INCOME AT ` 27,89,590/ - . THE RETURNED INCOME INCLUDE S LON G TERM CAPITAL GAIN ON THE SALE OF SHARES AND SECURITIES AMOUNTING TO ` 24,04,660/ - AND SHORT TERM CAPITAL GAIN ON THE SALE OF SHARES AND SECURITIES AMOUNTING TO ` 24,920/ - . THE ASSESSMENT, HOWEVER, WAS COMPLETED ON INCOME OF ` 28,64,600/ - AFTER TREATING THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS BUSINESS INCOME. 2 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION S THAT THE ASSESSEE HAS BECOME MEMBER OF U.P. STOCK EXCHANGE LTD. IN 1988 AND SINCE THEN HE HAS BEEN KEEPING SEPARAT E STOCK OF SHARES HELD FOR BUSINESS AS STOCK - IN - TRADE AND SHARES HELD SEPARATELY UNDER INVESTMENT PORTFOLIO. IT WAS FURTHER SUBMITTED THAT YEAR TO YEAR INCOME FROM SALE AND PURCHASE OF SHARES HELD AS STOCK - IN - TRADE WAS SHOWN AS BUSINESS INCOME WHICH IS D ULY REFLECTED IN THE PROFIT & LOSS ACCOUNT. HOWEVER, THE INCOME ON SALE OF SHARES HELD AS INVESTMENT, WHETHER SHORT TERM OR LONG TERM WAS SHOWN AND ACCEPTED AS CAPITAL GAIN. IT WAS FURTHER CONTENDED BEFORE THE CIT(A) THAT IN THE BALANCE SHEET OF THE ASSE SSEE FOR THE FINANCIAL YEAR 2003 - 04 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2004 - 2005, THE SHARES HELD AS STOCK - IN - TRADE WERE SHOWN SEPARATELY UNDER THE HEAD CURRENT ASSETS AND SHARES HELD AS INVESTMENT WERE SHOWN UNDER THE HEAD INVESTMENT. A CHART S HOWING SCRIP - WISE OPENING STOCK, PURCHASE, SALE AND CLOSING STOCK IN RESPECT OF SHARES AND DEBENTURES HELD AS INVESTMENT WAS FILED. HE HAS ALSO PLACED RELIANCE UPON THE ORDER OF THE CIT(A) FOR EARLIER ASSESSMENT YEARS IN WHICH THE CIT(A) HAS HELD THAT THE INCOME ARISING FROM SHARES HELD AS INVESTMENT GIVES RISE TO CAPITAL GAINS AND COULD NOT BE TREATED AS BUSINESS INCOME. THIS ORDER OF CIT(A) WAS UPHELD BY THE TRIBUNAL AND LATER ON THE APPEAL FILED BY THE DEPARTMENT WAS ALSO DISMISSED BY HON'BLE ALLAHABAD HIGH COURT. 3.1 THE CIT( A) HAS EXAMINED THE ISSUE IN THE LIGHT OF THESE FACTS AND DELETED THE ADDITION AFTER HOLDING THAT THE INCOME ARISING FROM THE SALE OF SHARES HELD BY THE ASSESSEE AS INVESTMENT WAS CAPITAL GAIN AND NOT A BUSINESS PROFIT. THE RELEVANT OBSERVATION OF THE CIT (A) IS EXTRACTED HEREUNDER: THE HON'BLE I.T.A.T., IN THE APPELLANTS OWN CASE FOR ASSESSMENT YEAR 1997 - 1998 TO 2001 - 2002, 2005 - 06 & 2006 - 3 07 HAS ACCEPTED THE PLEA OF THE APPELLANT AND THEREBY CONFIRMED THE FINDING OF THE LEARNED CIT(A) THAT THE INCOME ARI SING FROM SALE OF SHARES HELD BY THE APPELLANT AS INVESTMENT WAS CAPITAL GAINS AND NOT BUSINESS PROFITS. IN VIEW OF THE ABOVE AND IN THE ABSENCE OF ANY CONTRADICTORY FACT OR MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER, I HOLD SUCH INCOME WOULD BE IN THE NATURE OF CAPITAL GAINS. 4. NOW THE REVENUE IS IN APPEAL BUT COULD NOT CONTROVERT THE FACTUAL ASPECT RECORDED BY THE CIT(A). HE SIMPLY PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED HE AVY RELIANCE ON THE ORDER OF CIT(A) WITH THE SUBMISSIONS THAT THE IMPUGNED ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL, WHICH WAS LATER ON CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT. COPIES OF THE ORDERS OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 1999 - 2000 TO 2001 - 2002 ARE PLACED ON RECORD. 6. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM PERUS AL OF THE MATERIAL ON RECORD , WE ARE OF THE CONSIDER ED VIEW THAT SINCE THE CONSISTENT VIEW HAS BEEN TAKEN THAT THE INCOME EARNED ON SALE OF SHARES HELD BY THE ASSESSEE AS INVESTMENT IS CAPITAL GAIN AND NOT A BUSINESS PROFIT, THERE IS NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN ABSENCE OF ANY MATERIAL ON RECORD. ACCORDINGLY, WE CONFIRM THE ORDE R OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28/06/2 013 ) SD/. SD/. ( PRAMOD KUMAR) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/06/2013 *SINGH 4 COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR