ACIT 32(3), MUMBAI V. RAJESH DAMJI NANDU (HUF), MUMBAI

ITA 5561/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2440 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: MITESH N SHAH
• Keywords: Business income
• Section: 143(3)

Judgement Text

AAYAK AAYAK AAYAK AAYAKR APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQAKRNA N AKRNA N AKRNA N AKRNA NYAAYAPIZ YAAYAPIZ YAAYAPIZ YAAYAPIZ MAMUBA[ MAMUBA[ MAMUBA[ MAMUBA[- -- - MAO MAOMAO MAO. .. . IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR A GGARWAL, AM AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SAM MM M . / ITA NO5561 /MUM/2017 ( INAQA-ARNA BAYA- / ASSESSMENT YEAR 2012-13) ACIT, 32(3), MUMBAI. VS. SHRI RAJESH DAMJI NANDU HUF, A-103, ADITYA TOWER, CHANDAVARKAR ROAD, BORIVALI (W), MUMBAI . ( APILAAQA APILAAQA APILAAQA APILAAQAI II I - -- - / APPELLANT) .. ( P` P`P` P`%YAQAA %YAQAA %YAQAA %YAQAAI II I- -- - / RESPONDENT) PAN NO. REVENUE BY : SHRI D.G.PANSARI, D.R. ASSESSEE BY : SHRI MITESH N SHAH, AR DATE OF HEARING: 12.3.2019 DATE OF PRONOUNCEMENT : 12 - - 03 - 2019 AADOSA AADOSA AADOSA AADOSA / O R D E R PER MAHAVIR SINGH, JM: THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-44, MUMBAI [IN SHORT CIT(A)], IN APPEAL NO. CIT(A)-44/ACIT 32(3)/ITA -30-15-16 DATED 14.6.2017. THE ASSESSMENT WAS FRAMED BY THE ACIT 32(3),MUMBAI FOR THE A.Y. 2012-13 VIDE ORDER DATED 26.3.2015 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2 ITA NO.5561/MUM/2017 ASSESSMENT YEAR 2012-13 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AS REGARDS TO THE HOLDING OF THE CIT (A) THAT INCOME OF THE ASSES SEE FROM SHARE TRANSACTIONS IS INCOME TAXABLE UNDER THE HEAD CAPIT AL GAIN AND NOT BUSINESS INCOME. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING OF THE CIT (A) THAT INC OME OF THE ASSESSEE FROM SHARE TRANSACTIONS IS INCOME TAXABLE UNDER THE HEAD CAPITAL GAIN AND NOT BUSINESS INCOME WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS DONE SHARE TRANSACTIONS IN HIGH VOLUME DURING THE COURSE OF TH E YEAR. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE H AS CLAIMED SHORT TERM CAPITAL LOSS TO THE TUNE OF 2,04,29,008/- FROM SHARE TRANSACTION. THE ASSESSEE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, ON CALLED UPON BY THE ASSESSING OFFICE R, FILED DETAILS OF SHARE TRANSACTION ALONGWITH COPIES OF BILLS, DEM AT ACCOUNT ETC. THE ASSESSEE FILED COMPLETE DETAILS BUT THE ASSESSI NG OFFICER OBSERVED THAT ASSESSEE IS CONSISTENTLY ENGAGED IN T HE BUSINESS OF DEALING IN SHARES IN THE PRECEDING ASSESSMENT YEARS I.E. 2005-06 TO 2011-12. THE ASSESSING OFFICER RELYING ON THE ORDE RS FOR EARLIER YEARS, TREATED THE ASSESSEES INCOME SHOWN FROM CAP ITAL GAINS AS BUSINESS INCOME. PARTICULARLY, THE ASSESSING OFFIC ER NOTED AS UNDER: THE SUBMISSION OF THE ASSESSEE IS PERUSED. HOWEVE R, THE SAME IS NOT ACCEPTABLE. FURTHER, CONSIDERING THE F ACTS AND RELYING UPON THE ASSESSMENT ORDERS FOR EARLIER YEAR S THE ASSESSEES INCOME SHOWN AS CAPITAL GAINS IS TREATED AS INCOME FROM BUSINESS. 3 ITA NO.5561/MUM/2017 ASSESSMENT YEAR 2012-13 FURTHER, IT IS PERTINENT TO MENTION HERE THAT THE A SSESSEE, IN APPEAL, BEFORE THE CIT(A)-35, MUMBAI WITHDREW THE A PPEAL AGAINST THE ASSESSMENT ORDER FOR A.Y. 2008-09. HEN CE, THE CIT (A)-35, MUMBAI DISMISSED THE APPEAL VIDE APPELL ATE ORDER NO.CI(A)-35/ACIT 25(2)/ITA NHO.207/10-11 DATG ED 18.5.2011. 4. THE CIT (A) RELYING ON THE TRIBUNALS DECISION F OR ASSESSMENT YEAR 2010-11 IN ITA NO.1721/MUM/2014 ORD ER DATED 2.3.2016, WHEREIN, ORDERS FOR EARLIER YEARS OF ITA T DECISIONS WERE FOLLOWED, ALLOWED THE CLAIM OF THE ASSESSEE. THE C IT(A) ALSO CONSIDERED THE CBDT CIRCULAR NO.6 DATED 29.2.2016 O N THIS ISSUE. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBS ERVING IN PARAS 23.3. TO 3.5 AS UNDER: 3.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMEN T ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. I HAVE ALSO S TUDIED THE ORDER OF IT AT IN APPELLANT'S OWN CASE. IN THE ASSESSMENT ORDER THE ONLY REASON GIVEN BY THE AO FOR TREATING THE INCOME ARISING FRO M THE SALE OF SHARES AS BUSINESS INCOME INSTEAD OF INCOME FROM CAPITAL G AIN IS THE FACT THAT IN PREVIOUS ASSESSMENT YEARS ALSO ON SIMILAR ISSUE THE SAME THING WAS DONE BY ASSESSING OFFICERS. APART FROM THIS NO .ENQ UIRY OR INVESTIGATION SEEMS TO HAVE BEEN DONE BY THE ASSESSING OFFICER BUT ON SIMILAR ISSUES AND FACTS THE HON'BLE IT AT HAS ALREADY DECIDED THE APPEAL OF THE APPELLANT FOR AY 2010-11 IN HIS FAVOUR, ( THE HON'BLE IT AT D BENCH VIDE ITS ORDER DATED 02,03.2016 HAS OBSERVED ......... WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE LOWER AUTHORITIES AND AFTER CONSIDERING THE SAME, WE FOUND THAT SINCE THE ID. CIT(A) HAS BASED HIS ENTIRE FINDINGS BYPASSING A REASONED AND SPEAKING ORDER AND ALSO BY TAKING INTO CONSIDERATION THE PRINCIPLES OF CONSISTENCY AS SIMILAR SITUATION WAS FOUND IN THE CASE OF RAJESH D NANDU, AN INDIVIDUAL IN WHICH SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 12,02.2010 AND 11.07.2013. SUBSEQUENTLY THOSE ORDERS WERE ALSO UPHELD BY THE IT AT (MUM) BENCH IN ITA NO. 4330/MUM /2009 (AY 2006- 07) AND IN ITA NO. 3384/MUM/2010(AY 2007-08). AND S INCE THE FACTS OF PRESENT CASE ARE IDENTICAL THEREFORE, CIT(A), HAS RIGHTLY HELD THAT THERE IS NO REASON TO TAKE DIFFERENT DECISION IN THE CASE OF HUF AND CIT(A) HAS ALSO FOLLOWED THE CASE OF 'GOPAL PUROHIT'. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE ID CIT(A) DO NOT REQUIRE ANY 4 ITA NO.5561/MUM/2017 ASSESSMENT YEAR 2012-13 INTERFERENCE FROM US THEREFORE, WE UPHOLD THE SAME. IN THE RESULT, THE REVENUE'S APPEAL IS DISMISSED. 3.4 IT IS SEEN FROM THE FACTS, OF-THE CASE THAT T HE APPELLANT HAS CONSISTENTLY SHOWN SHARES AS INVESTMENT IN HIS BALA NCE SHEET. THE QUESTION OF TREATMENT OF INCOME ARISING OUT OF SALE OF SCARES HAS BEEN CONCLUSIVELY DECIDED BY THE CBDT IN ITS CIRCULAR NO . 6 DATED 29.02.2016. THE RELEVANT PORTION OF THE SAID CIRCULAR IS REPROD UCED AS BELOW: 'WHERE THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PER IOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO TREAT THE M AS STOCK-IN- TRADE, THE INCOME ARISING FROM-TRANSFER OF SUCH SHA RES/SECURITIES WOULD BE TREATED AS ITS BUSINESS INCOME, 3.5 IT IS OBVIOUS THAT THE APPELLANT HAS OPTED TO T REAT THE SHARES AS INVESTMENT RATHER THAN AS A STOCK IN TRADE. IT IS E QUALLY OBVIOUS THAT THE APPELLANT HAS BEEN INCOME ARISING OUT OF SALE OF SH ARES AS INCOME UNDER THE HEAD CAPITAL GAINS. AFTER CONSIDERING THE TOTA LITY OF FACTS, DECISION OF ITAT MUMBAI IN APPELLANTS OWN CASE AND CIRCULAR NO .6 OF 2016, I AM OF THE OPINION THAT INCOME ARISING OUT OF SALE OF SHAR ES WHICH HAVE BEEN TREATED BY THE AO AS BUSINESS INCOME WILL HAVE TO B E TREATED AS INCOME UNDER THE CAPITAL GAINS. GROUNDS OF APPEAL NO.1 IS THEREFORE, ALLOWED. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE TRIBUN AL IS CONSISTENTLY FOLLOWING THE ORDERS OF THE ASSESSMENT YEARS 2006- 07 TO 2011-12 TREATING THE INCOME OF THE ASSESSEE UNDER THE HEAD CAPITAL GAINS. WE FIND THAT THE ACTIVITY FROM SHARE TRANSACTION IS CAPITAL GAINS EITHER LONG TERM AND SHORT TERM AS THE CASE MAY BE AND NOT BUSINESS INCO ME. AS THE TRIBUNAL IS CONSISTENTLY TAKING THIS VIEW, WE RESPECTFULLY FOLLOWING THE SAME, AFFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 5 ITA NO.5561/MUM/2017 ASSESSMENT YEAR 2012-13 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 12-03- 2019. AADOSA KI AADOSA KI AADOSA KI AADOSA KI GAAO GAAOGAAO GAAOYANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK 15. 03.2019 KAO KI KAO KI KAO KI KAO KI GA GAGA GA SD/- SD/- (MANOJ KUMAR AGARWAL) (MAHAVIR SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12- - 03- 2019 BKP/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//