DCIT 24(2), MUMBAI V. MANOJ N. TEKRIWAL, MUMBAI

ITA 5594/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3000 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G P MEHTA
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5594/MUM/2012 ASSESSMENT YEAR 2008-09 DY. CIT-24(2), C-13, 6 TH FLR. PRATYAKSHAKAR BHAVAN, BKC, BANDRA (EAST), MUMBAI-400051 / VS. SHRI MANOJ N. TEKRIWAL, B-504, HARISHCHANDRA APTS. RAHEJA TOWNSHIP, MALAD(E), MUMBAI-400097 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. ABTPT8105D / REVENUE BY SHRI RANDHIR GUPTA !'# $ / ASSESSEE BY SHRI G.P. MEHTA % & $ ' / DATE OF HEARING : 26/10/2015 & $ ' / DATE OF ORDER: 05/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 15/06/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO T REATING THE PROFIT ON SALE OF SCRIPS WITH HOLDING PERIOD OF MOR E THAN 30 SHRI MANOJ N.TEKRIWAL ITA NO.5594/MUM/2012 2 DAYS AS CAPITAL GAINS, SHORT TERM CAPITAL GAINS AT RS.56,32,080/- AND LONG TERM CAPITAL GAIN AT RS.1,9 8,555/-. 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGUMENT, ADVANCED ON BEHALF OF THE REVENUE, BY SHR I RANDHIR GUPTA, LD. DR, IS IDENTICAL TO THE GROUND R AISED. ON THE OTHER HAND, SHRI G.P. MEHTA, LD. COUNSEL FOR TH E ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN SHARE TRADING, DERIVES INCOME FROM CAPITAL GAINS. WE NOTE THAT THE LD. ASS ESSING OFFICER CONCLUDED THAT THE ASSESSEE IS DOING BUSINE SS/TRADING OF SHARES MAINLY ON THE PLEA THAT THERE WERE REPEAT ED TRANSACTIONS IN SOME SCRIPS, WHICH LAID TO EARNING OF HUGE PROFITS, THERE ARE MORE THAN 100 SCRIPS TRANSACTED IN 150 DAYS DURING THE YEAR, HOLDING PERIOD WAS LESS THAN 15 DAYS IN MANY SCRIPS AND THE INTENTION OF THE ASSESSEE WAS N OT TO HOLD THE SCRIPS FOR A LONGER PERIOD I.E. NOT THE PURPOSE S OF INVESTMENT BUT WITH THE INTENTION OF TRADING. WE NO TE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHILE REA CHING TO A PARTICULAR CONCLUSION, DULY CONSIDERED THE SUBMIS SIONS OF THE ASSESSEE AS CONTAINED IN PARA 4.2 (PAGE -2) ONW ARDS OF THE IMPUGNED ORDER AND FOUND THAT THE ASSESSEE SHOW ED INVESTMENT IN SHARES OF 42 COMPANIES ONLY. BEFORE C OMING TO ANY CONCLUSION, WE ARE SUMMARIZING HEREUNDER THE HO LDING PERIOD OF THE SHARES FOR READY REFERENCE:- SHRI MANOJ N.TEKRIWAL ITA NO.5594/MUM/2012 3 PERIOD OF HOLDING NO. OF SALE TRANSACTIONS CAPITAL GAIN % OF TOTAL CAPITAL GAIN 0 - 30 DAYS 24 3,17,331 5% 31 - 60 DAYS 7 15,34,022 26% 61 - 90 DAYS 8 9,18,734 15% 91 - 180 DAYS 16 32,07,258 54% 181 - 365 DAYS 11 - 27,934 0% TOTAL 66 59,49,411 100% FROM THE CHART (REPRODUCED AT PAGE-3 OF THE IMPUGNE D ORDER), WE NOTE THAT THE ASSESSEE EARNED 50% OF THE SHORT TERM CAPITAL GAINS OUT OF THE INVESTMENT, WHERE, TH E HOLDING PERIOD IS MORE THAN 90 DAYS I.E. FOR THE CAPITAL GA IN OF RS.9,18,734/-(15% OF THE TOTAL CAPITAL GAIN) THE HO LDING PERIOD IS BETWEEN 61 TO 90 DAYS, WHEREAS, FOR GAIN OF RS.32,07,258/- (WHICH IS 54% OF THE TOTAL CAPITAL G AIN) THE HOLDING PERIOD IS 91 TO 180 DAYS AND THE NUMBER OF SALE OF TRANSACTIONS ARE ONLY 16, THUS, THE CONTENTION OF T HE LD. DR AND FINDING OF THE LD. ASSESSING OFFICER THAT THE A SSESSEE HOLD MAJORITY OF THE SHARES FOR A PERIOD OF LESS THAN 15 DAYS IS FACTUALLY INCORRECT. THERE ARE 5% OF THE TRANSACTI ONS, WHERE THE CAPITAL GAIN IS TO THE TUNE OF RS.3,17,331/- HA VING HOLDING PERIOD UP TO 30 DAYS AND ONLY 7 TRANSACTION S (WHICH IS 26% OF THE CAPITAL GAIN) WHEREIN, THE HOLDING PE RIOD IS 31 TO 60 DAYS, THUS, FOR 66 TRANSACTIONS, THE CAPITAL GAIN IS RS.59,49,411/-. THE TOTALITY OF FACTS, CLEARLY IND ICATE THAT THE VOLUME OF TRANSACTIONS IS NOT SO HIGH AS HAS BEEN M ENTIONED BY THE LD. ASSESSING OFFICER. IT IS ALSO NOT WORTH Y THAT IN IMMEDIATE ASSESSMENT YEAR I.E. A.Y. 2007-08, WHICH WAS FRAMED U/S 143(3) OF THE ACT, THE ASSESSING OFFICER ACCEPTED THE CLAIM OF CAPITAL GAINS EARNED BY THE ASSESSEE. WHETHER THE ASSESSEE CAN BE CALLED AN INVESTOR AS WELL AS T RADER HAS SHRI MANOJ N.TEKRIWAL ITA NO.5594/MUM/2012 4 BEEN EXPLAINED IN CIRCULAR NO.4 OF 2007 (291 ITR (S T.)35). THE CASE OF THE ASSESSEE FURTHER FIND SUPPORTS FROM THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHIT 228 CTR 582 (BOM.), WHICH WAS TAKEN I N A APPEAL FILED AGAINST THE DECISION OF THE TRIBUNAL I N 29 SOT 117 (MUMB. TRIB.) AND JANAK S. RANGWALA VS ACT (11 SOT 627) (MUM.). ADMITTEDLY, THERE ARE VARIOUS DECISION S AVAILABLE ON THE ISSUE BUT THERE IS NO STRAIT JACKET FORMULA, WHICH CAN BE SAID TO BE FITTING TO THE CASE OF THE ASSESSEE. HOWEVER, THE FREQUENCY, VOLUME, DURATION, AMOUNT INVOLVED, NATUR E OF AMOUNT INVESTED, INTENTION OF THE ASSESSEE, HOLDING PERIOD, ETC ARE SOME OF THE FACTORS, WHICH HAS TO BE CONSID ERED WHILE TAKING A DECISION AS PER THE ASSESSEE, THERE ARE 42 TRANSACTIONS OF SHORT TERM CAPITAL GAIN AND 11 ARE FOR LONG TERM CAPITAL GAIN. THE TOTAL NUMBER OF DAYS ARE 15 0 OF BUYING AND SELLING OF SCRIPTS WITHIN A YEAR AND THE SALES ARE NOT ON DAY TO DAY BASIS. ADMITTEDLY, THE MOST OF T HE TRANSACTIONS RESULTED INTO PROFITS, WHICH IS THE MO TIVE OF EVERY INVESTOR/TRADER, BUT IT CANNOT BE CONCLUDE THAT THE ASSESSEE WAS INDULGING IN PURELY BUSINESS ACTIVITY. IT IS AL SO NOTED THAT THERE ARE NOT MUCH REPETITIVE PURCHASE AND SALE OF THE SCRIPS EXCEPT FEW. THE CONDUCT OF THE ASSESSEE ALSO DEPIC TS THAT THE INTENTION WAS TO HOLD THE SHARES FOR SOME TIME BEFO RE THEY ARE DISPOSED OFF. THERE IS NO MUCH INTRA TRADING AC TIVITY. EVEN OTHERWISE, A PRUDENT INVESTOR KEEPS A WATCH ON THE MARKET RENT AND SOMETIMES A WHEN A PARTICULAR SCRIP S IS CONTINUOUSLY IN A DECREASING TREND THEN TO SAVE HIM SELF FROM FURTHER LOSSES LIQUIDATE THE SAME. THE CONDUCT OF T HE SHRI MANOJ N.TEKRIWAL ITA NO.5594/MUM/2012 5 ASSESSEE IS VERY RELEVANT, THUS, SALE OF 42 SCRIPS IN 150 DAYS, IT CAN BE SAID THAT THE FREQUENCY IS NOT HIGH. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TREATED THE PR OFIT OF RS.3,17,331/- ON SALE OF SCRIPS WHERE THE HOLDING P ERIOD WAS LESS THAN 30 DAYS AS BUSINESS AND FOR THE REMAINING WHERE THE HOLDING PERIOD WAS MORE THAN 30 DAYS, WAS TREAT ED AS SHORT TERM CAPITAL GAIN. SO FAR AS, LONG TERM CAP ITAL GAIN OF RS.1,98,555/- IS CONCERNED, THERE WERE ONLY 14 TRAN SACTIONS, COMPRISING OF 12 COMPANIES, OUT OF WHICH, GAIN WAS RESULTED OUT OF 7 SCRIPS AND IN REMAINING 5, THERE WAS A LOS S. THE HOLDING PERIOD WAS MORE THAN ONE YEAR, THUS, IT CAN NOT BE SAID TO BE A BUSINESS PROFIT AND WAS RIGHTLY HELD A S LONG TERM CAPITAL GAIN. THUS, WE FIND NO INFIRMITY IN THE C ONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 26/10/2015. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ( DATED : 05/11/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( *+ ) / THE CIT, MUMBAI. SHRI MANOJ N.TEKRIWAL ITA NO.5594/MUM/2012 6 4. 0 0 1$ / CIT(A)- , MUMBAI 5. 34 .$ ! , 0 *+' *! 5 , % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. / BY ORDER, /3+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI.