M/s Hero Investment Pvt. Ltd., Ludhiana V. DCIT, Ludhiana

ITA 567/CHANDI/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1623 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-12-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MEENAKHSI VOHRA
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Capital asset converted into stock in trade; Business income; Opportunity of being heard; Rule 8D; Set aside; Capital Gains
• Section: 45(2); 14A; 143(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A,CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 567/CHD/2015 ! / ASSESSMENT YEAR : 2010-11 M/S HERO INVESTMENT PVT. LTD., (NOW MERGED INTO M/S HERO MOTO CORP LTD.),HERO NAGAR, G.T. ROAD, LUDHIANA '# THE D CIT, CIRCLE V, LUDHIANA $ % ./PAN NO: AAACH4072N $&/ APPELLANT ()$& /RESPONDENT HEARING THOUGH VIDEO CONFERENCING *+ , - /ASSESSEE BY : SHRI SUBHASH AGGARWAL, ADVOCATE , - / REVENUE BY : SMT. MEENAKHSI VOHRA, ADDL. CI T . / , +0% /DATE OF HEARING : 01.12.2020 12! , +0% / DATE OF PRONOUNCEMENT : 01.12.2020 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 13.3.2015 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-2, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LEARNED CIT(A)-2 HAS ERRED IN CONFIRMING THE TREATMENT OF CAPITAL GAIN OF RS. 86,78,342/- (CONSISTING OF RS. 82,09,277/- BEING LONG TERM CAPI TAL ITA NO. 567-CHD-2015 M/S HERO INVESTMENT P. LTD, LUDHIANA 2 GAIN EXEMPT U/S 10(38) AND RS. 4,69,067/- BEING SHO RT TERM CAPITAL GAIN) AS 'BUSINESS INCOME'. 2. THAT THE LEARNED CIT(A) HAS ERRED IN CONSIDERIN G THE CAPITAL GAIN AS 'BUSINESS INCOME' WITHOUT GIVING TH E EFFECT OF PROVISIONS OF SECTION 45(2) OF THE INCOME TAX ACT. 3. THAT THE LEARNED CIT(A) HAS ERRED IN NOT CARRYI NG FORWARD BROUGHT FORWARD UNABSORBED CAPITAL LOSS OF ASSESSMENT YEAR 2005-06 AT RS. 27,38,978/- AND OF ASSESSMENT YEAR 2009-10 AT RS. 4,71,23,732/-. 4. THAT THE LEARNED CIT(A) HAS ERRED IN WRONGLY TR EATING THE SHORT TERM CAPITAL GAIN & LONG TERM CAPITAL GAIN AS 'BUSINESS INCOME' AND HAS FAILED TO ALLOW T HE ADMINISTRATION & OTHER EXPENSES AT RS. 1,91,521/-WH ICH WERE DISALLOWED IN THE COMPUTATION OF TAXABLE INCOM E. 5. THAT THE LEARNED CIT(A) HAS ERRED IN WRONGLY CONSIDERING THE PROVISIONS OF SECTION 14A R.W. RULE 8D(III) IN RESPECT OF ABOVE EXPENDITURE EVEN BY TRE ATING THE ASSESSEE AS A TRADER OF SHARES AND TREATING THE GAIN AS 'BUSINESS INCOME', THOUGH NO SEPARATE ADDITION W AS MADE AS THESE EXPENSES WERE NOT CLAIMED IN THE COMPUTATION OF TAXABLE INCOME. 6. THAT THE APPELLANT CRAVES LEAVE FOR PERMISSION TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3. GROUND NOS. 1 & 2 : THE SOLE ISSUE RAISED VIDE GROUND NOS. 1 & 2 IS AGAINST THE ACTION OF THE CIT(A) IN CONFIRMING THE TREATMENT OF CAPITAL GAINS (BEING LONG TERM CAPITAL GAIN EXEMPT U/S 10(38) AND SHORT TERM CAPITAL GAINS) AS BUSINESS INCOME. 4. AT THE OUTSET, BOTH THE LD. REPRESENTATIVES OF T HE PARTIES HAVE SUBMITTED THAT THE ISSUE RAISED THROUGH ABOVE GROUNDS OF APPEAL IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL DA TED 27.7.2020 IN THE ITA NO. 567-CHD-2015 M/S HERO INVESTMENT P. LTD, LUDHIANA 3 ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 ITA NO. 1450/CHD/2017. A COPY OF THE ORDER OF THE TRIBUNAL DATED 27.7.2020 (SUPRA) HAS BEEN PLACED ON THE FILE. 5. WE FIND THAT THE AFORESAID ISSUE INVOLVED IN TH IS APPEAL IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATED 27.7.2020 (SUPRA) RENDERED IN THE OWN CASE OF THE ASSESSEE FOR ASSESS MENT YEAR 2009-10, WHEREIN, THE TRIBUNAL AFTER DELIBERATING UPON THE I SSUE HAS SET ASIDE THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJU DICATED AFRESH BY OBSERVING AS UNDER:- 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE COMPANY WAS AN INVESTMENT COMPANY AND EARNED ITS INCOME FROM INVES TMENT IN SHARES AND SECURITIES. THE RETURN OF INCOME WAS FILED ON 2 7/09/2009 DECLARING AN INCOME OF RS. 56,08,454 WHICH WAS PROC ESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS ACT). WHILE FILING ITS RETURN OF INCOME THE ASSES SEE COMPANY CLAIMED LONG TERM CAPITAL LOSS OF RS. 4,71,23,732/- FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE A.O. TREATED THE SAID L OSS AS BUSINESS LOSS. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO UPHELD THE VIEW TAKEN BY THE A.O. 6. NOW THE ASSESSEE IS IN APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE DECISION RELATING TO THE NATURE OF LOSS WAS TO BE T AKEN BY CONSIDERING CIRCULAR NO. 4/2007 DT. 15/06/2007 AND THE CIRCULAR NO. 6/2016 DT. 29/02/2016 ISSUED BY CBDT. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) WAS WRONG IN NOT FOLLOWING THE CIRCULARS WHI CH WERE BINDING ON THE REVENUE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK VS. CIT REPOR TED AT 237 ITR 889. IT WAS ALSO SUBMITTED THAT FOR THE A.Y. 2008-0 9 THE LD. CIT(A)HAS CONSIDERED THE AFORESAID CIRCULAR AND ALL OWED THE RELIEF TO THE ASSESSEE. HE REQUESTED THAT THE MATTER MAY B E RESTORED BACK TO ITA NO. 567-CHD-2015 M/S HERO INVESTMENT P. LTD, LUDHIANA 4 THE FILE OF THE LD. CIT(A) TO BE DECIDED AFTER CONS IDERING THE AFORESAID REFERRED TO CIRCULARS ISSUED BY THE CBDT. 8. IN HIS RIVAL SUBMISSIONS THE LD. SR. DR ALTHOUG H SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER, HOWEVER DI D NOT OBJECT IF THE MATTER BE RESTORED TO THE FILE OF THE LD. CIT(A ). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE IT APPEARS THAT THE LD. CIT(A) WHILE DECIDING THE ISSU E AGITATED BY THE ASSESSEE DID NOT CONSIDER THE AFORESAID CIRCULARS N O. 4/2007 DT. 15/06/2007 AND 6/2016 DT. 29/02/2016 ISSUED BY THE CBDT. IT IS ALSO NOT CLEAR HOW AND IN WHICH CIRCUMSTANCES THE LD. CI T(A) DECIDED THE SIMILAR ISSUE FOR THE A.Y. 2008-09 IN ASSESSEES FA VOUR (AS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING). WE THEREFORE BY CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE AND IN THE ABSENCE OF THE CLEAR FACTS O N RECORD, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FIL E OF THE LD. CIT(A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 6. AT THIS STAGE, THE LD. COUNSEL HAS SUBMITTED THA T THE EARLIER ASSESSMENT YEAR REFERRED TO IN PARA 9 OF THE ABOVE ORDER IS 2011-12 AND 2012-13 INSTEAD OF 2008-09. THE LD. COUNSEL HAS ALS O PRODUCED ON FILE THE COPIES OF THE ORDERS OF THE CIT(A) FOR ASSESSME NT YEAR 2011-12 AND ASSESSMENT YEAR 2012-13 BOTH DATED 30.10.2018. A PE RUSAL OF THE ORDERS OF THE CIT(A) (SUPRA) REVEAL THAT THE CIT(A) IN THE SAID SUBSEQUENT YEARS, KEEPING IN VIEW THE CBDT CIRCULAR NO.6 OF 20 16 HAS DIRECTED THE ASSESSING OFFICER TO TREAT THE INCOME FROM SALE AN D PURCHASE OF SHARES / SECURITIES / PMS / MUTUAL FUNDS ETC. AS INCOME OF T HE ASSESSEE UNDER CAPITAL GAINS. ITA NO. 567-CHD-2015 M/S HERO INVESTMENT P. LTD, LUDHIANA 5 7. IN VIEW OF THE ABOVE DISCUSSION, FOLLOWING THE O RDER OF THE TRIBUNAL DATED 20.7.2020 (SUPRA) PASSED IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 AND KEEPING IN VIEW THE ORDERS OF THE CIT(A) DATED 30.10.2018 IN SUBSEQUENT ASSESSMENT YE ARS 2011-12 AND 2012-13, THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE LD. CIT( A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE A ND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THESE G ROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NOS. 3 TO 5 : GROUND NOS. 3 TO 5 HAVE NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AND ACCORDINGLY TH ESE ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 9. GROUND NO.6: THIS GROUND IS GENERAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 01.12.2020. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 01.12.2020 .. ITA NO. 567-CHD-2015 M/S HERO INVESTMENT P. LTD, LUDHIANA 6 3,(+45 65!+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. ()$& / THE RESPONDENT 3. . 7+ / CIT 4. . 7+ ( )/ THE CIT(A) 5. 58(+9 , 09 , :;<= / DR, ITAT, CHANDIGARH 6. <>/ / GUARD FILE 3 . / BY ORDER, ? / ASSISTANT REGISTRAR