M/s. Dreamland Buildtech Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5675/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96978 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: SANTOSH K AGGARWAL
• Keywords: Capital asset; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO: 5675/DEL/2011 ASSTT. YEAR 2007-08 M/S. DREAMLAND BUILDTECH PVT. LTD. VS. ACIT 910, ANSAL BHAWAN, CIRCLE-10(1) KASTURBA GANDHI MARG NEW DELHI. NEW DELHI. (PAN AACCD0809M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANTOSH K AGGARWAL, ADVOCATE RESPONDENT BY :SMT. PARVINDER KAUR, SR. DR DATE OF HEARING :17.8.2015 DATE OF PRONOUNCEMENT :17. 8.2015 O R D E R PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AG AINST THE ORDER OF LD. CIT(A) DATED 13.10.2011. THE ASSESSEE HAS TAKEN 13 GROUNDS OF AP PEAL. HOWEVER THE CRUX OF THE APPEAL IS THE GRIEVANCE OF ASSESSEE BY THE ORDER OF LD. CIT(A) BY WHICH HE HAD UPHELD PENALTY IMPOSED BY AO U/S 271 (1)(C) OF THE ACT. AT THE OUTSET LD. AR INVITED OUR ATTENTION TO AN ORDER OF TRIBUNAL DATED 12 TH DECEMBER, 2014 AND SUBMITTED THAT THE ISSUE ON WHICH PENALTY WAS IMPOSED HAS ALREADY BEEN DECIDED BY THE HONBLE TRIBUNAL IN FAVOUR OF ASSESSEE AND IN THIS RESPECT HE INVITED OUR ATTENTION TO PARA 8.3 ITA NO. 5675/DEL/2011 DREAMLAND BUI LDTECH PVT. LTD. VS ACIT 2 OF THE SAID ORDER. FURTHER EXPLAINING THE FACTS THE LD. AR SUBMITTED THAT LD. CIT(A) HAD UPHELD THE PENALTY U/S 271(1)(C) OF THE ACT AS A PART OF CAPITAL GAIN INCOME DECLARED BY ASSESSEE WAS TREATED AS BUSINESS INCOME WHICH THE HONBLE TRIBUNAL HAD DECIDED IN ITS FAVOUR AND THEREFORE THE PENALTY DOES NOT SURVIVE. THE LD. DR THOUGH SUPPORTED THE ORDER OF LD. CIT(A) BUT SUBMIT TED THAT SHE WILL GO THROUGH THE ORDERS OF HONBLE TRIBUNAL. 2. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE PENALTY WAS IMPOSED AS THE AO TREATED AS PART OF INCOME FROM SALE OF SHARES AS BUSINESS INCOME AND I N THIS RESPECT THE FACTS NOTED IN PENALTY ORDER ARE REPRODUCED BELOW :- I ACCORDINGLY, HOLD THAT GAIN OF RS. 2,53,84,621/- EARNED BY THE COMPANY ON SALE OF SHARES WITHIN A PERIOD OF 30 DAY S WAS I THE NATURE OF BUSINESS INCOME. ACCORDINGLY, I ACCEPT THE CONTE NTION OF THE APPELLANT TO THE EXTENT OF SHORT TERM CAPITAL GAIN OF RS. 3,35,01,577/- AS SHORT TERM CAPITAL GAIN, RS. 7,24,61,100/- AND I ALSO HOLD THAT AMOUNT OF RS. 2,53,84,621/- IS IN THE NATURE OF BUS INESS INCOME. AO IS DIRECTED TO TREAT RS. 3,35,01,577/- AS SHORT TERM C APITAL GAIN, RS. 7,24,61,100/- AS LONG TERM CAPITAL GAIN AND RS. 2,5 3,84,621/- AS BUSINESS INCOME. THIS GROUND IS PARTLY ALLOWED. 3. WE FIND THAT THE HONBLE TRIBUNAL VIDE ITS ORDER DATED 12 TH DECEMBER, 2014 HAS DISPOSED OF CROSS APPEALS FOR ASSESSMENT YEARS 2006-07 AND 2007-08. IN THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ONE OF THE ISSUES IS REGARDING TREATMENT OF CAPITAL GAIN AS BUSINESS INCOME. THE HONBLE TRIBUNAL VIDE PARA 8.3 AND 8.4 HAS HELD INCOME FROM SHARES HELD F OR LESS THAN 30 DAYS IN THE PRESENT CASE CANNOT BE TREATED AS BUSINESS INCOME. THE RELEVANT PARA 8.3 AND 8.4 IS REPRODUCED BELOW:- ITA NO. 5675/DEL/2011 DREAMLAND BUI LDTECH PVT. LTD. VS ACIT 3 8.3 WE NOW CONSIDER THE FINDINGS OF THE LD. CI T(A) WHEREIN HE HAS HELD THAT THE GAINS RECEIVED ON SHARES WHICH WERE HELD FOR A PERIOD OF LESS THAN 30 DAYS SHOULD BE ASSESSED AS INCOME FROM BUSINESS. THE MUMBAI H BENCH OF THE TRIBUNAL IN THE CASE OF MR. HITESH SATISHCHA NDRA DOSHI ETEMIA VS. JCIT IN ITA NO. 6497/MUM/2009 AND ITA 148/MUM/2010 FOR T HE ASSESSMENT YEAR 2003-04 AND OTHER APPEALS HAD AFTER CONSIDERING A N UMBER OF DECISIONS AT PAGE 15 HELD AS FOLLOWS. THEREFORE, THE BIFURCATION OF THE SHORT TERM CAPIT AL GAIN AND TREATING THE TRANSACTION AS INVESTMENT IN THE CASES WHERE THE HO LDING PERIOD OF MORE THAN 30 DAYS AND AS BUSINESS TRANSACTION IN THE CASE WHE RE THE HOLDING PERIOD IS LESS THAN 30 DAY, IN OUR CONSIDERED OPINION, IS NOT JUSTIFIED ON THE PART OF THE CIT(A). SINCE THERE CANNOT BE A SINGLE CRITERIA FOR JUDGING THE TRANSACTION AS CAPITAL ASSET OR TRADING ASSET, THE CIT(A) ADOPTED ONLY HOLDING PERIOD AS A SOLE CRITERIA FOR BIFURCATING THE TRANSACTIONS RELA TING TO THE SHORT TERM CAPITAL GAIN, WHICH IS NEITHER PROPER AND NOR JUSTIFIED. 8.4 RESPECTFULLY FOLLOWING THE SAME WE HAVE TO N ECESSARILY DISLODGE THIS DIRECTION OF THE LD. CIT(APPEALS). WE HOLD THAT THE ENTIRE PROFITS FROM THE PURCHASE AND SALE OF SHARES HAVE TO BE ASSESSED UND ER THE HEAD CAPITAL GAINS. 4. THE HONBLE TRIBUNAL IN THE SAME ORDER HAS A LLOWED RELIEF TO THE ASSESEE IN ASSESSMENT YEAR 2007-08 BY FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2006-07. THE GROUND NO.2 IN ASSTT. YEAR 2007-08 READS AS UNDER: THAT THE CIT(A) ERRED IN HOLDING THAT THE GAIN OF RS. 25384621/- OUT OF THE TOTAL SHORT TERM CAPITAL GAIN FROM SALE OF SHARES W AS BUSINESS PROFIT. 5. THE HONBLE TRIBUNAL HAS DISPOSED OF THIS IS SUE VIDE PARA 12 AND 12.1. THE SAME IS REPRODUCED BELOW :- 12. GROUND NOS. 2 AND 3 ARE IDENTICAL TO GROUND NOS . 2 AND 3 OF THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2006-07. IN THIS ASSESSMENT YEAR ITA NO. 5675/DEL/2011 DREAMLAND BUI LDTECH PVT. LTD. VS ACIT 4 THE FACTUAL POSITION OF PERIOD OF HOLDING IS BROUGH T OUT BY THE LD. CIT(A) AT PAGE 42 OF HIS ORDER AS FOLLOWS : I HAVE ALSO CALLED FOR BIFURCATION OF PROFIT RELAT ING TO SHARES DECLARED AS INVESTMENT IN THE PAST AND TRANSACTION CARRIED OUT IN THE YEAR UNDER REFERENCE ON THE BASIS OF PERIOD OF HOLDING. THE RE LEVANT BIFURCATION IS AS UNDER :- 1. CAPITAL GAIN ON SHARES SOLD OF INVESTMENT OF PRECED ING YEARS WHICH WERE DISCLOSED IN THE BALANCE SHEET AS INVESTMENT (ST) RS. 1,95,06,51/- AND (LT) RS. 7,24 ,61,100/- 2. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO HOLDING PERIOD OF 6 MONTHS AND ABOVE RS. 2,39,07,368/- 3. SHORT TERM CAPITAL GAIN ONINVESTMENT RELATING TO HO LDING PERIOD OF 5-6 MONTHS RS. 68,24,511/ - 4. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO H OLDING PERIOD OF 4-5 MONTHS RS. 62,90,269 /- 5. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO H OLDING PERIOD OF 3-4 MONTHS RS.47,05,291 /- 6. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO H OLDING PERIOD OF 2-3 MONTHS. RS. 12,82,2 45/- 7. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO H OLDING PERIOD OF 1-2 MONTHS RS. 29,04, 972/- 8. SHORT TERM CAPITAL GAIN ON INVESTMENT RELATING TO H OLDING PERIOD UPTO 1 MONTH RS. 2,53 ,84,621/- 12.1 AS THE FACTUAL POSITION OF THIS YEAR IS IDE NTICAL TO THE FACTUAL POSITION OF THE P.Y. WE ALLOW THESE GROUNDS OF THE ASSESSEE FOR THE SAME REASONS THAT WERE CITED BY US WHILE DISPOSING OF THE CASE FOR TH E ASSESSMENT YEAR 2006- 07. 6. FROM THE ABOVE FINDINGS OF HONBLE TRIBUNA L, WE FIND THAT THE ASSESSEE HAS BEEN GRANTED RELIEF IN THIS RESPECT AND THEREFORE T HE PENALTY UPHELD BY THE LD. CIT(A) ON ACCOUNT OF THIS ADDITION DOES NOT SUSTAIN . IN VIEW OF THE ABOVE THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 5675/DEL/2011 DREAMLAND BUI LDTECH PVT. LTD. VS ACIT 5 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2015. SD/- SD/- (C.M. GARG) (T.S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: THE 17 TH AUGUST, 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 17.8..2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 17.8.2 015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER