SMITA MODI, MUMBAI V. ITO 12(2)(3), MUMBAI

ITA 5756/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9197 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Business income
• Section: 143(3)

Judgement Text

. , , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO. 5756 / MUM/20 1 3 ( / ASSESSMENT YEAR : 2009 - 10 ) SMITA MODI, 3 RD FLOOR, 29, SHARDA SADAN, 11, S.A.BRELVI ROAD, FORT, MUMBAI - 400001 VS. ITO 12(2)(3), MUMBAI ./ ./ PAN/GIR NO. : A A OPM 3884 E ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI NISHIT GANDHI /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 25 /03/2015 / DATE OF PRONOUNCEMENT 25 / 03/2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 26 - 7 - 2013 , FOR THE A.Y.200 9 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO TREATING GAIN OF RS. 3 ,01,908/ - OFFERED ON SALE OF SHARES OF ICICI BANK LTD. AS CAPITAL GAINS, WHICH WAS TREATED BY THE AO AS BUSINESS INCOME. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE HAS INVESTED RS. 6.12 CRORES AS IN THE SHARES OUT OF HER CAPITAL OF RS.22.94 CRORES, OUT OF THE TOTAL HOLDING MOST OF THE SHARES WERE IN THE ITA NO. 5756 / 1 3 2 FORM OF LONG TERM INVESTMENT. THESE FACTS HAVE DULY BEEN ACCEPTED BY THE AO. THE CAPITAL GAIN SO OFFERED WAS ACCEPTED BY THE DEPARTMENT IN THE IMMEDIATELY PRECEDING YEAR UNDER SCRU TINY ASSESSMENT AS CAPITAL GAIN AND ALSO FOR THE SUBSEQUENT ASSESSMENT YEAR UNDER SECTION 143(3) ASSESSMENT. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS PURCHASED AND SOLD SHARES IN ONE SCRIPT OF ICICI BANK AND EARNED CAPITAL GAIN OF RS.3,01,908/ - WH ICH THE AO HAS HELD AS BUSINESS INCOME, OPINING THAT A SSESSEE HAS TRADED IN HUGE QUANTITY OF SHARES . THE ASSESSEE HAVING HER OWN CAPITOL AND T HERE IS NO RESTRICTI ON INVESTMENT IN SH A RES IN TERMS OF QUANTITY AND VALUE . T HE PURCHASE AND S A LE OF SH A RES OF ICI CI BANK IS A SINGLE TRANSACTION W HICH WERE SOLD AS PER ADVICE OF BROKER AS THE SH A RE MARKET WAS IN TURMOIL DURING THIS PERIOD AND IN ORDER TO A VOID FURTHER LOSS AS PER ADVICE OF HER BR O KER SHE H A D SOLD SUCH SHORES AND SUCH SINGLE TRANSACTION OF PURCHASE AN D S A LE OF SHARES CANNOT BE TAKEN AS BASIS FOR TREATING ASSESSEE AS TRADER . THERE IS NO DISPUTE TO THE FACT THAT SINCE BEGINNING ASSESSEE HAS ACCOUNTED THE SHARES PURCHASED AS INVESTMENT. THE ASSESSEE HAS PURCHASED AND S OLD SHARES OF ON E SCRIPT AND THERE WA S NO VOLUMINOUS OF TRANSACTION . I N THE BOOKS OF ACCOUNT IT WAS SHOWN AS INVESTMENT, ACCORDINGLY ALL THE CONDITIONS LAID DOWN BY THE CBDT CIRCULAR NO.4 OF 2007., DATED 15 - 6 - 2007 WAS FULFILLED IN RESPECT OF SHARES HELD FOR MORE THAN ONE YEAR. THE ASSESSEE HA S CLAIMED LONG TERM AND SHORT TERM CAPITAL GAIN S. HOWEVER, T HE AO REJECTED THE CAPITAL GAIN EARNED IN RESPECT OF SHARES HELD FOR LESS THAN ONE YEAR. RELIANCE WAS PLACED BY LD. AR ON THE DECISION OF MUMBAI BENCH IN THE CASE OF HITESH ITA NO. 5756 / 1 3 3 DOSHI, WHEREIN THE TRIB UNAL HAS HELD THAT PROFIT EARNED ON SALE OF SHARES EVEN THOUGH HELD FOR LESS THAN 30 DAYS WAS LIABLE TO TAX AS CAPITAL GAIN AND NOT AS BUSINESS INCOME. 4. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE WAS CONSISTEN TLY HOLDING THE SHARES AS INVESTMENT WHICH WAS ALSO OUT OF OWN FUNDS ONLY, PROFIT IN RESPECT OF SHARES HELD FOR MORE THAN ONE YEAR WAS ACCEPTED BY THE AO AS LONG TERM CAPITAL GAIN S AND EVEN DURING IMMEDIATELY PRECEDING AND SUBSEQUENT YEAR UNDER SCRUTINY AS SESSMENT THE AO HAS ACCEPTED ASSESSEES CLAIM FOR CAPITAL GAIN ON SALE OF SHARES, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR TREATING THE CAPITAL GAIN S OF RS.3,01,908/ - OFFERED ON SALE OF SHARES OF ICICI BANK LTD. DURING THE YEAR UNDER CONSIDERATION AS BUSINESS INCOME. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25 /03/ 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 25 /03 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / I TAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//