DARSHAK DADBHAWALA, MUMBAI V. ASST CIT 16(2), MUMBAI

ITA 6039/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2806 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2013
• Court: TRIBUNAL
• Department Lawyers: SATYAJIT MANDAL SR
• Assessee Lawyers: R K CHOKSHI
• Keywords: Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO. 6039/M/2013 (AY: 2010 - 2011 ) DARSHAK DADBHAWALA, 601, VIJAY APARTMENT, BHULABHAI DESAI ROAD, WARDEN ROAD, MUMBAI - 36. / VS. ACIT - 16(2), MATRU MANDIR, 2 ND FLOOR, GRANT ROAD (W), MUMBAI - 400036. ./ PAN : AAAPD6322J ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO. 6478/M/2013 (AY: 2010 - 2011 ) ACIT - 16(2), MATRU MANDIR, 2 ND FLOOR, GRANT ROAD (W), MUMBAI - 400036. / VS. DARSHAK DADBHAWALA, 601, VIJAY APARTMENT, BHULABHAI DESAI ROAD, WARDEN ROAD, MUMBAI - 36. ./ PAN : AAAPD6322J ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI R.K. CHOKSHI / REVENUE BY : SHRI SATYAJIT MANDAL, SR. AR / DATE OF HEARING : 03.11.2015 / DATE OF PRONOUNCEMENT : 03.11.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS PERTAINING TO THE AY 2010 - 2011. THESE APPEALS ARE FILED AGAINST THE ORDER OF THE CIT (A) - 27, MUMBAI DATED 12.8.2013. SINCE, THE ISSUES RAISED IN BOTH THESE APPEALS ARE INTER - CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS OF THIS ORDER. 2. THE SOLITARY ISSUE RAISED IN BOTH TH E APPEALS UNDER CONSIDERATION RELATES TO THE CLAIM OF THE ASSESSEE RELATING TO SHORT TERM CAPITAL GAINS. IN THE ASSESSMENT, AO TREATED THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 2 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) ARTIFICIALLY DIVIDED THE GAINS BASING ON THE HOLDING PERIOD. THE GAINS RELATING TO THE SHARES HELD BY THE ASSESSEE FOR A PERIOD UPTO 7 DAYS WAS TREATED AS BUSINESS INCOME AND THE BALANCE WAS CONSIDERED AS SHORT TERM CAPITAL GAINS. 4. DURING THE PROCEEDINGS BEFORE US, M ENTIONING THE ABOVE FACTS, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 - 2009 IN ITA NOS. 3522 & 4411/M/2012 (AY 2008 - 2009), DATED 5.12.2014 AND SUBMITTED THAT THE FACTS WERE SIMILAR AND THE DEC ISION OF THE CIT (A) WAS ALSO IDENTICAL WHICH CONSTITUTES DIVIDING THE GAINS BASED ON THE HOLDING PERIOD. THIS PARTICULAR APPROACH OF THE CIT (A) WAS NOT APPRECIATED BY THE TRIBUNAL AND FOLLOWED THE PRINCIPLE OF CONSISTENCY AND GRANTED THE RELIEF TO THE A SSESSEE. VIDE THE SAID ORDER (SUPRA), TRIBUNAL DIRECTED THE AO TO TREAT THE ENTIRE GAINS AS SHORT TERM CAPITAL GAINS. THE CONTENTS OF PARA 8.2 OF THE SAID TRIBUNALS ORDER ARE RELEVANT IN THIS REGARD AND THE SAME READ AS UNDER: 8.2......IN OUR CONSIDE RED VIEW, THE ASSESSEE IS AN INVESTOR WHO HAS BEEN ASSESSED AS INVESTOR SINCE AY 2000 - 01 ONWARDS. WE, THEREFORE, DO NOT FIND ANY REASON TO DEVIATE FROM THE RULE OF CONSISTENCY . WE, THEREFORE, DO NOT FIND ANY REASON IN THE FINDINGS OF THE LD CIT (A) TO TR EAT THE ASSESSEE AS AN INVESTOR WHERE THE HOLDING PERIOD WAS LESS THAN 7 DAYS . WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD CIT (A) AND DIRECT THE AO TO TREAT THE ENTIRE SHORT TERM CAPITAL GAINS AS SUCH . 3. CONSIDERING THE ABOVE SETTLED NATURE OF T HE ISSUE, AND THE REVENUES FAILURE TO DEMONSTRATE AS TO WHY THE RULE OF CONSISTENCY SHOULD NOT BE FOLLOWED WHEN THE FACTS ARE SIMILAR, WE ARE OF THE OPINION THAT THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED AND THE GROUNDS RAISED BY THE REVENUE SH OULD BE DISMISSED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THE AP PEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD NOVEMBER, 2015. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 3.11 .2015 . . ./ OKK , SR. PS S 3 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI