ACIT-16(2), MUMBAI V. MADHURI R. DHOOT, MUMBAI

ITA 6053/MUM/2011

• Counselvise Citation: 605319914 RSA 2011
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.6053/MUM/2011 : ASST.YEAR 2008-2009 THE ASST.COMMISSIONER OF INCOME-TAX CIRCLE 16(2) MUMBAI. SMT.MADHURI R.DHOOT 4-B, II-PALAZZO, LITTLE GIBBS ROAD MUMBAI 400 006. PAN : AADPD1056E. ( %& / // / APPELLANT) ( ( ( ( / VS. ( )*%&/ RESPONDENT) %& + ++ + , , , , / APPELLANT BY : SHRI S.K.SINGH )*%& + , + , + , + , / RESPONDENT BY : SHRI M.SUBRAMANIAN ( + - / / / / DATE OF HEARING : 05.09.2013 ./0 + - / DATE OF PRONOUNCEMENT : 11.09.2013 !1 !1 !1 !1 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 31.05.2011 IN RELATION TO THE ASSESSMENT YEAR 2008-2009. 2. REVISED GROUNDS HAVE BEEN FILED BY THE REVENUE. FIRST TWO GROUNDS ARE AGAINST THE DIRECTION OF THE LEARNED CI T(A) TO TREAT ` 21,79,923 AS INCOME AS `SHORT TERM CAPITAL GAIN AN D ` 4,17,19,300 AS `LONG TERM CAPITAL GAIN AS AGAINST `BUSINESS INCOM E TREATED BY THE ASSESSING OFFICER. ITA NO.6053/MUM/2011. SMT.MADHURI R.DHOOT. 2 3. BRIEFLY STATED THE FACTS OF THESE GROUNDS ARE TH AT THE ASSESSEE SHOWED ABOVE AMOUNTS AS LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN ON TRANSFER OF CERTAIN SHARES BY CLAIM ING THAT THESE SHARES WERE HELD AS INVESTMENTS. THE ASSESSING OFFICER, AF TER CONSIDERING THE HOLDING PERIOD IN CERTAIN CASES, CAME TO HOLD T HAT THE AMOUNT SHOWN AS LONG TERM / SHORT TERM CAPITAL GAIN WAS LI ABLE TO BE CONSIDERED AS `BUSINESS INCOME. IN THE FIRST APPE AL, THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE WAS CONSISTENTLY HOLDING THE SHARES AS `INVESTMENT AND INCOME FROM THEIR TRANSFER WAS REGULARLY DECLARED AND ACCEPTED UNDER THE HEAD `CAPITAL GAINS. HE TOO K NOTE OF THE FACT THAT THE STATUS OF THE ASSESSEE AS AN `INVESTOR ST OOD ACCEPTED BY THE A.O. IN EARLIER YEARS UNDER SCRUTINY ASSESSMENT U/S 143(3). IN SPECIFIC, HE NOTICED THAT THE ASSESSMENT ORDER WAS PASSED U/S 143(3) FOR ASSESSMENT YEAR 2005-2006 ACCEPTING LONG TERM C APITAL GAIN OF ` 10.95 CRORE AND SHORT TERM CAPITAL GAIN OF ` 43.95 LAKH. THE REVENUE IS AGGRIEVED AGAINST THIS FINDING. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT V. GOPAL PUROHIT [(2011) 336 ITR 287 (BOM.)] HAS EMPHASIZED ON THE PRINCIPLE OF CONSISTENCY. IN THIS CASE THE HONBLE HIGH COURT, DEALING WITH SIMILAR ISSUE, HELD THAT : THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. AS INCOME FROM S ALE OF SHARES HAS BEEN CONSISTENTLY ACCEPTED AS SHORT TERM / LONG TER M CAPITAL GAIN IN ITA NO.6053/MUM/2011. SMT.MADHURI R.DHOOT. 3 PRECEDING YEARS, WE SEE NO REASON FOR OBSERVING DEP ARTURE FOR THE CURRENT YEAR. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER. THESE TWO GROUNDS ARE DISMISSED. 5. GROUND NO.3 IS AGAINST ALLOWING DEDUCTION TOWARD S PORTFOLIO MANAGEMENT FEES OF ` 8,93,347. THE ASSESSEE CLAIMED DEDUCTION FOR THE SAID SUM TOWARDS PORTFOLIO MANAGEMENT CHARGES, WHICH THE A.O. DISALLOWED AS NO DEDUCTION OF TAX AT SOURCE WAS MAD E. THE LEARNED CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS ISSU E. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THIS ISSU E HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE MUMBAI BENCH OF THE TRI BUNAL AGAINST THE ASSESSEE IN SEVERAL CASES INCLUDING HOMI K BABA V. ITO (INTERNATIONAL TAXATION) [(2011) 48 SOT 102 (MUM.)] . IN SUCH CASES IT HAS BEEN HELD THAT PORTFOLIO MANAGEMENT EXPENSES ARE NOT DEDUCTIBLE UNDER S. 48 IN COMPUTING CAPITAL GAINS. IN THAT VIEW OF THE MATTER, THERE IS NO QUESTION OF GRANTING ANY DEDUCT ION, LEAVE ASIDE THE APPLICATION OF SECTION 40(A)(IA). THE IMPUGNED ORDE R ON THIS ISSUE IS, THEREFORE, REVERSED. 7. 2 -3 4 51 - 6 + 7- 89 IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO.6053/MUM/2011. SMT.MADHURI R.DHOOT. 4 ORDER PRONOUNCED ON THIS 11 TH DAY OF SEPTEMBER, 2013. !1 + ./0 :!(3 / + ; SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; :!( DATED : 11 TH SEPTEMBER, 2013. DEVDAS* !1 + )#-5' <'0- !1 + )#-5' <'0- !1 + )#-5' <'0- !1 + )#-5' <'0-/ COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. )*%& / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A) 27, MUMBAI. 5. '@; )#-#( , , / DR, ITAT, MUMBAI 6. ;A B / GUARD FILE. !1( !1( !1( !1( / BY ORDER, *'- )#- //TRUE COPY// C C C C/ // /8 7 8 7 8 7 8 7 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI