HIMANSHU NALIN KAJI, MUMBAI V. DCIT 16(3), MUMBAI

ITA 6073/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0910 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Rectification of order
• Section: 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H MUMBAI. BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 SHRI HIMANSHU NALIN KAJI C-7, ISHWAR NIWAS, SICKKA NAGAR, VP ROAD, MUMBAI 400 004. DCIT - 16(3), MATRU MANDIR, MUMBAI. PAN/GIR NO. AAA CN0775B APPELLANT RESPONDENT ORDER PER G.S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] DATED 19-07-2013, WHICH IN-TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 19-5-2010 PERTAINI NG TO ASSESSMENT YEAR 2008-09. ASSESSEE BY SHRI DEVENDRA JAIN REVENUE BY SHRI UDAY BHASKAR JAKKE DATE OF HEARING 01 .06.2015 DATE OF PRONOUNCEMENT 31 .07.2015 2 ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 PAGE 2 OF 7 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING A RECTIFICATION ORDER U/S.154 OF THE INCOME TAX ACT, 1961 BY TAXING THE SHORT TERM CAPITAL GAINS ON SALE OF E QUITY SHARES ON WHICH SECURITIES TRANSACTION TAX IS SUFFERED AT NORMAL RATE INSTEAD OF SPECIAL RATE AS SPECIFIED U/S. 111 A OF THE ACT. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE SHORT TERM CAPITAL GAINS OF RS 4,20,550/- ARISING OUT OF SALE OF EQUITY SHARES THROUGH A RECOGNIZED STOCK EXCHANGE AND ON WHICH SECURITIES T RANSACTION TAX (SIT) IS SUFFERED AND THUS SHOULD BE TAXED AT SPECIAL RATE AS SPECIFI ED UNDER THE SECTION IIIA OF THE INCOME TAX ACT. THUS THE APPELLANT IS APPEALING FOR RELIEF AGAINST THE UNLAWFUL ACT OF THE ASSESSING OFFICER (A.O.) BY TAXING THE SHORT TE RM CAPITAL GAINS ON WHICH SECURITIES TRANSACTION TAX IS ALREADY SUFFERED AT THE LOWER RA TE OF 10% AS PER SECTION IIIA OF THE INCOME TAX ACT, 1961 INSTEAD OF THE NORMAL RATES AP PLICABLE TO INDIVIDUAL AS APPLIED BY THE LEARNED ASSESSING OFFICER. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED ASSESSING OFFICER IS UNJUST IN TAXING THE SHORT TERM CAPITAL GAINS ON SALE OF EQUITY SHARES ON WHICH SECURITIES TRANSACTION TAX IS SUFFERED AT NOR MAL RATES INSTEAD OF THE SPECIAL RATES AS SPECIFIED UNDER SECTION 111 A OF THE INCOM E TAX ACT, 1961 ON THE GROUNDS THAT THE RETURN OF INCOME IN FORM ITR-4 HAD STATED THE ' NIL' UNDER ITEM NO.4(A) OF THE PART-B IN THE COMPUTATION OF TOTAL INCOME, WHICH RE QUIRES TO STATE THE SHORT TERM CAPITAL GAINS ON WHICH THE SPECIAL RATE OF INCOME T AX U/S.LL1 A IS APPLICABLE. HOWEVER, THE ASSESSING OFFICER HAS CONVENIENTLY IGNORED THE FACT THAT THE SAID FIGURE OF SHORT TERM CAPITAL GAINS ON SALE OF EQUITY SHARES ON WHIC H SECURITIES TRANSACTION TAX IS SUFFERED AND THUS IS ELIGIBLE FOR THE SPECIAL RATES AS APPLICABLE UNDER SECTION IIIA OF THE INCOME TAX ACT, 1 961 WAS MENTIONED IN ITEM NO.2 OF SCHEDULE SI - INCOME CHARGEABLE TO INCOME TAX AT SPECIAL RATE AND ALSO THE RATE OF THE INCOME TAX APPLICABLE ON SUCH TRANSACTION IN THE SAME RETURN OF INCOME IN FORM IT R-4 FILED WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER IS UNJUSTIFIED IN LA YING EMPHASIS ON THE ERROR THAT HAS BEEN COMMITTED IN FILLING THE RETURN OF INCOME WHIL E IGNORING THE CORRECT TAX TREATMENT OF SUCH INCOME CLAIMED BY THE APPELLANT I N THE SAME RETURN OF INCOME IN FORM ITR-4 FILED BY THE APPELLANT WITH THE DEPARTME NT. A COPY OF THE RETURN OF INCOME IN FORM ITR-4 AS FILED WITH THE DEPARTMENT IS ENCLO SED HEREWITH FOR YOUR READY REFERENCE. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED ASSESSING OFFICER IS UNJUSTIFIED IN NOT GIVING APPELLANT AN O PPORTUNITY TO SUBSTANTIATE AND/OR PROVE THAT THE SECURITIES TRANSACTION TAX WAS SUFFE RED ON THE SALE OF SHORT TERM CAPITAL ASSET - EQUITY SHARES. THE ASSESSING OFFICE R WAS DETERMINED TO TAX THE SHORT 3 ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 PAGE 3 OF 7 TERM CAPITAL GAINS AT NORMAL RATES WITHOUT GIVING A NY OPPORTUNITY TO HEAR THE APPELLANT. THUS, THE APPELLANT APPEALS FOR AN OPPOR TUNITY TO BE HEARD. 4) THE BENEFIT OF LOWER RATE OF TAX ON SHORT TERM C APITAL GAINS ON SALE OF EQUITY SHARES ON WHICH SECURITIES TRANSACTION TAX IS SUFFE RED IS PROVIDED BECAUSE THE ACT DOES NOT INTEND TO TAX SUCH TRANSACTION TWICE, ONCE AS S ECURITIES TRANSACTION TAX WHEN THE SALE OF EQUITY SHARES ARE EFFECTED ON A RECOGNIZED STOCK EXCHANGE AND FURTHER AS CAPITAL GAINS WHILE FILING THE RETURN OF INCOME. SO BY TAXING SUCH GAINS AT NORMAL RATES THE APPELLANT IS PAYING DOUBLE TAXES FIRSTLY SIT WHEN THE SALE IS AFFECTED ON THE RECOGNIZED STOCK EXCHANGE AND FURTHER WHEN THE NORM AL RATE OF TAX WHICH IN CASE OF THE APPELLANT IS 33.99%, IS APPLIED ON SUCH SHORT T ERM CAPITAL GAINS. THUS, THE APPELLANT APPEALS AGAINST THE UNLAWFUL ACT OF THE A SSESSING OFFICER. 5) THE ACT OF TAXING SHORT TERM CAPITAL GAINS ON SA LE OF EQUITY SHARES ON WHICH SECURITIES TRANSACTION TAX IS SUFFERED IS DEVOID OF ANY MERIT, ARBITRARY, UNCALLED FOR AND BAD IN LAW, THE APPELLANT BE GIVEN SUCH RELIEF OR RELIEFS AS PRAYED FOR. 3. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSESS EE IS THAT THE SHORT TERM CAPITAL GAIN OF RS. 4,20,550/- ARISING ON SALE OF E QUITY SHARES THROUGH A RECOGNIZED STOCK EXCHANGE ON WHICH SECURITIES TRANS ACTION TAX (STT) WAS LEVIED HAS BEEN WRONGLY TAXED AT NORMAL RATE, WHER EAS, IT SHOULD BE TAXED AT SPECIAL RATE OF 10% AS SPECIFIED U/S 111A OF THE AC T. 4. THE ASSESSEE HAD MOVED AN APPLICATION U/S 154 OF THE ACT, SEEKING RECTIFICATION OF THE AFORESAID MISTAKE BUT THE SAME WAS REJECTED BY THE ASSESSING OFFICER VIDE ORDER DATED 11.08.2010. THE PLEA OF ASSESSEE DID NOT FIND FAVOUR WITH THE CIT(A) ALSO AND ACCORDINGLY, A SSESSEE IS IN FURTHER APPEAL BEFORE US. 4 ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 PAGE 4 OF 7 5. A PERUSAL OF THE ORDERS OF AUTHORITIES BELOW REV EAL THAT THE IMPUGNED INCOME EARNED BY THE ASSESSEE HAS BEEN SUBJECT TO T HE NORMAL RATE OF TAX INSTEAD OF CONCESSIONAL RATE OF TAX PROVIDED U/S 11 1A OF THE ACT ON THE GROUND THAT THE RETURN OF INCOME IN FORM NO. ITR-4, FURNIS HED BY THE ASSESSEE DID NOT CONTAIN SUCH A CLAIM IN ITEM NO. 4) A) I) OF THE PA RT-B, IN THE COMPUTATION OF TOTAL INCOME. THE ASSESSEE DOES NOT DISPUTE THAT S UCH A MISTAKE HAS OCCURRED IN THE RETURN OF INCOME BUT IN THE APPLICATION MOVE D U/S 154 OF THE ACT, HE POINTED OUT THAT IT WAS AN INADVERTENT ERROR BECAUS E IN THE SAME RETURN FORM WHILE ENUMERATING COMPUTATION OF TAX LIABILITY ON T OTAL INCOME, ASSESSEE HAD CALCULATED AND PAID TAX ON SUCH INCOME AT CONCESSIO NAL RATE. SECONDLY, ASSESSEE ALSO POINTED OUT ITEM NO. 2 IN SCHEDULE S 1, OF THE INCOME TAX RETURN FORM, WHEREIN, SHORT TERM CAPITAL GAIN CHARGEABLE T O CONCESSIONAL TAX RATE U/S 111A OF THE ACT OF RS. 4,20,550/- HAS BEEN FILLED U P BY THE ASSESSEE. IN THE COURSE OF HEARING BEFORE US. THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS TAKEN US THROUGH THE VARIOUS COLUMNS IN THE RETURN OF INC OME FORM ITR-4 AND POINTED OUT THAT STATING OF NIL IN ITEM NO. 4)A)I ) OF PART-B, OF COMPUTATION OF TOTAL INCOME WAS A MISTAKE. EVEN OTHERWISE, A REFER ENCE HAS BEEN MADE TO PAGE 36 TO 49 OF THE PAPER BOOK TO POINT OUT THE DE TAILS OF SHORT TERM CAPITAL GAIN ARISING OUT OF SALE OF EQUITY SHARES THROUGH A RECOGNIZED STOCK EXCHANGE ON WHICH STT HAS BEEN PAID. IT IS CANVASSED THAT SU CH DETAILS CLEARLY ESTABLISH EARNING OF SHORT TERM CAPITAL GAIN OF RS. 4,20,550/ -, WHICH DESERVES TO BE TAXED AT THE RATE OF 10% IN TERMS OF SECTION 111A O F THE ACT. 6. THE AFORESAID FACTUAL CASE SET UP BY THE ASSESSE E IS NOT DISPUTED BY THE REVENUE. THE ORDER OF THE CIT(A) REVEALS THAT THE C LAIM HAS BEEN REJECTED PRIMARILY ON THE GROUND THAT THE SHORT TERM CAPITAL GAIN OF RS. 4,20,550/- HAS 5 ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 PAGE 5 OF 7 BEEN WRONGLY STATED IN THE MAIN PORTION OF THE RETU RN OF INCOME FORM ITR-4, IN PART-B COMPUTATION OF TOTAL INCOME, THOUGH THE SAME HAS BEEN CORRECTLY DEPICTED IN THE ANNEXURES AND OTHER SCHEDULES ANNEX ED TO THE RETURN OF INCOME FORM ITR -4. THE PLEA OF THE REVENUE IS THAT THE INFORMATION FURNISHED IN THE SCHEDULES AND ANNEXURES TO THE RETURN CANNOT OVERRIDE THE DECLARATION MADE IN THE RETURN FORM. 7. IN OUR CONSIDERED OPINION, THE APPROACH ADOPTED BY THE INCOME TAX AUTHORITIES IN THE PRESENT SITUATION IS QUITE MYOPI C AND DESERVES TO BE REPELLED. THE STATUTORY PROVISION OF SECTION 111A OF THE ACT PROVIDING FOR A CONCESSIONAL TAX RATE ON SHORT TERM CAPITAL GAIN AR ISING OUT OF SALE OF EQUITY SHARES THROUGH A RECOGNIZED STOCK EXCHANGE ON WHICH STT HAS BEEN PAID, IS NOT IN DISPUTE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS SUCCESSFULLY PROVED BEFORE THE LOWER AUTHORITIES THAT HE HAS EAR NED THE INCOME OF RS. 4,20,550/- WHICH DESERVED TO BE TAXED IN TERMS OF S ECTION 111A OF THE ACT. IN OUR VIEW, THE AFORESAID UNDISPUTED FEATURES DOES NO T JUSTIFY THE STAND OF THE REVENUE IN TAXING SUCH INCOME UNDER THE NORMAL RATE OF TAX. FURTHERMORE, THE NON MENTIONING OF SUCH INCOME IN ONE OF THE COLUMNS OF THE INCOME TAX RETURN IS TO BE UNDERSTOOD AS AN INADVERTENT MISTAKE BECAU SE IN THE SAME FORM OF RETURN OF INCOME, AT MORE THAN ONE PLACE, ASSESSEE HAS SHOWN SUCH INCOME TO BE ENTITLED FOR CONCESSIONAL RATE OF TAXATION. IN THE AFORESAID LIGHT, IN OUR VIEW, THE CIT(A) ERRED IN NOT ALLOWING THE CLAIM OF ASSES SEE FOR TAXING THE SHORT TERM CAPITAL GAIN OF RS. 4,20,550/- AS PER THE SPECIAL R ATE SPECIFIED U/S 111A OF THE ACT. ACCORDINGLY, THE ORDER OF CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RE-WORK THE TAX LIABILITY OF THE ASSESS EE AFTER CONSIDERING THE SHORT 6 ITA NO 6073/MUM/2013 ASSESSMENT YEAR: - 2008-09 PAGE 6 OF 7 TERM CAPITAL GAIN OF RS. 4,20,550/- TO BE AN INCOME LIABLE TO BE TAXED IN TERMS OF SECTION 111A OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSED IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31ST D AY OF JULY 2015. SD/- SD/- (SANJAY GARG) (G.S. PANNU) (JUDICIAL MEMBER) (AC COUNTANT MEMBER) MUMBAI DATED -07-2015 SKS SR. P.S, COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, HBENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI