DCIT, New Delhi V. M/s. Amba Properties Pvt. Ltd., New Delhi

ITA 6149/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3380 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: SAGARIKA KPOOR
• Keywords: Question of law
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6149/DEL./2014 (ASSESSMENT YEAR : 2005-06) ACIT, CIRCLE 1 (1), VS. M/S. AMBA PROPERTIES PVT. LTD., NEW DELHI. 114, FIRST FLOOR, AMBADEEP BLDG., 14, K.G. MARG, NEW DELHI-110 001. (PAN : AAACA2999M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL KAPOOR, ADVOCATE AND MS. SAGARIKA KPOOR, ADVOCATE REVENUE BY : SMT. APARNA KARAN, CIT DR DATE OF HEARING : 06.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, ASSISTANT COMMISSIONER OF INCOME-TAX , CIRCLE 1 (1), NEW DELHI, BY FILING THE PRESENT APPE AL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 22.08.2014 PASSED BY LD. CIT(APPEALS)-IV, NEW DELHI QUA THE ASSESSMENT YEAR 2005-06 ON THE GROUND THAT :- ITA NO.6149/DEL./2014 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO TREAT THE INCOME OF RS.5,55,71,420/- AS INCOME FRO M CAPITAL GAINS AND NOT INCOME FROM BUSINESS AS HE LD BY THE AO WHEN AO HAD CLEARLY ESTABLISHED THAT THE ACTIVITY OF THE ASSESSEE WAS TRADING AND THE SHARES WERE NOT HELD AS INVESTMENT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF TRADING AND INVESTMENT IN SHARES AND SECURITIES HAV ING MAINTAINED TWO PORTFOLIOS SEPARATELY AND HAS INCOME UNDER THE HEAD BUSINESS AS WELL AS UNDER THE HEAD CAPITAL GAINS. ASSESSM ENT WAS REOPENED U/S 148 OF THE ACT. AO MADE ADDITION OF RS.5,55,71,470/- BY TREATING THE SAME AS BUSINESS I NCOME AS AGAINST THE CLAIM OF THE ASSESSEE COMPANY THAT THIS INCOME HAS BEEN EARNED UNDER CAPITAL GAINS. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS ALLOWED THE APPEAL BY DIREC TING THE AO TO TREAT THE INCOME OF RS.5,55,71,470/- AS INCOME FROM CAPITAL GAINS AND NOT INCOME FROM BUSINESS. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING TH E PRESENT APPEALS. ITA NO.6149/DEL./2014 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE COMPANY HAS BEEN MAIN TAINING TWO PORTFOLIOS UNDER THE HEADS : (I) BUSINESS AND (II) CAPITAL GAIN. IT IS ALSO NOT IN DISPUTE THAT THE FACTUM O F MAINTAINING TWO PORTFOLIOS BY THE ASSESSEE COMPANY HAS CONSISTENTLY BEEN FOLLOWED BY THE DEPARTMENT IN PRECEDING YEARS AS WELL AS SUC CEEDING YEARS WHILE ASSESSING THE INCOME U/S 143 (3) OF THE ACT A S IS EVIDENT FROM THE ASSESSMENT ORDERS FOR 2003-04, 2004-05 AND 2005 -06 (WHEN ASSESSMENT WAS COMPLETED U/S 143 (3)) AND 2007-08 A ND 2010-11. 6. WHEN IT IS NOT IN DISPUTE THAT THE ASSESSEE COMP ANY HAD DECLARED THE INCOME TO THE TUNE OF RS.5 , 55 , 7 1 ,470/- FROM THE CAPITAL GAINS QUA WHICH SEPARATE PORTFOLIOS HAVE BEEN MAINT AINED AND HAVE CONSISTENTLY BEEN ACCEPTED BY THE REVENUE, THERE IS NO MATERIAL ON RECORD TO TAKE AN OPPOSITE VIEW. 7. THE LD. CIT (A), AFTER EXAMINING VARIOUS DECISIO N OF COORDINATE BENCH OF THE TRIBUNAL AND DECISION RENDE RED BY HONBLE DELHI HIGH COURT AS WELL AS HONBLE BOMBAY HIGH COU RT, CAME TO THE CONCLUSION THAT WHEN THE OBJECT OF INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY OF DIVIDEND ETC. THEN THE ITA NO.6149/DEL./2014 4 INCOME ACCRUING BY CHANGE IN SUCH INVESTMENT BY SAL E OF SHARES WILL YIELD CAPITAL GAIN AND NOT REVENUE RECEIPTS, P ARTICULARLY WHEN THIS PRACTICE IS BEING FOLLOWED BY THE ASSESSEE SIN CE LAST MANY YEARS. 8. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ROHIT ANAND (2010) 327 ITR 445 DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY RETURNING THE FOLLOWING FINDINGS :- WHERE THE TRIBUNAL HAD FOUND THAT THE ASSESSEE WAS NOT A TRADER IN STOCK BUT ONLY AN INVESTOR AND THAT THE ASSESSEE HAD DEMONSTRATED THAT HIS INTENTION WAS NE VER TO TRADE IN SHARES BECAUSE THE INVESTMENT WAS OUT O F HIS OWN FUNDS, THE INVESTMENT WAS NOT ROTATED FREQUENTL Y, THE TOTAL NUMBER OF TRANSACTIONS WAS FEW, THE TREAT MENT OF THE SHARES AS INVESTMENT IN EARLIER YEARS HAD BE EN ACCEPTED BY THE ASSESSING OFFICER, THE ASSESSEE HAD TAKEN DELIVERY AND MADE FULL PAYMENT OF SUCH INVESTMENT AND THAT THEREFORE THE TRANSACTIONS WERE TO BE TREATED AS GIVING RISE TO CAPITAL GAINS AND NOT PROFITS AND GAINS OF BUSINESS, ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE FACTUAL FINDINGS OF THE FINAL FACT FINDING AUTHORITY WERE N EITHER PERVERSE NOR CONTRARY TO RECORD. NO SUBSTANTIAL QUESTION OF LAW AROSE. 9. MOREOVER, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOT MADE INVESTMENT IN SHARES BY BORROWING FUNDS FROM THE BA NKS RATHER USED ITS OWN CAPITAL FOR INVESTMENT. FURTHERMORE, THE ASSESSEE HAS KEPT THE SHARES FOR MORE THAN ONE YEAR AND AS SUCH IS PROVED TO BE FOR INVESTMENT PURPOSE. ALL THESE FACTS HAVE NOT B EEN CONTROVERTED BY THE AO WHILE FRAMING ASSESSMENT U/S 143 (3)/147 OF THE ACT. ITA NO.6149/DEL./2014 5 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE LD. CIT (A) AFTER THRASHIN G THE ISSUE AT LENGTH DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE , SO FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT (A), THE APPEAL FILED BY THE REVENUE IS HEREBY DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-16, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.