ITO,Ward-8(2), Kolkata, Kolkata V. M/s Nilgiri Mercantiles Pvt. Ltd., Kolkata

ITA 616/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78315 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2012
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS BANERJEE
• Assessee Lawyers: J M THARD
• Keywords: Tax effect
• Section: 143(3); 147; 148

Judgement Text

I.T.A. NO. 616/KOL./2012 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 616/KOL/ 2012 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER,................................ ...........................APPELLANT WARD-8(2), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, ROOM NO. 16 P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. NILGIRI MERCANTILES PVT. LITMITED,............ ............RESPONDENT 46C, CHOWRINGHEE ROAD, KOLKATA-700 071 [PAN : AAACN 9317 L] APPEARANCES BY: SHRI DEBASHIS BANERJEE, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI J.M. THARD, ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 27, 2015 DATE OF PRONOUNCING THE ORDER : NOVEMBER 30, 2015 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 04.01.2012 FOR THE ASSESSMENT YEAR 2006-07 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME FOR OUR CONSIDERATION RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.14,30455/- MADE BY THE ASSESS ING OFFICER BY TREATING THE LONG-TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS ITS INCOME FROM BUSINESS. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS MAINLY ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES. TH E RETURN OF INCOME FOR YEAR UNDER CONSIDERATION WAS FILED BY IT ON 02.11.2 006 DECLARING TOTAL INCOME OF RS.37,736/-. IN THE SAID RETURN, PROFIT A RISING FROM SALE OF I.T.A. NO. 616/KOL./2012 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 4 SHARES OF M/S. VIJAYA BANK LIMITED AND M/S. WORLDWI DE LEATHER EXPORTS LIMITED AMOUNTING TO RS.14,30,455/- WAS DECLARED BY THE ASSESSEE AS LONG-TERM CAPITAL GAIN AND THE SAME WAS CLAIMED TO BE EXEMPT UNDER SECTION 10(38). THE SAID SHARES HELD EARLIER AS STO CK-IN-TRADE WERE CONVERTED BY THE ASSESSEE INTO INVESTMENT DURING TH E PREVIOUS YEAR RELEVANT TO A.Y. 2005-06. THE RETURN FILED BY THE A SSESSEE FOR THE YEAR UNDER CONSIDERATION WAS INITIALLY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 139(1) OF THE ACT ON 18.09.2007 THERE BY ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON ACCOUNT OF LONG-TE RM CAPITAL GAIN ARISING FROM THE SALE OF SHARES OF M/S. VIJAYA BANK LIMITED AND M/S. WORLDWIDE LEATHER EXPORTS LIMITED. THEREAFTER THE ASSESSMENT FOR AY 2005-06 CAME TO BE COMPLETED BY THE ASSESSING OFFICER, WHEREIN T HE CLAIM OF THE ASSESSEE FOR CONVERSION OF SAID SHARES FROM STOCK-I N-TRADE TO INVESTMENT WAS DISALLOWED. CONSEQUENTLY THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS REOPENED BY THE ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 148 ON 24.12.2007 AND IN THE ASSESSME NT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 VIDE AN ORDER DATED 30.12.2008, THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON ACCOUNT OF L ONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHARES OF M/S. VIJAYA BANK LIMITED AND M/S. WORLDWIDE LEATHER EXPORTS LIMITED WAS DISALLOWED BY THE ASSESSING OFFICER BRINGING THE SAID GAIN TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFES SION. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 147, AN APPEAL WAS PREFERR ED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS). MEANWHILE THE APPEAL F ILED BY THE ASSESSEE FOR AY 2005-06 CHALLENGING THE ACTION OF THE ASSESS ING OFFICER IN NOT ACCEPTING ITS CASE FOR CONVERSION OF SHARES FROM ST OCK-IN-TRADE TO INVESTMENT CAME TO BE DISPOSED OF BY THE LD. CIT(AP PEALS), WHEREBY THE CLAIM OF THE ASSESSEE FOR CONVERSION OF THE RELEVAN T SHARES FROM STOCK-IN- TRADE TO INVESTMENT WAS ACCEPTED BY THE LD. CIT(APP EALS). RELYING ON THE SAID DECISION RENDERED IN ASSESSEES CASE FOR AY 20 05-06, THE LD. CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN I.T.A. NO. 616/KOL./2012 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 4 ARISING FROM THE SALE OF SHARES CONVERTED BY THE AS SESESE INTO INVESTMENT IN EARLIER YEAR, IN THE YEAR UNDER CONSIDERATION I. E. AY 2006-07 AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ORDER OF THE LD. CIT(APPEALS) ACCEPTING THE CLAIM OF THE ASSESES E FOR THE CONVERSION OF RELEVANT SHARES FROM STOCK-IN-TRADE TO INVESTMENT I N AY 2005-06 WAS ALSO CHALLENGED BY THE REVENUE BY WAY OF AN APPEAL BEFOR E THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 13.04.2012 PASSED IN ITA NO. 1959/KOL/2010 HAS DISMISSED THE SAME ON ACCOUNT OF LOW TAX EFFECT. ALTHOUGH THE TRIBUNAL HAS NOT GONE INTO AND DECIDED THE ISSUE RELATING TO CONVERSION ON MERIT IN AY 2005-06, AS A RESULT OF T HE DISMISSAL OF THE REVENUES APPEAL BY THE TRIBUNAL FOR LOW TAX EFFECT , THE ORDER OF THE LD. CIT(APPEALS) ACCEPTING THE CLAIM OF THE ASSESESE FO R CONVERSION OF SHARES INTO INVESTMENT FOR AY 2005-06 HAS BECOME FINAL. CO NSEQUENTLY THE PROFIT ARISING TO THE ASSESESE IN THE YEAR UNDER CONSIDERA TION FROM THE SALE OF THE SAID SHARES TREATED AS INVESTMENT IN THE IMMEDI ATELY PRECEDING YEAR, I.E. AY 2005-06 REPRESENTS LONG TERM CAPITAL GAIN, WHICH IS EXEMPT FROM TAX UNDER SECTION 10(38), AS RIGHTLY HELD BY THE LD . CIT(APPEALS). WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR LONG-TERM CA PITAL GAIN AND UPHOLDING THE SAME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 30, 2015. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 30 TH DAY OF NOVEMBER, 2015 I.T.A. NO. 616/KOL./2012 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 4 ORDER PRONOUNCED BY SD/- SD/- (S.S.V.R.) (W.A.) J.M. A.M. COPIES TO : (1) INCOME TAX OFFICER, WARD-8(2), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, ROOM NO. 16 P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. NILGIRI MERCANTILES PVT. LITMITED, 46C, CHOWRINGHEE ROAD, KOLKATA-700 071 (3) COMMISSIONER OF INCOME-TAX (APPEALS)- VIII, K OLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.