ASHOK JAIN, MUMBAI V. ACIT CEN CIR 38, MUMBAI

ITA 6250/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0316 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHAILESH N DOSHI
• Keywords: Business income
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER ITA NO.6250/MUM./2016 (ASSESSMENT YEAR: 2011 12) ASHOK JAIN 1303, VASTU SHILP GAMADIA COLONY, TARDEO, MUMBAI 400007 PAN AAOPJ2690M . APPELLANT V/S ACIT CEN CIR 38 MUMBAI . RESPONDENT ASSESSEE BY : SHRI. SHAILESH N. DOSHI REVENUE BY : SHRI . RAKESH RANJAN DATE OF HEARING 07.06 .2017 DATE OF ORDER - 14 .06 .2017 O R D E R PER: B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13.06.2016 PASSED BY LD. CIT(A) - 54, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2011 - 12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ASSESSMENT OF SHORT TER M CAPITAL GAINS ARISING ON SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. ASHOK KUMAR ITA NO.6250 /MUM./2016 2 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE WAS SUBJECTED TO SEARCH AND THE SEIZURE OPERATION U/S. 132 OF THE ACT, ON 12.10.2011. CONSEQUENTLY THE PRESENT ASSES SMENT WAS COMPLETED U/S. 143(3) R.W.S. 153F OF THE ACT. THE A.O NOTICED THAT THE ASSESSEE HAS DECLARED SHORT TERM CAPITAL GAIN OF RS.11.05 LAKHS FROM SALE OF SHARES. THE A.O WAS ASSESSED THE SAME AS BUSINESS INCOME OF THE ASSESSEE ON THE REASONING THAT THE ASSESSEE INTENDED TO HOLD THE SHARES AS TRADING STOCK . THE LD. CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED WITH THIS APPEAL. 3. THE APPEAL BARRED BY LIMITATION OF 20 DAYS. THE ASSESSEE HAS MOVED A PETITION REQUESTING THE BENCH TO COND ONE THE DELAY. I HEARD THE PARTIES ON THIS PRELIMINARY ISSUE. HAVING REGARD TO THE SUBMISSIONS MADE BY THE ASSE SSEE IN THE PETITION, I CONDONE THE DELAY ON ADMIT THE APPEAL HEARING. 4. I HEARD THE PARTIES ON MERITS OF THE CASE . T HE LD. A.R SUBMITTED THAT THE ASSESSEE GOT ALLOTMENT OF 28,318 SHARES IN THE PUBLIC ISSUE OF SHARES ISSUED BY M/S. COAL INDIA LTD. THE ALLOTMENT WAS OBTAINED ON 04.11.2010. THE ASSESSEE SOLD 11,000 SHARES DURING THE YEAR UNDER CONSIDERATION AND DECLARED THE GAIN ARISING THEREON HAS SHORT TERM CAPITAL GAIN. THE LD. A.R SUBMITTED THAT THE ASSESSEE HAS TREATED THE PURCHASE OF SHARES OF COAL INDIA LTD. AS HIS INVESTMEN TS IN THE BOOKS OF ACCOUNTS. HE SUBMITTED THAT THE ASHOK KUMAR ITA NO.6250 /MUM./2016 3 ASSESSEE HAS SOLD PART OF SHARES OF COAL INDIA LTD. IN AS SESSMENT YEA R 2012 - 13 ALSO AND CAPITAL GAIN DECLARED IN THAT YEAR HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HE SU BMITTED THAT THE ASSESSEE INTENDED TO HOLD THE SHARES OF M/S COAL INDIA LTD. AS HIS INVESTMENT ONLY AND HENCE THE TAX AUTHORITIES ARE NOT JUSTIFIED IN TR EATING THE GAINS AS BUSINESS INCOME OF THE ASSESSEE. 5. ON THE CONTRARY THE LD. D.R SUBMITTED THAT THE ASSESSEES STAND OF CAPITAL GAINS HAS BEEN REJECTED BY THE TRIBUNAL IN ASSESSMENT YEAR 2006 - 07. HE FURTHER SUBMITTED THAT THE STAND TAKEN BY THE ASSESSEE IN ONE YEAR CANNOT BE CHANGED IN OTHER YEARS AS PER THE CIRCULAR ISSUED BY CBDT. HE SUBMITTED THAT THE LD. CIT(A) HAS TAKEN COGNIZANCE OF THE ORDER PASSED BY THE TRIBUNAL IN ASSESSMENT YEAR 2006 - 07 AND HENCE THE SAME SHOULD BE UPHELD. 6. IN THE REJOINDE R THE LD. A.R SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PROHIT HAS HELD THAT AN ASSESSEE CANNOT BOTH AS INVESTOR AS WELL AS TRADER. IN THE EARLIER YEARS ALSO, THE ASSESSEE WAS HAVING BOTH TRADING AND INVESTMENT ACTIVITY . HOWEVER THE TRIBUNAL HAS CONFIRMED THE CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME OF THE ASSESSEE. HOWEVER DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE S DIVIDEND INCOME HAS GONE UP A SUBSTANTIALLY , WHICH SHOWS THAT THE ASSESSEE HAS BEEN HOLDING THE SHARE S AS HIS INVESTMENTS. HE ASHOK KUMAR ITA NO.6250 /MUM./2016 4 SUBMITTED THAT THE ASSESSEE HAS HELD THE SHARES OF M/S COAL INDIA LTD. AS HIS INVESTMENT ONLY AND FURTHER THE SHARES HAVE BEEN ACQUIRED IN THE PUBLIC OFFER. ACCORDINGLY HE SUBMITTED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN ASSESSING THE CAPITAL GAIN AS BUSINESS INCOME OF THE ASSESSEE. 6. HAVING HEARD RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE PRAYER OF THE ASSESSEE. I NOTICE THAT THE ASSESSEE HAS ACQUIRED THE SHARES OF M/ S COAL INDIA LTD IN THE PUBLIC OFFER AND HAS DECLARED THE SAME AS HIS INVESTMENTS IN THE BOOKS OF ACCOUNT. I FURTHER NOTICE THAT THE DIVIDEND INCOME DECLARED BY THE ASSESSEE HAS GONE UP OVER THE YEARS, WHICH ALSO INDICATE THAT THE ASSESSEE HAS INCREASED HI S INVESTMENT ACTIVITY. THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE ON SALE OF SHARES OF M/ S COAL INDIA LTD IN AY 2012 - 13 HAS BEEN ACCEPTED BY THE AD. FURTHER THE HON'BLE BOMBAY HIGH COURT HAS HELD IN THE CASE OF GOPAL PUROHIT (228 CTR 582) THAT A PERSON CAN ACT BOTH AS INVESTOR AND T RADER. HENCE I AM OF THE VIEW THAT THERE IS NO PROPER REASON IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE GAINS ARISING ON SALE OF SHARES OF M/ S COAL INDIA LTD SHOULD BE ASSESSED AS SHORT TERM CAPITAL GAIN. ACCORDING LY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ASSESSEE THE GAIN ARISING ON SALE OF SHARES OF M/S COAL INDIA LTD. AS SHORT TERM CAPITAL GAINS. ASHOK KUMAR ITA NO.6250 /MUM./2016 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 14 .06 .2017 SD/ - B.R.BASKARAN ACCOUNTANT MEMBER MUMBAI, DATED: 14 .06 .2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI ASHOK KUMAR ITA NO.6250 /MUM./2016 6