DCIT 5(2), MUMBAI V. PAYASH SECURITIES P.LTD, MUMBAI

ITA 6370/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93088 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2013
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B MUMBAI. BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO 6370 /MUM/201 3 ASSESSMENT YEAR: - 2009 - 10 DY. COMMISSIONER OF INCOME TAX, 5(2), ROOM NO. 571, AAYKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS.` PAYASH SECURITIES PVT. LTD. 17/19, 2 ND FLOOR, KHATAU BUILDING, 44 BANK STREET, OFF: SHAHID BHAGAT SINGH ROAD, MUMBAI 400023. PAN/GIR NO. AADFM0407E APPELLANT RESPONDENT ORDER PER G.S. PANNU, AM THE CAPTIONED APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) [ HEREINAFTER REFERRED TO AS THE CIT(A) ] DATED 26.08.2013 WHICH IN - TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961( REVENUE BY SHRI PREMANAND J ASSESSEE BY SHRI C.B.R MURTHY DATE OF HEARING 29 .06.2015 DATE OF PRONOUNCEMENT 30 .06.2015 2 ITA NO 6370/MUM/2013 ASSESSMENT YEAR: - 2009 - 10 PAGE 2 OF 6 HEREINAFTER RE FERRED TO AS THE ACT) DATED 28.12.2011 PERTAINING TO ASSESSMENT YEAR 2009 - 10. IN THIS APPEAL, REVENUE HAS RAI SED FOLLOWING GROUNDS OF APPEAL: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING ASSESSEE S SHARE ACTIVITY AS INVESTMENT, ALTHOUGH THERE ARE VOLUMINOUS TRANSACTIONS DURING THE YEAR AND HOLDING PERIOD ALSO IS LESS THAN ONE YEAR? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CT THAT RES JUDICATA IS NOT APPLICABLE ON INCOME TAX PROCEEDINGS AND FACTS OF EACH YEAR ARE DIFFERENT, HENCE APPEAL CANNOT BE DECIDED ON THE BASIS OF A.Y. 2006 - 07? 2. ALTHOUGH THE REVENUE HAS RAISED TWO GROUNDS OF APPEAL BUT THE SOLITARY GRIEVANCE IS AGAINST THE ACTION OF THE CIT(A) IN HOLDING THAT THE ASSESSEES ACTIVITY OF PURCHASE AND SALE OF SHARES WAS AN INVESTMENT ACTIVITY AND NOT AN ACTIVITY OF TRADE. THE ASSESS ING OFFICER HELD THAT ASSESSSEE WAS A TRADER IN SHARES AND SECURITIES AND NOT AN INVESTOR AND THUS THE PROFIT/ LOSS ON SUCH ACTIVITY WAS ASSESSABLE AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS SHOWN BY THE ASSESSE E IN THE RETURN OF INCOME. 3. THE CIT(A) D IFFERED WITH THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 - 07, THE TRIBUNAL VIDE ITS ORDER DATED 19.04.2013 IN ITA NO. 650/MUM/2013 HAD UPHELD THE STAND OF 3 ITA NO 6370/MUM/2013 ASSESSMENT YEAR: - 2009 - 10 PAGE 3 OF 6 THE ASSESSEE THAT THE TRANSACTIONS OF PURCH ASE AND SALE OF SHARES AND SECURITIES WERE IN THE NATURE OF CAPITAL GAINS. 4. AGAINST THE AFORESAID DECISION OF CIT(A), REVENUE IS IN APPEAL BEFORE US. THE LD. REPRESENTATIVE FOR THE RESPONDENT - ASSESSEE SUBMITTED THAT THE CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL DATED 19.04.2013 (SUPRA) WHICH CONTINUES TO HOLD THE FIELD AND, THEREFORE, THE APPEAL BY THE REVENUE LACKS MERIT. 5. THE LD. DR APPEARING FOR THE REVENUE HAS NOT CONTESTED THE FACTUAL MATRIX BROUGHT OUT BY THE LD. REPRESENTATIVE FOR THE RESPONDENT - ASSESSE E . 6. IN THE CONTEXT OF THE ABOVE CONTROVERSY, WE FIND THAT THE CIT(A) IN PARA 5.1 OF HIS ORDER COMPARED THE FACTUAL POSITION OF THE INSTANT YEAR WITH THAT OF THE ASSESSMENT YEAR 2006 - 07 (SUPRA) AND FOUND THAT THE SAME WAS IDENTICAL. TH E CIT(A) HAS SPECIFICALLY NOTED THAT THERE IS NO CHANGE OF FACTS IN RELATION TO ASSESSMENT YEAR 2006 - 07 AND, THEREFORE, HE HAS FOLLOWED THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2006 - 07 (SUPRA) AND HELD THAT THE ASSESSEE HAS EARNED INCOME FROM PURCH ASE AND SALE OF SHARES IN THE CAPACITY OF AN INVESTOR AND, THEREFORE, SUCH INCOME/LOSS IS TAXABLE UNDER THE HEAD CAPITAL GAINS. THE RELEVANT DISCUSSION IN THE ORDER OF THE CIT(A) IS AS UNDER: - AFTER CONSIDERING THE RIVAL SUBMISSIONS IT IS OBSERVED THA T THE ONLY DISPUTE BETWEEN THE A.O AND APPELLANT IS THE TREATMENT OF THE PROFIT/LOSS ON THE SHARE 4 ITA NO 6370/MUM/2013 ASSESSMENT YEAR: - 2009 - 10 PAGE 4 OF 6 TRANSACTIONS. THE APPELLANT HAS CONTENDED THAT IT IS AN INVESTOR IN SHARES WHEREAS THE A.O. HAS OPINED THAT THE APPELLANT IS A TRADER OF SHARES. IT IS NOTED THAT THIS ISSUE IN THE CASE OF THE APPELLANT ALSO AROSE IN EARLIER YEARS. THE HONBLE ITAT IN A.Y. 2006 - 07 VIDE ITS ORDER DATED 19.04.2013 HAS DECIDED THAT THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AND SECURITIES ARE IN THE NATURE OF CAPITAL GAINS. WHILE DECIDING THIS ISSUE THE ITAT HAS OBSERVED THAT 'WE NOTE THAT THE TRANSACTION IN EARLIER AS WELL AS IN SUBSEQUENT YEARS ARE SIMILAR....... WE FURTHER NOTE THAT IF THE AVERAGE HOLDING PERIOD IS CALCULATED FROM' THE OLD TRANSACTIONS IT WILL BE MORE TH AN 60 DAYS IN RESPECT OF THE SALE AND PURCHASE OF TRANSACTIONS GIVING RISE TO THE STCG....... THE ASSESSEE IS TREATING THE SAME AS INVESTMENT IN BOOKS OF ACCOUNTS, THESE ARE DELIVERY TRANSACTIONS........ THE BORROWED FUND IS NOT INTEREST BEARING AS IT HAS BEEN ARRANGED FROM THE SHARE HOLDERS'. ON THE BASIS OF THESE FACTS AND IN VIEW OF PRINCIPLE OF CONSISTENCY THE ITAT HAS ACCEPTED THE CONTENTION OF THE APPELLANT. ON THE SAME ANALOGY, I ALSO AGREE WITH THE CONTENTION OF THE APPELLANT THAT DURING THE YEAR UN DER CONSIDERATION ALSO FACTS ARE ALMOST IDENTICAL TO THE ASSESSMENT YEAR 2006 - 07 AS DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS DEALT ONLY IN SMALL NUMBER OF SCRIPS (TOTALING TO 38 SCRIPS AS COMPARED TO 65 SCRIPS IN A.Y. 2006 - 07) TOTAL NUMBER OF TRANSACTIONS ARE ONLY 85 (AS COMPARED TO 182 IN A.Y. 2006 - 07) AND THE AVERAGE HOLDING IS 152 DAYS FOR SHORT TERM CAPITAL GAINS AND 703 DAYS IN LONG TERM CAPITAL GAINS ( AS COMPARED TO 138 AND 807 DAYS IN A.Y. 2006 - 07). UNDER THESE CIRCUMSTANCES, WHEN THE RE IS NO CHANGE OF FACTS OF DECISION OF HONBLE ITAT IN A.Y. 2006 - 07 IS APPLICABLE DURING THIS YEAR ALSO. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT IN A.Y. 2006 - 07, IT IS HELD THAT THE APPELLANT HAS EARNED THIS INCOME IN THE CAPACITY OF INVES TOR, ACCORDINGLY INCOME /LOSS ON THE SHARE TRANSACTION OF THE APPELLANT IS TAXABLE UNDER THE HEAD CAPITAL GAINS. THE A.O. IS DIRECTED TO ASSESS THE SAME ACCORDINGLY. THIS GROUND IS THEREFORE, ALLOWED. 7. THE AFORESAID FINDINGS OF THE CIT(A) HAVE NOT BEE N CONTROVERTED BY THE LD. DR BEFORE US AND ARE ACCORDINGLY AFFIRMED. THERE IS ALSO NO CONTROVERSION BY THE REVENUE TO THE ASSERTIONS OF THE RESPONDENT - ASSESSEE THAT THE ORDER OF THE TRIBUNAL DATED 19.04.2013 (SUPRA) , APPLIED BY THE CIT(A) , CONTINUES TO HOLD THE FIELD. IN THE ABOVE BACKGROUND, WE HEREBY AFFIRM THE DECISION OF CIT(A) AND ACCORDINGLY REVENUE FAILS. 5 ITA NO 6370/MUM/2013 ASSESSMENT YEAR: - 2009 - 10 PAGE 5 OF 6 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JUNE 2015. SD/ - SD/ - ( AMIT SHUKLA ) (G.S. PANNU) (JUDICIAL MEMBER/ U;KF;D LNL; ) (ACCOUNTANT MEMBER/ YS[KK LNL; ) MUMBAI DATED 30 - 06 - 2015 SKS SR. P.S, COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI