DCIT CIR 7(1), MUMBAI V. PALANI ANDAVAR HOLDINGS P LTD, MUMBAI

ITA 6374/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4122 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E SRIDHARDR
• Keywords: Business income
• Section: 143(3); 142(1); 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6374/MUM/2013 ASSESSMENT YEAR:2010-11 DCIT-7(1), ROOM NO.622, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI-400020 / VS. M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 8/222, BHASKAR BHAVAN, SIR BHALCHANDRA ROAD, MATUNGA, MUMBAI-400019 ( / REVENUE ) ( ! ' /ASSESSEE) PAN. NO . AAACP4779J / REVENUE BY SHRI E. SRIDHAR-DR ! ' / ASSESSEE BY SHRI SUBHASH SHETTY # $ % ' & / DATE OF HEARING : 12/04/2016 % ' & / DATE OF ORDER: 12/04/2016 ITA NO.6374/MUM/2013 M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 30/08/2013 OF THE FIRST APPELLATE AUTHORITY, MUMBAI . THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO DIREC TING THE ASSESSING OFFICER TO TREAT THE SALE OF BONUS SHARES OF GLODYNE TECHNOSERVE AS SHORT TERM CAPITAL GAIN AND NOT AS B USINESS INCOME WITHOUT APPRECIATING THE FACTUAL AND LEGAL M ATRIX. 2. DURING HEARING, THE LD. DR, SHRI E. SHRIDHAR, ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED BY DEFENDING THE ADDITION MADE AS BUSINESS INCOME B Y THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. COU NSEL FOR THE ASSESSEE, SHRI SUBHASH SHETTY, DEFENDED THE CONCLUS ION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT INVESTMENT OF RS.1,81,17,914/ WAS MADE BY THE ASSES SEE OUT OF WHICH THE SHORT TERM CAPITAL GAIN IS RS.99,19,09 4/-, WHEREAS, THE ASSESSING OFFICER HAS TREATED THE WHOL E AMOUNT OF INVESTMENT AS BUSINESS INCOME. PLEA WAS ALSO RAI SED THAT IN EARLIER YEAR, IDENTICAL CLAIM WAS ACCEPTED AS CA PITAL GAIN. RELIANCE WAS PLACED UPON THE DECISION OF THE LD. AS SESSING ITA NO.6374/MUM/2013 M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 3 OFFICER FOR ASSESSMENT YEAR 2009-10, WHERE, SHORT T ERM CAPITAL GAIN WAS ACCEPTED. IT WAS BROUGHT TO OUR NO TICE THAT SOMEHOW IN THE IMPUGNED ORDER SOME CONFUSION HAS BE EN CREATED. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE, A PRIVATE LIMITED COMPANY WA S INCORPORATED UNDER THE INDIAN COMPANIES ACT, 1956 A ND IS REGULARLY FILING ITS RETURN FOR THE LAST MANY YEARS . THE MAIN SOURCE OF INCOME OF THE ASSESSEE COMPANY IS FROM INVESTMENT, DERIVATIVES, TRADING/SHARE TRADING, ETC . FOR THE YEAR UNDER CONSIDERATION, TOTAL INCOME OF RS.2,32,6 8,541/- WAS FILED ON 02/10/2010, WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY, THEREF ORE, NOTICE U/S 143(2) AND 142(1) OF THE ACT WAS SERVED UPON TH E ASSESSEE. THE LD. ASSESSING OFFICER WHILE FRAMING T HE ASSESSEE U/S 143(3) MADE CERTAIN DISALLOWANCES AND THE CLAIMED CAPITAL GAIN WAS TAXED AS BUSINESS INCOME BY APPLYING RULE 8D AND DETERMINING THE DISALLOWANCE U /S 14A OF THE ACT. IT IS NOTED THAT THE ASSESSEE CLAIMED ITA NO.6374/MUM/2013 M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 4 RS.99,19,094/- AS SHORT TERM GAIN FROM SALE OF SHAR ES, WHICH WERE TREATED AS BUSINESS INCOME. IT IS ALSO NOTED THAT IN ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER WHIL E FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT ACCEPT ED THE CLAIM OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN. H OWEVER, NO CONTRARY FACTS WERE BROUGHT ON RECORD. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEAL), IT SEEMS THAT SOME CONFUSION HAS OCCU RRED AS IS EVIDENT FROM PARA 5.1, WHEREIN, IT HAS BEEN MENTION ED THAT THE ASSESSEE HAS NOT SUPPORTED/EXPLAINED ITS STAND THAT SHORT TERM CAPITAL GAIN OF RS.99,19,094/- SHOULD NO T BE TREATED AS INCOME FROM BUSINESS, THEREFORE, THE ASS ESSING OFFICER WAS RIGHTLY HELD TO BE OBSERVING THAT THE A SSESSEE COMPANY WAS ENGAGED IN BUSINESS OF SHARES. WITHOUT COMMENTING FURTHER, THE COMMISSIONER OF INCOME TAX (APPEAL) IS DIRECTED THE FACTS AS THE ASSESSEE HAS NOT SHOWN THE SHARES AS STOCK IN TRADE BUT SHOWN AS INVESTMEN T, THEREFORE, EQUAL TREATMENT SHOULD HAVE BEEN GIVEN T O BOTH. IT IS ALSO NOTED THAT FOR A.Y. 2009-10, THE CLAIM OF T HE ASSESSEE HAS BEEN ACCEPTED. IF THE FACTS ARE IDENTICAL THE DEPARTMENT ITA NO.6374/MUM/2013 M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 5 IS NOT EXPECTED TO DEVIATE FROM ITS EARLIER STAND. BOTH PARTIES AGREED THAT THE FACTS AND ISSUE NEEDS TO BE EXAMINE D AFRESH. IN VIEW OF THIS FACTUAL MATRIX, THE COMMISSIONER OF INCOME TAX (APPEAL) IS DIRECTED TO EXAMINE THE FACTS AND DECIDE IN ACCORDANCE WITH LAW AS FACTS HAS NOT BEEN PROPERLY EXPLAINED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORIT Y, THEREFORE, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 12/04/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ( DATED :12/04/2016 F{X~{T? P.S/. .. ITA NO.6374/MUM/2013 M/S PALANI ANDAVAR HOLDINGS PVT. LTD. 6 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1' / CIT(A)- , MUMBAI 5. 23 .' , 0 *+& * 4 , # $ / DR, ITAT, MUMBAI 6. 5 6$ / GUARD FILE. / BY ORDER, /2+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI