SEEMA HARSHIT SAVLA, MUMBAI V. ASST. CIT RG 19(1), MUMBAI

ITA 6536/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100813 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 13-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2010
• Court: TRIBUNAL
• Department Lawyers: S K JANGRE
• Keywords: Business income
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 6536 / MUM/20 1 0 ( / ASSESSMENT YEAR : 20 0 6 - 20 07 ) MS. SEEMA HARSHIT SAVLA, 601, LANDMARK, TAGORE ROAD, PLOT NO.487, SANTACRUZ (W), MUMBA I - 400054 VS. ACIT, RANGE - 19(1), MUMBAI ./ ./ PAN/GIR NO. : A A HPS 6801 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEHTA /REVENUE BY : SHRI S.K.JANGRE / DATE OF HEARING : 29 / 0 6 / 2015 / DATE OF PRONOUNCEMENT 19/08 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , MUMBAI , DATED 30 - 6 - 2010 , FOR THE ASSESSMENT YEAR 20 0 6 - 20 07 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2. THE ONLY GRIEV ANCE OF THE ASSESSEE RELATES TO DECLINE OF CLAIM OF SHORT TERM CAPITAL GAINS OF RS. 39, 9 9,736/ - , WHICH WAS ASSESSEE BY THE AO AS BUSINESS INCOME. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD WE FOUND THAT THE ASSESSEE HAS CONSIST ENTLY REFLECTED THE INVESTMENTS IN SHARES AND SECURITIES AS INVESTMENTS IN ITS BALANCE SHEET. ITA NO. 6536 /1 0 2 FURTHER THE ASSESSEE HAS BEEN CONSISTENTLY OFFERING THE INCOME FROM SALE OF SHARES AS LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAINS, AS THE CASE MAY, WHICH HAS BEEN ACCEPTED BY THE TAX DEPARTMENT. WHILE FRAMING SCRUTINY ASSESSMENT U/S.143(3) IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2005 - 06, WHEREIN INCOME FROM SHARES HAS BEEN ASSESSED AS SHORT TERM AND LONG GERM CAPITAL GAINS. EVEN CARRY FORWARD OF SHORT TERM CAPITAL GAINS AMOUNTING TO RS.14.99 LAKHS WAS ALLOWED. THE AOS CONCLUSION FOR TREATING THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME WAS THAT THE AVERAGE HOLDING PERIOD WAS 35 DAYS. WE FOUND THAT THE AO HAS MADE FACTUALLY INCORRECT OBSERVATION INS OFAR AS, AS PER THE CHART PLACED ON RECORD, THE AVERAGE PERIOD OF HOLDING IS 205 DAYS. FURTHERMORE, THE MAIN INVESTMENT OF THE ASSESSEE WAS IN PMS AND PROFIT EARNED FROM PMS WAS RS. 41,69,596/ - . 4 . WITH REGARD TO INVESTMENT IN PMS WHETHER INCOME IS SHORT T ERM CAPITAL GAIN OR LIABLE TO TAX AS BUSINESS INCOME HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF RADIALS INTERNATIONAL, 367 ITR 1, WHEREIN IT WAS HELD THAT INVESTMENT OF SHARES UNDER PORTFOLIO MANAGEMENT AGREEMENT, PROFIT ACCRUING T HEREON IS LIABLE TO BE ASSESSED AS CAPITAL GAIN AND NOT AS BUSINESS INCOME. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 19.44 LAKHS, WHICH IS CONSIDERED NORMAL FOR INVESTMENT IN SHARES. THE DIVIDEND INCOME WHEN COMPARED T O THE TOTAL TAXABLE INCOME OF RS.35.14 LAKHS, THE SAME WORKS OUT TO BE MORE THAN 50% . WE ALSO FOUND THAT ASSESSEE HAS BEEN CONSISTENTLY ACCOUNTING THE SHARES PURCHASED AS AN INVESTMENT SINCE ITA NO. 6536 /1 0 3 BEGINNING AND THE TREATMENT SO GIVEN HAS BEEN ACCEPTED BY THE DEP ARTMENT IN PAST. AS PER OUR CONSIDERED VIEW THE INVESTMENT IN SHARES AND NATURE OF SHARES HAS TO BE JUDGED TO THE OVERALL NATURE OF TRANSACTION WHICH INCLUDE INTENTION OF ASSESSEE WHILE PURCHASING SHARES, EARNING DIVIDEND INCOME THEREON, FREQUENCY AND VOLU ME OF TRANSACTION ETC. THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT, (2011) 336 ITR 287(BOM) IS ALSO APPLICABLE TO THE FACTS OF THE INSTANT CASE INSOFAR AS THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES AS COMPARED TO THE EARLIER Y EAR WHEN THE DEPARTMENT ITSELF HAS ACCEPTED ASSESSEES CLAIM OF SHORT TERM AND LONG TERM CAPITAL GAINS. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF LOWER AUTHORITIES FOR TREATING THE CAPITAL GAINS AS BUSINESS INCOME. 5 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 19/08 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 19/08 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. //TRUE COPY//