DCIT 17(2), MUMBAI V. JAGRUTI RAJIV DUTIA, MUMBAI

ITA 6588/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92873 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR BIRLA
• Keywords: Business income
• Section: 143(3)

Judgement Text

J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ./ I.T.A. NO.6588/ MUM/2013 ( / ASSESSMENT YEAR: 2010-2011 DCIT 17(2, R. NO. 217, 2 ND FLOOR, PIRAMAL CHAMBERS, MUMBAI 400 012. / VS. SMT. JAGRUTI RAJIV DUTIA, A-73, NEPEROL TOWER, OPP. GYANESHWAR VIDYALAYA, R.A. KIDWAI ROAD, WADALA, MUMBAI 400 031. ./ PAN : AAQPD2072H ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI PAWAN KUMAR BIRLA R E SPONDENT BY : SHRI NIT ESH JOSHI / DATE OF HEARING : 18-06-2015 / DATE OF PRONOUNCEMENT : 18-06-2015 [ !' / O R D E R PER B.R. BASKARAN, A.M. THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 27-08-2013 PASSED BY THE LD. CIT(A) 29, MUMBAI AN D IT RELATES TO A.Y. 2010- 11. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE SHORT TERM CAPITAL GAIN ARISING OUT OF SAL E OF SHARES IS ASSESSABLE AS CAPITAL GAIN INSTEAD OF BUSINESS INCOME. ITA 6588/M/13 2 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE FACTS RELATING TO THE ISSUE UNDER CONSIDERATION ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND SHE FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION DECLARING A TOTAL INCOME OF RS. 1.86 CRORES, WHICH INCLUDED SHORT TER M CAPITAL GAIN OF RS. 74.84 LACS AND LONG TERM CAPITAL GAIN OF RS. 12.11 LACS. HE FURTHER NOTICED THAT THE ASSESSEE HAS SOLD 3.78 LACS OF SHARES AND TOTAL TUR NOVER WAS RS. 5.36 CRORES. THE AVERAGE HOLDING PERIOD WAS SEEN AT 22.5 DAYS. ACCORDINGLY, THE A.O. TOOK THE VIEW THAT THE ASSESSEE HAS DEALT IN PURCHASE AN D SALE OF SHARES AS A TRADER. HENCE, THE A.O. HELD THAT SHORT TERM CAPITA L GAIN SHOULD BE ASSESSED AS BUSINESS INCOME AND ACCORDINGLY ASSESSED THE SAM E. THE LD. CIT(A), HOWEVER, SET ASIDE THE ORDER OF THE A.O. AND DIRECT ED THE A.O. TO ASSESS THE PROFIT ON SHORT TERM CAPITAL GAIN ONLY. AGGRIEVED BY THIS, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE CAREFULLY PERUSED THE ORDER PASSED BY TH E LD. CIT(A). WE NOTICE THAT THE ASSESSEE HAS BEEN CONSISTENTLY DECLARING T HE PROFIT ARISING OUT OF PURCHASE AND SALE OF SHARES AS CAPITAL GAIN ONLY AN D THE SAME HAS BEEN ACCEPTED BY THE A.O. IN THE ASSESSMENT ORDERS PASSE D U/S 143(3) OF THE ACT FOR ASSESSMENT YEARS 2005-06, 2006-07, 2007-08, 200 8-09 AND 2012-13. IT IS A WELL SETTLED PROPOSITION THAT THE QUESTION OF ASS ESSING THE GAIN ARISING ON SALE OF SHARES EITHER AS CAPITAL GAIN OR BUSINESS I NCOME WOULD DEPEND UPON VARIOUS FACTORS THAT ARE REQUIRED TO BE CONSIDERED, MORE PARTICULARLY THE INTENTION OF THE PARTY AT THE TIME OF PURCHASING SH ARES. 5. IN THE INSTANT CASE, THE LD. CIT(A) HAS NOTIC ED THAT THE ASSESSEE HAS ENTERED INTO ONLY 22 TRANSACTIONS DURING THE YEAR U NDER CONSIDERATION. A PERUSAL OF THE DETAILS FURNISHED IN THE ORDER OF LD CIT(A), WE NOTICE THAT THERE WAS NO REPETITION OF PURCHASE AND SALES EXCEPT IN O NE CASE. FURTHER, THE LD. CIT(A) HAS NOTICED THAT THE ASSESSEE HAS HELD SCRIP S FOR A PERIOD RANGING FROM 5 DAYS TO 4 MONTHS. FURTHER, A PERUSAL OF THE CAPIT AL ACCOUNT OF THE ASSESSEE ITA 6588/M/13 3 SHOWS THAT THE ASSESSEE HAS NOT INCURRED ANY INTERE ST EXPENDITURE AND THE LD. CIT(A) HAS GIVEN A FINDING THAT THE CAPITAL OF THE ASSESSEE IS MUCH MORE THAN THE INVESTMENT MADE IN THE SHARES AND THERE WAS NO USE OF ANY BORROWED FUNDS IN SHARE TRANSACTIONS. THE A.O. HAD OBSERVE D THAT THE ASSESSEE HAS NOT SHOWN ANY DIVIDEND INCOME AND THE SAME HAS BEEN FOUND TO BE FALSE BY THE LD. CIT(A) AND HE HAS NOTED THAT THE ASSESSEE H AS DECLARED DIVIDEND INCOME OF RS. 5 LACS IN HER PERSONAL ACCOUNT. HENCE THE LD CIT(A) HAS DIRECTED THE A.O. TO ASSESS THE GAIN ARISING ON SA LE OF SHORT TERM CAPITAL GAIN. 6. THE LD. D.R. COULD NOT CONTROVERT THE VARIOUS FA CTS AND FINDING GIVEN BY THE LD. CIT(A) AND HE PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 7. WE NOTICED THAT THE LD. CIT(A) HAS ANALYSED THE FACTS PREVAILING IN THE INSTANT CASE IN PERSPECTIVE AND ACCORDINGLY CAME TO THE CONCLUSION THAT THE ASSESSEE HAS ACTED AS INVESTOR ONLY IN SHARES. W E NOTICE THAT THE AO HAS GIVEN MUCH IMPORTANCE TO THE AMOUNT OF TURNOVER OF TRANSACTIONS. HOWEVER, THE VOLUME AND TURNOVER OF SHARES WOULD DEPEND UPON THE FUNDS AVAILABLE WITH AN ASSESSEE AND THE QUANTUM OF INVESTMENT HE I NTENDS TO MAKE. IN THE INSTANT CASE, THE ASSESSEE HAS DEALT IN ONLY 22 SCR IPS IN HIGH QUANTITIES AND HENCE THE AMOUNT OF TURNOVER WAS HIGH. HENCE, THE VOLUME OF TRANSACTIONS ALONE CANNOT BE DETERMINING FACTOR IN DECIDING THE NATURE OF INVESTMENTS MADE BY THE ASSESSEE. EXCEPT HIGH VOLUME, IN OUR V IEW, THERE ARE NO OTHER FACTOR TO SHOW THAT THE ASSESSEE HAS NOT ACTED AS A N INVESTOR IN INDULGING IN SHARES. FURTHER, THE VERY FACT THAT THE ASSESSEES DECLARATION OF CAPITAL GAIN HAS BEEN ACCEPTED BY THE A.O. IN THE 143(3) ASSESS MENT PASSED FOR ASSESSMENT YEARS 2005-06, 2006-07, 2007-08, 2008-09 AND 2012-13 WOULD SHOW THAT THE A.O. HAS ALSO CONSISTENTLY TREATING T HE ASSESSEE AS AN INVESTOR. UNDER THE SET OF FACTS, WE ARE IN AGREEMENT WITH TH E LD. CIT(A) THAT THE A.O. WAS NOT JUSTIFIED IN TREATING THE ASSESSEE AS TRAD ER, THAT TOO ONLY IN THIS YEAR AND ACCORDINGLY ASSESSING THE CAPITAL GAIN AS BUSIN ESS INCOME. ACCORDINGLY, ITA 6588/M/13 4 WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS AN INVESTOR ONLY AND ACCORDINGLY DIRECTING THE AO TO ASSESS THE GAINS AS SHORT TERM CAPITAL GAINS. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH JUNE, 2015. !' # $% &! ' 18-06-2015 ( ) SD/- SD/- (I.P. BANSAL) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER $ 5 MUMBAI ; &! DATED 18-06-2015 [ .=../ RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. > () / THE CIT (A)29, MUMBAI 4. > / CIT -17,MUMBAI 5. AB( ==CD , CD , $ 5 / DR, ITAT, MUMBAI J BENCH 6. (FG H / GUARD FILE. ' / BY ORDER, A = //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 5 / ITAT, MUMBAI