A.R.S SHENOI, MUMBAI V. DCIT CIR 19(2), MUMBAI

ITA 6845/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8499 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 6845/MUM/2010 ASSESSMENT YEAR 2005-06 LATE MR. A.R.S. SHENOI THROUGH LEGAL HEIR MRS. VINAYA SHENOI, PLOT NO. 74/75, SEA BREEZE, 5 TH FLOOR, RAMKRISHNA MISSION ROAD, SANTACRUZ (WEST), MUMBAI 400 054. PAN: AOGPS 4810 J VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 19(2), PIRAMAL CHAMBERS, 3 RD FLOOR, LALBAUG, MUMBAI-400 012. ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI NITESH JOSHI ! # ' /RESPONDENT BY : SHRI MANOJ KUMAR $ # %& / DATE OF HEARING : 03-10-2012 '() # %& / DATE OF PRONOUNCEMENT : 03-10-2012 * / O R D E R PER RAJENDRA, AM CHALLENGING THE ORDER OF THE CIT(A)-30, MUMBAI DT. 29-07-2010, LEGAL HEIRS OF SHRI A.R.S. SHENOI HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1.0. THE GROUNDS OF APPEAL THAT FOLLOW ARE ALL INDE PENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 2.0 RE: TAXABILITY OF CAPITAL GAINS AS BUSINESS INCOME: 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT THE INVESTMENTS MADE BY THE DECEASED APPELLANT IN SHARES AND SECURITIES CON STITUTED A BUSINESS ACTIVITY. I.TA. NO. 6845/MUM/2010 LATE MR. A.R.S. SHENOI THROUGH LEGAL HEIR MRS. VINAYA SHENOI, 2 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT THE INVESTMENTS ACQUIRED BY THE APPELLANT HAD BEEN FINANCED MAINLY OUT OF BORROWED FUNDS. 2.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONSEQUENTLY E RRED IN HOLDING AND ENTIRE LONG TERM CAPITAL GAINS (INCLUDING LONG TERM CAPITAL GAI NS EXEMPTED UNDER THE PROVISIONS OF SECTIONS 10(36) AND 10(38)) AND THE SHORT TERM C APITAL GAINS AGGREGATING IN ALL TO RS. 3,527,955 WERE TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS VIS-A VIS UNDER THE HEAD CAPITAL GAINS OFFERED BY THE APPEL LANT. 3.0 YOUR PETITIONERS CRAVE LEAVE TO ADD, TO ALTER, AMEND OR VARY ALL OR ANY OF THE ABOVE GROUNDS AS AND WHEN THE OCCASION ARISES. 2. ASSESSEE HAD FILED RETURN OF INCOME ON 11-08-2005 D ECLARING TOTAL INCOME OF RS. 24.77 LAKHS. ASSESSMENT WAS FINALISED U/S. 143 (3) OF THE INCOME-TAX ACT, 1961(ACT) BY THE ASSESSING OFFICER (AO) ON 13-12-20 07 DETERMINING TOTAL INCOME AT RS. 38.79 LAKHS. DURING THE ASSESSMENT PROCEEDINGS , AO FOUND THAT ASSESSEE HAD DECLARED SHORTER TERM AND LONG TERM CAPITAL GAINS A ND INCOME FROM OTHER SOURCES. AFTER GOING THROUGH THE DETAILS FILED BY THE ASSESS EE, HE HELD THAT THERE WAS A SYSTEMATIC , REGULAR AND PERIODICALLY ACTIVITY IN T HE STOCK MARKET WITH HIGH FREQUENCY VOLUM AND QUANTUM, THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES WERE TO BE TREATED AS BUSINESS ACTIVITY OF THE ASSESSEE, THAT GAIN/LOSS ON SUCH ACTIVITIES HAD TO BE CONSIDERED AS BUSINESS INCOME/LOSS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HE FURTHER MENTIONED THAT DETAILED REASONS WERE GIV EN BY THE AO IN THE ASSESSMENT ORDER ON THE SAME ISSUE FOR THE AY 2004-05, THAT TR ANSACTION CARRIED OUT BY THE ASSESSEE WERE HELD BUSINESS IN THAT YEAR ALSO. A SSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). AFTER CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE DISMISSED APP EAL FILED BY THE ASSESSEE. 3. DURING THE HEARING BEFORE US, IT WAS BROUGHT TO OUR NOTICE THAT A BENCH OF ITAT, MUMBAI VIDE ITS ORDER (ITA NO. 5065/M/2008 AY 2004-05 DT. 14 TH OCTOBER 2009) HAD RESTORED BACK THE MATTER TO THE FILE OF T HE FAA FOR THE AY 2004-05. WE FIND THAT IN AY 2004-05 ALSO, THE ISSUE OF INCOME F ROM BUSINESS/INCOME FROM CAPITAL GAINS EXISTED. FOLLOWING THE RULE OF THE CONSISTEN CY AND IN THE INTEREST OF JUSTICE, WE HOLD THAT MATTER SHOULD BE RESTORED BACK TO THE FIL E OF THE FAA. HE IS REQUESTED TO PASS A SPEAKING ORDER; TAKING INTO CONSIDERATION TH E APPELLATE PROCEEDINGS FOR THE AY 2004-05, RESTORED BACK TO HIM BY THE TRIBUNAL; WHIL E DECIDING THE ISSUE. APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER, 2012. SD/- SD/- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, +$ DATE: 3 RD OCTOBER, 2012 I.TA. NO. 6845/MUM/2010 LATE MR. A.R.S. SHENOI THROUGH LEGAL HEIR MRS. VINAYA SHENOI, 3 TNMM * * * * # ## # %, %, %, %, -,)% -,)% -,)% -,)% / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE !,% % //TRUE COPY// *$ *$ *$ *$ / BY ORDER, . .. . / / / / / DY./ASSTT. REGISTRAR , / ITAT, MUMBAI