SKM CONSTRUCTION P.LTD, MUMBAI V. ASST CIT RG 5(3), MUMBAI

ITA 7097/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62368 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI VIVEK VARMA (JM) I.T.A. NOS. 2988 & 7097/MUM/2011 (A.YS. 2007-08 & 2008-09) M/S. SKM CONSTRUCTION PVT.LTD., 12, SKM HOUSE, 1 ST FLOOR, KHETWADI 6 TH LANE, MUMBAI-400004. PAN: AAFCS8266G VS. ASST.COMMR. OF INCOME-TAX, RANG-5(3), AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDENT APPELLANT BY SHRI SANJIV M. SHAH. RESPONDENT BY SHRI V .V. SHASTRI. DATE OF HEARING 07-05-2012 DATE OF PRONOUNCEMENT 09-05-2012 O R D E R PER R.S. SYAL, AM : THESE TWO APPEALS BY THE ASSESSEE RELATE TO ASSESSM ENT YEARS 2007-08 AND 2008-09. SINCE THE ISSUES RAISED IN THESE APPEALS ARE COMMON, WE ARE THEREFORE PROCEEDING TO DISPOSE THEM OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.2988 &7097/MUM/2011 SKM CONSTRUCTION P.LTD. 2 ASST.YEAR 2008-09: 2. THE FIRST GROUND IS AGAINST TREATING THE PROFIT ON SALE OF SHARES AMOUNTING TO RS.15,42,325/- AS BUSINESS INCOME AGAINST SHORT- TERM CAPITAL GAINS SHOWN BY THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE LD. CIT(A), WHILE R ECORDING HIS FINDING AGAINST THE ASSESSEE, RELIED ON THE VIEW TAKEN BY HIM IN ASSESS MENT YEAR 2006-07. HIS ORDER FOR ASSESSMENT YEAR 2006-07 CAME UP FOR ADJUDICATIO N BEFORE THE TRIBUNAL IN ITA NOS.6272 & 6499/MUM/2009. VIDE ITS ORDER DATED 30-06-2011, THE TRIBUNAL HAS HELD THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADING. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES FOR THE INSTANT YEAR ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR ASSESSMENT YEAR 2006-07. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE AND DIRECT THAT THE PROFIT ON SALE OF SHARES AMOUNTING TO RS.15.42 LAKHS BE CONSIDERED AS BUSINESS INCOME AND NOT ASSESSABLE AS SHORT-TERM CAPITAL GAINS. GROUND NO. 1 IS, THEREFORE, NOT ALLOWED. 4. GROUND NOS.2 & 3 ARE CONSEQUENTIAL TO THE DECISI ON ON GROUND NO. 1. THROUGH THESE GROUNDS, IT HAS BEEN CLAIMED BY THE A SSESSEE THAT IF PROFIT FROM SHARE TRADING IS TO BE CONSIDERED AS BUSINESS INCOM E, THEN THE VALUATION OF CLOSING STOCK OF SHARES SHOULD BE DONE AS PER ACCO UNTING STANDARD NOTIFIED ITA NOS.2988 &7097/MUM/2011 SKM CONSTRUCTION P.LTD. 3 U/S.145 AND FURTHER REBATE U/S.88E IN RESPECT OF SE CURITIES TRANSACTION TAX PAID AT THE TIME OF PURCHASE AND SALE OF SHARES BE ALLOWED AS DEDUCTION. IT WAS FAIRLY CONCEDED THAT THE AUTHORITIES BELOW DID NOT HAVE AN Y OCCASION TO CONSIDER THESE TWO GROUNDS. IN OUR CONSIDERED OPINION, IT WILL BE JUST AND FAIR IF THE MATTER IS REMITTED TO THE FILE OF AO FOR CONSIDERING THESE TW O ISSUES VIZ. (I) VALUATION OF CLOSING STOCK OF SHARES AND (II) ALLOWING OF REBATE U/S. 88E, AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASST.YEAR 2007-08: 6. THE ONLY ISSUE RAISED THROUGH THE MEMO OF APPEAL IS ABOUT THE TREATMENT OF PROFIT ON SALE OF SHARES AMOUNTING TO RS.65,02, 767/- AS BUSINESS INCOME AGAINST CAPITAL GAINS SHOWN BY THE ASSESSEE. FOR TH IS YEAR ALSO, BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES ARE S IMILAR TO THE ASSESSMENT YEAR 2006-07. RESPECTFULLY FOLLOWING THE ORDER PASSED B Y THE TRIBUNAL FOR THE SAID EARLIER YEAR, WE UPHOLD THE IMPUGNED ORDER BY DIREC TING THAT PROFIT ON SALE OF SHARES AMOUNTING TO RS.65.02 LAKHS BE CONSIDERED AS BUSINESS INCOME. 7. THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS ON AL LOWABILITY OF REBATE U/S.88E AND VALUATION OF CLOSING STOCK OF SHARES. THESE GROUNDS ARE SIMILAR TO THOSE SPECIFICALLY TAKEN IN APPEAL MEMO FOR THE A. Y. 2008-09. NO SERIOUS OBJECTION WAS TAKEN BY THE LD. DR TO THE ADMISSION OF THESE GROUNDS. SINCE ITA NOS.2988 &7097/MUM/2011 SKM CONSTRUCTION P.LTD. 4 THESE GROUNDS ARE CONSEQUENTIAL TO THE DECISION ON THE MAIN GROUND OF APPEAL AND NO FRESH FINDING OF FACTS IS REQUIRED AT OUR EN D, WE ADMIT THE SAME. ON MERITS BOTH THE SIDES AGREE THAT THE DIRECTION SIMILAR TO THAT FOR A.Y. 2008-09 BE GIVEN. 8. FOLLOWING OUR VIEW FOR ASSESSMENT YEAR 2008-09, WE DIRECT THE AO TO CONSIDER THESE TWO ISSUES AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 09TH DAY OF MAY, 2 012. SD/- SD/- (VIVEK VARMA) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 09TH MAY , 2012. NG: COPY TO : 1.ASSESSEE. 2.DEPARTMENT.. 3 CIT(A)-9, MUMBAI. 4 CIT-5,MUMBAI. 5.DR,E BENCH, MUMBAI. 6.MASTER FILE. (TRUE COPY) ITA NOS.2988 &7097/MUM/2011 SKM CONSTRUCTION P.LTD. 5 BY ORDER, ASST. REGISTRAR, ITAT, MUMBAI. ITA NOS.2988 &7097/MUM/2011 SKM CONSTRUCTION P.LTD. 6 DETAILS DATE INITIALS DESIGN ATION 1. DRAFT DICTATED ON 07-05-12 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 07-05-12 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/A M 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *