DILIP S. MEHTA, MUMBAI V. ITO 16(2)(2), MUMBAI

ITA 73/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3737 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2014
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Capital asset; Business income; Date of conversion
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 73 /MUM/ 2014 (ASSESSMENT YEAR 2007 - 08 ) SHRI DILIP S. MEHTA 8/PAVLOVA 10 LITTLE GIBBS ROAD MALBAR HILL MUMBAI - 400 006. VS. ITO - 16(2)( 2) ROOM NO. 214 MATRU MANDIR TARDEO ROAD MUMBAI - 400 007. ( APPELLANT ) ( RESPONDENT ) PAN NO. AACPM3858N ASSESSEE BY SHRI SANJAY R. PARIKH DEPARTMENT BY SHRI B.S. BIST DATE OF HEARING 25 .2 . 201 6 DATE OF PRONOUNCEMENT 11 . 5 . 201 6 O R D E R PER B.R. BASKARAN, A M : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20.9.2013 PASSED BY LEARNED CIT(A) - 6, MUMBAI FOR A.Y. 2007 - 08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LEARNED CIT(A) IN CONFIRMING THE ADDITION OF R S. 6,52,535/ - MADE BY THE ASSESSING OFFICER. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE HAD CONVERTED ITS STOCK IN TRADE OF SHARES INTO CAPITAL ASSET AND ACCORDINGLY CLAIMED THE DIFFERENCE BETWEEN THE COST AND MARKET VALUE AS ON THE DATE OF CONVERSION AMOUNTING TO RS. 4,72,514/ - AS BUSINESS LOSS. SUBSEQUENTLY, THOSE SHARES WERE SOLD AND THE GAIN ARISING THEREON WAS DECLARED AS SHORT TERM CAPITAL GAINS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONVERSION OF STOCK IN TRADE INTO CA PITAL ASSET AND ACCORDINGLY DISALLOWED CLAIM OF BUSINESS LOSS OF RS.4,72, 514/ - . THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS NOT CORRECTLY COMPUTED THE PROFIT ARISING ON SALE OF SHARES. ACCORDINGLY HE SHRI DILIP S. MEHTA 2 COMPUTED CAPITAL GAIN ON THE BASIS OF AV AILABLE INFORMATION AT RS. 12,07,950/ - AND ASSESSED THE SAME AS BUSINESS INCOME OF THE ASSESSEE. 4. IN THE APPELLATE PROCEEDINGS LEARNED CIT(A) UPHELD THE DISALLOWANCE OF CLAIM OF LOSS OF RS. 4,72,515/ - ARISING ON ACCOUNT OF CONVERSION OF STOCK IN TRADE I NTO CAPITAL ASSET. WITH REGARD TO COMPUTATION OF CAPITAL GAIN MADE BY THE ASSESSING OFFICER, LEARNED CIT(A) AGREED WITH THE ASSESSEE THAT THE ASSESSING OFFICER HAS COMPUTED THE FIGURE OF RS. 12,07,950/ - WITHOUT TAKING INTO ACCOUNT ALL THE DETAILS OF PURCHA SE S AND SALE S OF SHARES . FURTHER THE ASSESSEE ALSO CLAIMED THAT THE SHORT TERM CAPITAL GAINS DECLARED BY HIM DOES NOT INCLUDE THE BUSINESS LOSS OF RS. 4,72,515/ - . THE L EARNED CIT(A) EXAMINED THE WORKING FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOM E AND TOOK THE VIEW THAT SHORT TERM CAPITAL GAIN TO THE EXTENT OF RS. 6,52,535/ - HAS NOT BEEN DECLARED BY THE ASSESSEE , AS CLAIMED BY HIM. IN EFFECT LEARNED CIT(A) ACCEPTED THE CLAIM OF SHORT TERM CAPITAL GAIN BUT DISALLOWED AN AMOUNT OF RS.6,52,535/ - WIT H THE OBSERVATION THAT THE SAME HAS NOT BEEN DECLARED BY THE ASSESSEE. 5. AT THE TIME OF HEARING LEARNED AR INVITED OUT ATTENTION TO PAGE NO. 7 OF THE PAPER BOOK, WHEREIN HE HAD WORKED OUT SHORT TERM CAPITAL GAIN ON SALE OF SHARES AT RS. 4,87,745/ - AS UND ER : - CONVERTED SHARES 5,20,745 OTHER SHARES 1,13,790 ----------- 6,52,535 ( - ) LOSS ON SHARES 1,64,790 ------------ 4,87,745 ======== LEARNED AR SUBMITTED THAT THE ASSESSEE, WHILE FILING THE RETURN OF INCOME, HAS WRONGLY TAKEN THE LOS S AS RS. 1,64,790/ - AS A PROFIT FIGURE AND ACCORDIN GLY COMPUTED CAPITAL GAIN AT RS. 8,17,325/ - (5,20,745 +1,31,790+1,64,790) . ACCORDINGLY LEARNED AR SUBMITTED THAT THE ASSESSEE HAS DULY DECLARED CAPITAL GAIN OF RS.6,52,535/ - (5,20,745 + 1,31,970) AND HENCE THE OBSERVATION OF SHRI DILIP S. MEHTA 3 LEARNED CIT(A) THAT THE ASSESSEE HAS NOT DECLARED CAPITAL GAIN OF RS. 6,52,535/ - IS WRONG. 6 . WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICE THAT THE OBSERVATIONS OF LEARNED CIT(A) APPEARS TO BE NOT CORRECT AS PER THE SUBMISSIONS MADE BY THE ASSESSEE, I.E., THE DIFFERENCE NOTICED BY LD CIT(A) CAN BE CLARIFIED BY THE ASSESSEE, IF THE FIGURES ARE RECONCIL ED . ACCORDINGLY WE ARE OF THE VIEW THAT THE SUBMISSIONS MADE BY THE ASSESSEE WITH THE DETAILS OF G AINS/LOSS ARISING ON SALE OF SHARES REQUIRE EXAMINATION AT THE END OF LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE HIS ORDER AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO CONSIDER EXPLANATION S AND WORKING S FURNISHED BY ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 11 .5 .2016 . SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN ) JUDICIAL MEM BER ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 5 /20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER , //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS