PENTAGON BUILDERS P.LTD, MUMBAI V. ITO WD 5(2)(4), MUMBAI

ITA 7417/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0495 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 12-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency; Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7417/MUM/2014 ASSESSMENT YEAR: 2011 - 12 PENTAGON BUILDERS PVT. LTD. VS. ITO - 5(2)(4), 6 TH FLOOR, DEEJAY APARTMENT, MUMBAI - 400020 46, BHULABHAI DESAI ROAD, MUMBAI 400026 PAN NO. AA BCP8971F (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. DEEPAK TRALSHAWALA, AR REVENUE BY: MR. SAURABH KUMAR R AI, DR DATE OF HEARING : 24 /05/2017 DATE OF PRONOUNCEMENT: 31/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. THE FACTS, FIGURES AND PARAMETERS AT PARA 5 OF THE ORDER DATED 29.10.2010 OF THE HON'BLE ITAT ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. CIT(A) ARE MATERIALLY DIFFERENT IN THE PRESENT A.Y. 2011 - 12, AND HENCE CANNOT BE CONSTRUED AS RES JUDICATA. ITA NO. 7417/MUM/2014 2 2. THE PRINCIPLE OF CONSISTENCY CANNOT APPLY FOR THE PRESENT A . Y. 2011 - 12 AS THE FIGURES TRANSACTED AND THE PERIOD OF HOLDING ARE MATERIALLY DIFFERENT FROM THE EARLIER YEARS. 3. THE PARAMETERS MENTIONED BY THE HON'BLE ITAT AT PARA 5 OF THEIR ORDER DATED 29.10.2010 HAVE SUBSEQUENTLY DECIDED BY VARIOUS COURTS IN FAVOUR OF THE ASSESSEE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (A.O.) NOTICED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN (LTCG) AMOUNTING TO RS.82,38,088/ - AS EXEMPT INCOME. ALSO IT HAD SHOWN RS.1,47,685/ - AS NON - EXEMPT INCOME . THE A.O. FURTHER OBSERVED THAT THE ASSESSEE - COMPANY HAD CLAIMED BUSINESS LOSS OF RS.18,20,830/ - IN THE RETURN OF INCOME WITHOUT CARRYING OUT ANY BUSINESS ACTIVITY OTHER THAN INVESTMENTS IN SHARES, SECURITIES, BONDS AND UNITS DURING THE YEAR. THE A.O. NOT ED THAT IN EARLIER ASSESSMENT YEAR 2005 - 06, 2006 - 07, 2007 - 08 AND 2009 - 10, THE SHARE TRADING TRANSACTION WAS CONSIDERED AS BUSINESS INCOME. THE ITAT UPHELD THE ACTION OF THE A.O. IN THE A.Y. 2005 - 06 AND 2006 - 07. IN VIEW OF THE ABOVE, THE A.O. TREATED THE AM OUNT OF RS.66,07,537/ - AS BUSINESS INCOME AND BROUGHT THE SAME TO TAX. 4. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS FOLLOW ED THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE CIRCULAR NO. 6 / 2016 ISSUED BY CBDT AND STATED THAT THE SCENARIO HAS CHANGED AFTER THE DATE OF ISSUE OF THE A BOVE CIRCULAR I.E. 29.02.2016. THE LD. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS. SMT. DATTA MAHENDRA SHAH (2015) 378 ITR 304 (BOM.) AND ACIT VS. SHRI SACHIN R. TENDULKAR FOR THE ITA NO. 7417/MUM/2014 3 A.Y. 2010 - 11 (ITA NO. 3217/MUM/2014) AND A.Y. 2011 - 12 (ITA NO . 1411/MUM/2015). 6. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDER PASSED BY THE LD. CIT(A). HE ALSO MADE REFERENCE TO THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005 - 06. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL O N RECORD. WE FIND THAT THE CBDT CIRCULAR NO. 6/2016 DATED 29.02.2016 HAS ALSO REFERRED TO INSTRUCTION NO. 1827 DATED 31.08.1989 AND CIRCULAR NO. 4/2007 DATED 15.06.2007. IN FACT THE ORDER PASSED BY THE TRIBUNAL FOR THE EARLIER ASSESSMENT Y EAR REFLECT THE GUIDELINES LAID DOWN BY CBDT IN THE ABOVE CIRCULAR / INSTRUCTION. 7.1. REGARDING THE DECISION IN SMT. DATTA MAHENDRA SHAH (SUPRA) AND SHRI SACHIN R. TENDULKAR (SUPRA), WE MAY SAY THAT THE ISSUE WHETHER THE NATURE OF TRANSACTION OF PURCHAS E AND SALE OF SHARE IS INVESTMENT OR TRADING IS PURELY A FINDING OF FACTS. THEREFORE, EACH CASE INVOLVING A QUESTION OF FACT HAS TO BE DECIDED ON ITS OWN PECULIAR FACTS. IT IS NOT TO BE DECIDED ON THE BASIS OF FINDING OF FACTS IN ANOTHER CASE. 8. WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005 - 06 AND 2006 - 07 VIDE ITA NOS. 4384/MUM/2008 DATED 29.10.2010 AND 6045/MUM/2009 & 6110/MUM/2009 DATED 22.12.2010 HAS CONSIDERED SIMILAR DISPUTE AND HELD THAT THE PROF IT OR LOSS EARNED IN TRANSACTION OF PURCHASE AND SALE OF SHARES AND SECURITIES WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME. WE ALSO FIND THE CO - ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2007 - 08 AND 2009 - 10 VIDE ITA NO. 379/MUM/2011 AND ITA N O. 5407/MUM/2012 HAS FOLLOWED THE ABOVE ITA NO. 7417/MUM/2014 4 ORDER AND HELD THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES WERE LIABLE TO BE ASSESSED AS BUSINESS INCOME. 9. FACTS BEING SIMILAR, WE FOLLOW THE ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005 - 06, 2006 - 07,2007 - 08 AND 2009 - 10 AND UPHOLD THE ORDER OF THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2017 SD/ - SD/ - ( MAHAVIR SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/05/2017 RAHUL SHARMA, SR. P.S. 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