VIDHI RAMESH SHAH, NAVI MUMBAI V. ASST CIT CIR 19(2), MUMBAI

ITA 7644/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0806 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2014
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Business income
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI C.N. PRASAD (JM) I.T.A. NO. 7644 /MUM/ 201 4 (ASSESSMENT YEAR 20 10 - 1 1 ) VIDHI RAMESH SHAH C/O. SANJAY C. SHAH B - 3, OM JOSHI APARTMENT LALLUBHAI PARK ROAD ANDHERI WES T MUMBAI - 400 058. VS. ASST. CIT - 19(2) MUMBAI ( APPELLANT ) ( RESPONDENT ) PAN NO . AZAPS2260F ASSESSEE BY SHRI SANJAY C. SHAH DEPARTMENT BY SHRI B.S. BIST DATE OF HEARING 20 . 4 . 201 7 DATE OF PRONOUNCEMENT 9 .5 . 201 7 O R D E R PER B.R. BASKARAN (AM) : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 27 - 10 - 2014 PASSED BY LD CIT(A) - 30, MUMBAI FOR ASSESSMENT YEAR 2010 - 11, WHEREIN HE HAS CONFIRMED THE ASSESSMENT OF SHORT TERM CAPITAL GAIN ARISING ON SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. 2. THE ASSESSEE FILED HER RETURN OF INCOME DECLARING INCOME FROM OTHER SOURCES AND CAPITAL GAINS, I.E., SHORT TERM CAPITAL GAINS ARISING FROM SALE OF SHARES. THE AO HELD THAT THE SHORT TERM CAPITAL GAINS DECLARED BY THE ASSESSEE SHO ULD BE TREATED AS BUSINESS INCOME OF THE ASSESSEE, SINCE THE VOLUME AND QUANTITY OF TRADE WERE HIGH. ACCORDINGLY HE ASSESSED THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. VIDHI RAMESH SHAH 2 3. THE LD A.R SUBMITTED THAT THE ASSESSEE IS DENTIST AND SHE WAS STUDYING ABROAD DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT SHE HAS NOT USED ANY INTEREST BEARING BORROWED FUNDS FOR INVESTING IN SHARES. HE FURTHER SUBM ITTED THAT THE MAJORITY OF SHARES HAVE BEEN HELD FOR A REASONABLE PERIOD. HE SUBMITTED THAT THE ASSESSEE HAS HELD THE SHARES AS INVESTMENTS IN THE PAST AND DURING THE YEAR UNDER CONSIDERATION ALSO. AT THE YEAR END, THE SHARES HAVE BEEN VALUED AT COST O NLY. HE SUBMITTED THAT THE IN THE EARLIER AND SUCCEEDING YEARS, THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO. THERE IS NO REPEATED PURCHASE AND SALE OF ANY OF THE SHARES. THE ASSESSEE HAS DEALT WITH ONLY 18 SCRIPS ONL Y AND THE AVERAGE HOLDING PERIOD WAS REASONABLE IN MOST OF THE SCRIPS. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO. 4. ON THE CONTRARY, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER PASSED BY LD CIT(A). 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. THE NATURE OF SHARE TRANSACTIONS, I.E., WHETHER AN ASSESSEE HAS ACTED AS AN INVESTOR OR TRADER, HAS TO BE JUDGED ON THE BASIS OF VARIOUS CRITERIA LAID DOWN BY THE COURTS AND THE CB DT IN ITS CIRCULAR. OUT OF THOSE CRITERIA, THE INTENTION OF THE ASSESSEE AT THE TIME OF MAKING PURCHASE IS ONE OF THE MAIN CRITERIAS THAT NEED TO BE EXAMINED. WE NOTICE THAT THE ASSESSEE HAS ACCOUNTED THE SHARES AS HER INVESTMENT AT THE TIME OF PURCHASE. FROM THE DETAILS OF SHORT TERM CAPITAL GAINS STATEMENT FURNISHED BY THE ASSSESSEE, WE NOTICE THAT THERE IS NO REPETITION OF PURCHASES IN ANY OF THE SCRIPS. THE ASSESSEE HAS USED HIS OWN FUNDS AND INTEREST FREE FAMILY FUNDS ONLY FOR MAKING INVESTMENTS. THE LD A.R SUBMITTED THAT THE ASSESSEE IS A DENTIST AND DURING THE YEAR UNDER CONSIDERATION SHE WAS ABROAD MOST OF THE TIME, MEANING THEREBY THE TRADING IN SHARES WAS NOT THE MAIN PROFESSION OF THE ASSESSEE. HE ALSO SUBMITTED THE AO ACCEPTED THE SHORT TER M CAPITAL GAINS U/S VIDHI RAMESH SHAH 3 143(3) ASSESSMENT IN AY 2009 - 10 AND 2013 - 14. WE NOTICE THAT THE ASSESSEE HAS DEALT WITH ONLY 18 SHARES, OUT OF WHICH 7 SCRIPS WERE HELD FOR A PERIOD OF LESS THAN 30 DAYS, BUT THE NET CAPITAL GAIN DECLARED FROM THOSE 7 SCRIPS WAS ONLY R S.3.82 LAKHS, I.E., LESS THAN 5% OF THE TOTAL CAPITAL GAINS. WE ALSO NOTICE THAT THERE IS NO REPETITION OF PURCHASES OF ANY OF THE SHARES, EVEN THOUGH THE ASSESSEE HAS PURCHASED SHARES IN MORE THAN ONE INSTAL L MENT AND SOLD IN MORE THAN ONE INSTA L LMENT. UND ER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THERE IS NO REASON TO SUSPECT THE INTENTION OF THE ASSESSEE AND THE NATURE OF SHARES. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO ASSESS THE GAINS UNDER THE HEAD SHORT TERM CAP ITAL GAINS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 9 . 5 . 201 7. SD/ - SD/ - (C.N. PRASAD) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 9 / 5 / 20 1 7 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) PS ITAT, MUMBAI