ACIT, Jaipur V. SHRI SHASHIKANT DAMODAR KHANDELWAL, MUMBAI

ITA 796/JPR/2011

• Counselvise Citation: 79623114 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEEPH

Judgement Text

ITA NO. 796/JP/2011 ACIT VS. SHRI SHASHIKANT DAMODAR KHANDELWAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 796/JP/2011 ASSESSMENT YEAR: 2008-09 PAN : AGBPK 0830 H THE ACIT VS. SHRI SHASHIKANT DAMODAR KHANDELWAL CIRCLE- 1 C-202, PANCHWATI GUIDANCE RAHEJA JAIPUR TOWNSHIP, MALAD EAST, MUMBAI (APPELLANT) (RESPONDENT) DEPARTMENT BY : MRS.NEENA JEEPH ASSESSEE BY SHRI MANISH AGARWAL DATE OF HEARING: 01-10-2014 DATE OF PRONOUNCEMENT: 28-11-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 05-07-2011 FOR THE ASSE SSMENT YEAR 2008-09 WHEREIN THE REVENUE RAISED THE FOLLOWING GROUND OF APPEAL. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN TREA TING THE INCOME FROM SALE OF THE SHARES A SHORT TERM CAPITAL GAINS, WHEN THE FACTS OF THE CASE PROVES THAT THE INCOME IS FROM THE BUSI NESS ACTIVITY. 2.1 THE LD. DR RELIED ON THE ORDER OF THE AO. ITA NO. 796/JP/2011 ACIT VS. SHRI SHASHIKANT DAMODAR KHANDELWAL 2 2.2 THE LD. COUNSEL CONTENDS THAT ASSESSEE MAINTAIN S TWO SHARE PORTFOLIOS ONE ON INVESTMENT ACCOUNT AND OTHER AS STOCK IN TRA DE. APROPOS IMPUGNED SCRIPS HELD IN INVESTMENT PORTFOLIO ONLY TWO SHARE S SCRIPS WERE DEALT IN WITH LIMITED 10 OVERALL TRANSACTIONS ON RECOGNIZED STOCK EXCHANGE. THESE SHARES WERE SOLD AS INVESTMENT ASSESSEE OFFERED THE M AS SHORT TERM CAPITAL GAINS TRANSACTIONS. LD. AO WITHOUT APPRECIATING THE REAL NATURE OF TRANSACTION HELD THESE SHARES AS STOCK IN TRADE AND CONSIDERED THE TRANSACTIONS AS BUSINESS TRANSACTIONS. 2.3 THE LD. CIT(A) IN FIRST APPEAL RELIED ON THE FO LLOWING CATENA OF JUDGEMENTS IN THIS BEHALF: (A) CIT VS. RADHEY SHYAM MORARKA REPORTED IN 271. I TR 111 ( BOMBAY (HC) (B) 46 DTR 236 CIT VS. ROHIT ANANTL (DEL) (C) 188 TAXRNAN 140 CIT VS. GOPAL PUROHIT (BOM) (D) 49 DTR 16 VINOD K. NEVATIA VS. ASSTT. CIT (IVLU MBAI 'F') (E) 130 TTJ 86 BHARAT KUNVERJI KENIA VS. ADDL CIT ( MUMBAI 'B') (UO) (F) COMMISSIONER OF INCOME TAX (CENTRAL), CALCUTTA VS. ASSOCIATED INDUSTRIAL (G)DEVELOPMENT CO. (P) LTD. [1971] 82 ITR 586 (SC) (H)CIT VS. .MADAN GOPAL RADHEY LAL [1969] 73 ITR 6 52 (I) CIT VS. PRINCIPAL OFFICER, LAXMI SURGICAL (P) L TD. [1993] 202 ITR 601 (BOMBAY HC) AND FURTHER HELD THESE TRANSACTIONS TO BE IN THE NA TURE OF SHORT TERM CAPITAL GAINS BY FOLLOWING OBSERVATIONS: ITA NO. 796/JP/2011 ACIT VS. SHRI SHASHIKANT DAMODAR KHANDELWAL 3 4.3 I HAVE PERUSED THE ORDER OF THE ASSESSEE AND TH E SUBMISSIONS OF THE AR. ON VERIFICATION IT WAS FOUND THAT DURING THE YEAR THE ASSESSEE HAS TRANSACTED ONLY IN TWO SCRIPS . LESS THAN L0 TRANSACTIONS TOOK PLACE IN SELLING OF THESE TWO SCR IPS AND. THEY WERE SOLD AT A RECOGNIZED STOCK EXCHANGE. MOREOVER, THOU GH THE ASSESSEE EARNED A DIVIDEND OF RS. 7,212/-, HE ALSO RECEIVED 9950 BONUS SHARES VALUED AT RS. 30,01,745/- WHICH IS VERY GOOD RETURN ON AN INVESTMENT. MOST IMPORTANT THING VERIFIED WAS THAT THE ASSESSEE HAD CONSISTENTLY SHOWN SHARES IN HIS BALANCE SHEET AS INVESTMENTS. N OWHERE HAS THE ASSESSEE SHOWN THE SHARES AS STOCK IN TRADE. SECOND LY THE FUNDS BORROWED BY THE ASSESSEE WERE USED TO ACQUIRED FIXE D ASSETS DURING THE YEAR AND THERE WAS NO DIRECT NEXUS BETWEEN INVE STMENT IN SHARES AND BORROWED FUNDS. IN VIEW OF THESE FACTS, IT CANN OT BE HELD THAT THE SALE OF THESE SHARES BY THE ASSESSEE WERE BUSINESS TRANSACTIONS. THEREFORE, THE FINDING OF THE AO TO THIS EFFECT IS NOT UPHELD. FIRST GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESS EE .. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT DISPUTED THAT THE AS SESSEE WAS MAINTAINING TWO SEPARATE PORTFOLIOS I.E. ONE AS INVESTMENT AND OTHE R IS AS STOCK IN TRADE. THE SHARES IN QUESTION WERE PURCHASED IN THE PREVIOUS Y EAR AND HELD IN INVESTMENT A/C. THE TRANSACTIONS ARE LIMITED TWO SC IPS AND THE FREQUENCY ALSO IS LIMITED BESIDE THEY WERE HELD AS INVESTMENTS. IN OUR CONSIDERED VIEW THERE ARE ONLY TWO SCRIPS IN QUESTION WITH LESS THAN 10 T RANSACTIONS IN THE YEAR. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE FACTS A ND ABOVE CASE LAWS ON JUST AND PROPER CONSIDERATIONS. THUS WE FIND NO INF IRMITY IN THE ORDER OF THE LD. CIT(A) HOLDING THEM TO BE TRANSACTIONS RELATING TO SHORT TERM CAPITAL GAIN WHICH IS UPHELD. ITA NO. 796/JP/2011 ACIT VS. SHRI SHASHIKANT DAMODAR KHANDELWAL 4 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 - 11-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 28 TH NOV 2014 *MISHRA COPY FORWARDED TO:- 1. THE ACIT, CIRCLE- 1, JAIPUR 2. SHRI SHASHIKANT DAMODAR KHANDELWAL, MUMBAI 3. THE LD. CIT(A) 4. THE LD. CIT 5..THE LD. DR 6.THE GUARD FILE (IT NO. 796/JP/2011) BY ORDER AR ITAT, JAIPUR