ACIT, V. Sri Uday Chauhan,

ITA 84/RAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85456 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-09-2013
• Court: TRIBUNAL
• Department Lawyers: M K
• Assessee Lawyers: DEEPAK ROSHAN SENIOR S CLD
• Keywords: Business income; Opportunity of being heard

Judgement Text

1 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO . 8 4 /RAN/201 3 A.Y 200 8 - 09 A.C.I.T CIRCLE - 2, DHANBAD VS. SRI UDAY CHAUHAN PAN: A BSPC0423C ( DEPARTMENT ) ( ASSESSEE ) C.O NO. 15 /RAN/1 3 [ITA N O. 84/ RAN/201 3 A.Y 200 8 - 09 ] SRI UDAY CHAUHAN VS. A.C.I.T CIRCLE - 2, DHANBAD ( CROSS OBJECTOR ) ( DEPARTMENT ) IT A NO . 101 /RAN/201 3 A.Y 200 8 - 09 I.T.O WARD 11(2), DHANBAD VS. MISS SHYAMA UDAY CHAUHAN PAN: A EOPC6417R ( DEPARTMENT ) ( ASSESSEE ) C.O NO. 1 7 /RAN/13 [ITA NO. 101 / RAN/201 3 A.Y 200 8 - 09 ] SHYAMA UDAY CHAUHAN VS. A.C.I.T CIRCLE - 2, DHANBAD ( CROSS OBJECTOR ) ( DEPARTMENT ) FOR THE RESPONDENT /DEPARTMENT : SHRI DEEPAK ROSHAN, SENIOR S.C, LD.DR FOR THE A SSESSEE /CROSS OBJECTOR : S/ SHRI S.K PODDAR & M.K. CHOUDHARY, LD.ARS DATE OF HEARING : 01 - 12 - 20 14 DATE OF PRONOUNCEMENT: 01 - 12 - 2014 2 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN ORDER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A) IN THE RESPECTIVE HANDS OF THE ASSESSEE S CITED ABOVE AND BOTH THE APPEALS RELATE TO THE ASSESSMENT YEAR 2008 - 09. SINCE ISSUE CONTESTED IN THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THI S COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. ACCORDING TO LD A.R, SHRI UDAY CHAUHAN IS WORKING WITH M/S OHM INVESTMENTS, A STOCK BROKING FIRM AND THE OTHER ASSESSEE IS THE SPOUSE OF SRI UDAY CHAUHAN. BOTH THE ASSESSEES DECLARED SHORT TERM CAPITAL GAIN IN RESPECT OF GAINS REALISED ON PURCHASE AND SALE OF SHARES. HOWEVER, THE AO TREATED THE ACTIVITIES OF BOTH THE PARTIES AS TRADING ACTIVITIES AND ACCORDINGLY ASSESSED THE GAINS REALISED ON PURCHASE AND SALE OF SHARES AS BUSINESS INCOME. HOWEVER, THE LD CIT(A) ACCEPTED THE CONTENTIONS OF BOTH THE ASSESSEES AND ACCORDINGLY SET ASIDE THE ORDER PASSED BY THE AO IN BOTH THE CASES. AGGRIEVED, THE REVENUE HAS FILED THESE APPEALS BEFORE US AND THE ASSESSEES HAVE FILED CROSS OBJECTIONS TO SUPPORT THE ORDER O F LD CIT(A). 3. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE QUESTION WHETHER THE GAINS/LOSS ARISING IN SHARE TRANSACTIONS HAS TO BE ASSESSEE AS BUSINESS INCOME OR AS CAPITAL GAIN WOULD ESSENTIALLY DEPEND UPON THE FACT , VIZ., WHETHER TH E SHARES WERE HELD AS STOCK IN TRADE OR AS INVESTMENT. IF THE ASSESSEE HAD HELD THE SHARES AS INVESTMENT, THE GAINS ARE ASSESSABLE AS CAPITAL GAINS AND IF THEY ARE HELD AS STOCK IN TRADE, THEN THE GAINS ARE ASSESSABLE AS BUSINESS INCOME. HOWEVER, THE DIS PUTE ARISES WHEN THE FACTS PREVAILING IN A 3 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN PARTICULAR CASE ARE FOUND TO BE CONTRARY TO THE CLAIM MADE BY THE ASSESSEE. HENCE, THE COURTS AS WELL AS THE CBDT HAVE PRESCRIBED VARIOUS CRITERIAS TO ASCERTAIN THE TRUE INTENTION OF THE ASSESSEE IN INDULGING IN SHARE TRANSACTIONS, I.E., WHETHER THE PURCHASE OF SHARES WERE WITH THE OBJECTIVE TO HOLD THEM AS INVESTMENT OR AS STOCK IN TRADE. THUS, ESSENTIAL THE INTENTION OF THE ASSESSEE MATTERS MUCH HERE. IN THIS REGARD, GAINFUL REFERENCE CAN BE MADE TO THE CIRCUL AR NO.4 OF 2007 DATED 15.6.2007 ISSUED BY THE CBDT, WHEREIN CERTAIN GUIDING FACTORS THAT ARE NEED TO BE CONSIDERED TO DECIDE ABOUT THE NATURE OF TRANSACTIONS HAS BEEN PRESCRIBED. ALL THE CASE LAWS ON THIS ISSUE ALSO REVEAL ONLY ONE POINT THAT THERE IS NO STRAIGHT JACKET FORMULA TO DECIDE ABOUT THE NATURE OF SHARE TRANSACTIONS VIZ., WHETHER IT WAS CARRIED AS BUSINESS ACTIVITY OR INVESTMENT ACTIVITY. THE FACTS PREVAILING IN EACH CASE HAS TO BE JUDGED INDEPENDENTLY IN ORDER TO RESOLVE THE SAID QUESTION. 4. IN THE INSTANT CASE, WE NOTICE THAT NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) HAS MADE ANY OBJECTIVE ANALYSIS OF THE SHARE TRANSACTIONS THAT WERE CARRIED ON BY BOTH THE PARTIES. WE NOTICE THAT THE ASSESSEES HAVE ALSO FAILED TO MAKE OBJECTIVE ANA LYSIS OF THE SHARE TRANSACTIONS IN ORDER TO SUPPORT THEIR CLAIMS, EVEN THOUGH DETAILED GENERALISED SUBMISSIONS WERE MADE BEFORE LD CIT(A). 5. SOME OF THE FACTORS THAT ARE REQUIRED TO BE CONSIDERED ARE (A) FREQUENCY OF TRANSACTIONS; (B) VOLUME OF TRA NSACTIONS ; (C) REPETITION OF PURCHASE AND SALE OF SAME SHARES; (D) FUNDS SOURCED FOR PURCHASING SHARES, I.E., WHETHER OWN FUNDS WERE USED AND/OR FUNDS WERE ALSO BORROWED; (D) HOLDING PERIOD OF SHARES; (E) OTHER BUSINESS ACTIVITIES OR EMPLOYMENT DETAILS OF THE ASSESSEE; (F) TIME DEVOTED; (G) TREATMENT GIVEN IN BOOKS OF ACCOUNT; (H) DIVIDEND INCOME EARNED ETC. 4 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN 6. IF THE FACTS PREVAILING IN A PARTICULAR CASE HAD BEEN ANALYSED OBJECTIVELY IN TERMS OF THE VARIOUS CRITERIAS MENTIONED BY THE CBDT IN ITS CIR CULAR REFERRED ABOVE /COURTS AND ACCORDINGLY A DECISION WAS TAKEN BY THE TAX AUTHORITIES, THEN IT WOULD BE POSSIBLE FOR AN APPELLATE COURT TO EXAMINE THEM AND THEN TO ARRIVE AT A DEFINITE CONCLUSION. IN THE INSTANT CASES, NO SUCH OBJECTIVE ANALYSIS HAS BEE N CARRIED OUT BY ANY OF THE PARTIES AND HENCE IT WOULD BE DIFFICULT FOR US TO ADJUDICATE THE ISSUE URGED BEFORE US. 7. BEFORE US, THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY THE MUMBAI BENCH OF TRIBUNAL AS WELL AS THE HON BLE BOMBAY HIGH COUR T IN THE CASE OF GOPAL PUROHIT (2009)(29 SOT 117) AND (2010)(188 TAXMAN 140)(BOM) RESPECTIVELY. HOWEVER, IN THE ABSENCE OF ANY OBJECTIVE ANALYSIS OF THE SHARE TRANSACTIONS AND ALSO IN THE ABSENCE OF ANY DETAILS RELATING TO PAST OR FUTURE HISTORY, WE ARE U NABLE TO APPLY THE RATIO OF BOTH THE CASE LAWS. 8. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE ISSUE URGED IN BOTH THE APPEALS REQUIRE FRESH ADJUDICATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) IN THE HANDS OF BOTH THE PARTIES AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE SAME AFRESH BY MAKING OBJECTIVE ANALYSIS OF THE SHARE TRANSACTIONS IN TERMS OF VARIOUS CRITERIA LISTED OUT BY THE CBDT IN ITS CIRCULAR/ BY COURTS AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEES. THE ASSESSEES ARE ALSO DIRECTED TO FURNISH RELEVANT DATA AND ANALYSIS TO SHOW THEIR INTEN TION IN TERMS OF THE VARIOUS CRITERIAS LISTED OUT BY THE CBDT/COURTS. 9. THE CROSS OBJECTIONS HAVE BEEN FILED ONLY TO SUPPORT THE ORDER OF LD CIT(A). SINCE WE HAVE SET ASIDE THE ORDERS PASSED BY LD CIT(A) IN BOTH THE CASES, THEY ARE LIABLE TO BE DISM ISSED. 5 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN 10. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 01 - 12 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 01 - 12 - 2014 PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT /DEPARTMENT : ACIT CIR - 2, DHANBAD/ITO W 11(2), D BAD 2 THE RESPONDENT /ASSESSEE : SHRI UDAY CHAUHAN & MISS SHYAMA UDAY CHOUHAN 3..THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 6 ITA NOS.84 & 101/RAN/13 SRI UDAY CHAUHAN & SHYAMA UDAYCHOUHAN 1. DATE OF DICTATION ............. PREPARED IN MEMBER S LAPTOP ....................... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER . ...... 02.12 - 2014........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.................................. 01 - 12 - 1 4. .................................................. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO T HE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................................................................................................. 9. DATE OF DE SPATCH OF THE ORDER ..............................................................