CHANDRAVATI L. SHAH, MUMBAI V. DCIT 24(3), MUMBAI

ITA 8594/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1692 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL J SHAH
• Keywords: Capital asset; Business income; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO. 8594/M/2010 ASSESSMENT YEAR:2006-2007 SMT. CHANDRAVATI L. SHAH, 6-A, JAWAHAR NAGAR, GOREGAON (W), MUMBAI 40 062. PAN:ANGPS 8825 A VS. DCIT-24(3), PRATYAKSHKAR BHAVAN, C-10, 7 TH FLOOR, BANDRA KURLA COMPLEX, MUMBAI 400 051. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIPUL J. SHAH RESPONDENT BY : SHRI RAJARSHI DWIVEDY, SR. DR DATE OF HEARING: 17.1.2013 DA TE OF ORDER: 08.3.2013 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 10.12.2010 IS AGAINST THE ORDER OF CIT (A)-34, MUMBAI DATED 1.10.2010 FOR THE ASSESSMENT Y EAR 2006-07. 2. IN THIS APPEAL, ASSESSEE RAISED THE ONLY EFFECTIV E GROUND WHICH READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT (A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER TREATING SHORT TERM CAPITAL GAINS ON SALE OF SHARES OF RS. 19,19,032/- AS INCOME FROM BUSIN ESS. 3. BRIEFLY STATED THE RELEVANT FACTS OF THE CASE AR E THAT THE ASSESSEE IS A SENIOR CITIZEN AND WIFE OF A PRACTICING DOCTOR OF MEDICINE AS GENERAL PHYSICIAN. ASSESSEE FILED THE RETURN SHOWING SHORT TERM CAPITAL GAINS O F RS. 19,18,025/-. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED T HAT THE SALES TURNOVER IS RS. 1.25 CR AND PURCHASE TURNOVER IS RS. 1.06 CR, THE H OLDING PERIOD IS 1 TO 40 DAYS, NUMBER OF TRANSACTIONS ARE 58 AND THE ASSESSEE HAS BORROWED SOME INVESTMENT. ON THESE PARAMETERS, AO TREATED THE SAID SHORT TERM CA PITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE WENT ON APPEA L BEFORE THE CIT (A). 4. DURING THE FIRST APPELLATE PROCEEDINGS, CIT (A) EXAMINED THE CASE OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE AOS A CTION OF TREATING THE SHORT TERM 2 CAPITAL GAINS AS BUSINESS INCOME IS CORRECT. ACCOR DINGLY, HE CONFIRMED THE ADDITION AS PER THE DISCUSSION GIVEN IN PARA 3.2 OF THE IMPU GNED ORDER. IN THE PROCESS, LOWER AUTHORITIES IGNORED THE FACT THAT THE RELEVANT BOOK ENTRIES SHOW THEM AS SHORT TERM CAPITAL ASSETS AND THE ASSESSEE HAS BEEN CONSISTENT LY SHOWING THE SAID ASSETS AS CAPITA ASSETS SINCE THE YEAR 1985 AND THE REVENUE H AS BEEN CONSISTENTLY ACCEPTING THE SAME WITHOUT WITHDRAWING THE CLAIM OF THE ASSES SEE. ASSESSEE RELIED ON THE APEX COURT JUDGMENT IN THE CASE OF GOPAL PUROHIT VS . JCIT IN SUPPORT OF HIS ASSERTION THAT PRINCIPLE OF CONSISTENCY IS REQUIRE D TO BE FOLLOWED, SINCE, THE FACTS ARE IDENTICAL AND REVENUE HAS NOT MADE OUT ANY DIST INGUISHABLE FACTORS BEFORE WITHDRAWING THE CLAIM OF THE ASSESSEE IN THIS YEAR. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. DURING THE PROCEEDINGS BEFORE US, SHRI VIPUL J. SHAH, LD COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK TO DEMONSTRATE THAT THE CLAIM OF THE ASSESSEE AS SHORT TERM CAPITAL GAINS HAS BEEN CONSISTENTLY ACCEPTED B Y THE REVENUE AND FILED RELEVANT COPIES OF IN THE RETURN OF INCOME. COMBINED THE FA CT THAT TURNOVER IS ONLY RS. 2.31 CR WHICH MAY NOT BE TERMED AS VERY HIGH IN THIS LIN E OF INVESTMENT ACTIVITY. THE NUMBER OF TRANSACTIONS IS MERELY 58 WHICH COME ON A N AVERAGE OF ONE TRANSACTION PER WEEK. LD COUNSEL ALSO FILED VARIOUS NUMBER OF DECISIONS TO SUBSTANTIATE THAT HER CLAIM SHOULD NOT BE DISTURBED IN THIS YEAR. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. ON HEARING THE LD REPRESENTATIVES OF BOTH THE PA RTIES, WE FIND THAT THE PARAMETERS IE SALES OF RS. 1.25 CR, PURCHASE OF RS. 1.06 CR, 58 TRANSACTIONS INVOLVED DO NOT INDICATE THE BUSINESS FEATURES OF THE IMPUGN ED SHARE TRADING ACTIVITY. FURTHER ALSO, WE FIND THAT ASSESSEE HAS BEEN CONSIS TENTLY OFFERING SUCH GAINS UNDER THE HEAD SHORT TERM CAPITAL GAINS AND THE CLAIM I S ACCEPTED BY THE REVENUE. THIS IS THE FIRST TIME THAT THE REVENUE DISTURBED THE CLAIM OF THE ASSESSEE. WE HAVE ALSO NOTICED THAT HONBLE SUPREME COURTS JUDGMENT IN TH E CASE OF GOPALD PUROHIT (SUPRA) HELPS THE ASSESSEE ON THIS ASPECT OF RULE OF CONSISTENCY., REVENUE HAS NOT 3 BROUGHT OUR NOTICE ANY DISTINGUISHING FACTS WHICH A RE CONTRARY IN THIS YEAR FROM THAT OF THE EARLIER YEARS. IN THESE CIRCUMSTANCES, WE A RE OF THE OPINION THAT THE PRINCIPLE OF CONSISTENCY MUST BE APPLIED IN VIEW OF THE BIND ING JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF GOPAL PUROHIT (SUPRA). ACCORD INGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED . 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF MARCH, 2013. SD/- SD/- (R.K. GUPTA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 8.3.2013 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI