ACIT, CIR-44, KOLKATA, Kolkata V. Shri Daulal Kothari, Kolkata

ITA 863/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1370 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Keywords: Business income; Question of law
• Section: 143(3)

Judgement Text

1 ITA NO.863/KOL/2015 DAULAL KOTHARI., AY, 2010-11 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 863/KOL/2015 ASSESSMENT YEAR: 2010-11 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-44, KOLKATA VS. SHRI DAULAL KOTHARI (PAN: AIYPK2894C) APPELLANT RESPONDENT DATE OF HEARING 05.09.2017 DATE OF PRONOUNCEMENT 06.10.2017 FOR THE APPELLANT SHRI SAURABH KUMAR, ADDL. CIT, DR FOR THE RESPONDENT SHRI ANIL KOCHAR, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-13, KOLKATA DATED 20.03.2015 FOR AY 2010-11. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E RELATES TO CHARACTERIZATION OF THE INCOME ARISING FROM SALE OF SHARES BY THE ASSESSEE I.E, WHETHER IT ATTRACTS CAPITAL GAINS OR IT IS TO BE TREATED AS BUSINESS INCOME. 3. BRIEFLY STATED FACTS ARE THAT IN THIS CASE, ASS ESSMENT WAS COMPLETED U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) ON 26.11.2012. DURING THE YEAR, THE ASSESSEE HAD SOLD CERTAIN SHARES AND SHOWN LONG TERM CAPITAL GAIN OF RS.45,36,643/-, AND ALSO SHORT TERM CAPITAL GAIN OF RS.13,86,748/-, TOTALING TO RS.59,23,391/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THESE TRANSACTIONS SHOULD NOT BE TREATED AS BUSINESS TRAN SACTIONS INSTEAD OF TRANSACTIONS IN INVESTMENT AS SHOWN BY THE ASSESSEE. IN REPLY, THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED IN THE EARLIER YEAR AND THE SUBMISSION FIL ED IN THAT YEAR BE TREATED AS THE SUBMISSION FILED IN THIS YEAR. DISSATISFIED WITH THE REPLY OF THE ASSESSEE, THE AO RELYING ON CERTAIN CASE LAWS, VOLUME OF BUSINESS, FREQUENCY OF TRANSACTION, REPETITIVENESS OF THE TRANSACTION AND FACTS OF PROFIT MAXIMIZATION TREATED THE SHARE TRAN SACTIONS BY THE ASSESSEE AS BUSINESS ACTIVITIES AND ADDITION WAS MADE ON THE ACCOUNT OF SHARE BUSINESS AMOUNTING TO 2 ITA NO.863/KOL/2015 DAULAL KOTHARI., AY, 2010-11 RS.59,23,391/-. AGGRIEVED, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A), WHO ALLOWED THE ASSESSEES APPEAL AND DIRECTED THE AO T O ACCEPT THE INCOME FROM SHARE TRANSACTION AS OFFERED BY THE ASSESSEE I.E. SHORT T ERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERING THE SAME, WE NOTE THAT THE ISSUE INVOLVED IS DULY COVERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1729/KOL /2012 AND ITA NO. 195/KOL/2013 FOR AY 2008-09 DATED 27.07.2015, WHEREIN THE TRIBUNAL H AS HELD AS UNDER: 3. THE ONLY ISSUE INVOLVED IN THE APPEAL RELATES T O WHETHER THE INCOME DERIVED BY THE ASSESSEE ON THE PURCHASE AND SALE OF SHARES HELD BY THE ASSESSEE AS INVESTMENT AND TREATING THE GAIN FROM SHARE TRANSACTIONS AS BUSINESS INCOME OR CAPITAL GAIN. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERING THE SAME, WE NOTED THAT THE ISSUE INVOLVED IS DULY COVERED IN FAVOUR OF THE ASS ESSEE BY THE ORDER OF THE HONBLE CALCUTTA HIGH COURT IN G.A. NO. 2489 OF 2014 IN ITAT NO. 113 OF 2014, IN WHICH THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF ASSESSEES WIFE VIDE ORDE R DATED 01.09.2014 TOOK THE VIEW ON THE SIMILAR ISSUE IN THE ASSESSMENT YEAR 2007-08 THAT T HE INCOME WILL BE ASSESSABLE NOT AS BUSINESS INCOME BUT AS CAPITAL GAIN. THE RELEVANT F INDINGS OF THE HONBLE CALCUTTA HIGH COURT ARE REPRODUCED AS UNDER:- WE FIND THAT THE TRIBUNAL WHILE NEGATING THE CONCL USION OF THE REVENUE HAD REFERRED TO THE ORDER OF THE CIT(A). THE RELEVANT PORTION OF THE ORDER PASSED BY THE CIT(A) IS AS UNDER:- 5. THE CONTENTIONS O F THE APPELLANT AS SUMMED UP ABOVE HAVE BEEN CONSIDERED IN THE CONTEXT OF THE FINDINGS ARRIVED AT BY THE ASSES SING OFFICER IN HIS ORDER WHILE TREATING THE INCOME FROM SHARE TRANSACTIONS AS APPE LLANTS BUSINESS INCOME. IT IS SEEN THAT THE APPELLANT HAS CONSISTENTLY BEEN SHOWING HE R SHARES AS INVESTMENTS AND THE SAME HAS BEEN ACCEPTED AS SUCH BY THE DEPARTMENT IN EARLIER YEARS AND THE ASSESSING OFFICER HAS NOT BROUGHT IN ANY FRESH EVIDENCE IN HI S ASSESSMENT ORDER FOR THE PRESENT YEAR TO THE CONTRARY. HE HAS SIMPLY REF ERRED TO TH E MAGNITUDE OF SHARE TRANSACTION AND CO ME TO HIS OWN CONCLUSIONS ABOUT THE INTENTIO NS OF THE APPELLANT. THE DETAILED EVIDENCES AND WRITE UP GIVEN BY THE APPELLANT IN SU PPORT HER ARGUMENTS, SUBSTANTIATE HER CLAIM O F BEING AN INVESTOR. IT IS ALSO CLEAR T HAT THE ASSERTION THAT SHE IS AN INVESTOR CAN ONLY BE CHALLENGED ON THE BASIS OF HER OWN RECORD S AND TRANSACTIONS WHICH COULD INDICATE THAT IT IS ACTUALLY DOING TRAD ING BUSINESS. THIS IS NOT THERE IN THE APPELLANT'S CA SE AND THE A.O. HAS FAILED TO DO SO OTHER THAN MAKING A LONG WINDING ANALYSIS OF THE GUIDELINES 'LAID OUT IN CBDT CIRCUL AR NO .4/20 07. THE RELIANCE OF ASSESSING OFFICER ON THE DECISION OF ITO VS. LILY E XPORTS PVT. LTD. OF HON'BLE I.T.A.T. 'A' -BENCH, KOLKATA IS BASED ON DIFFERENT FACTS AND CANNOT BE APPLIED IN THE APPELLANT'S CASE. IN THE AFOREMENTIONED CASE THE HON'BLE I.T.A. T. HAS REFERRED TO SEVERAL FACTORS WHILE HOLDING THAT THE INCOME WAS NORMAL BUSINESS P ROFIT REFERRING TO SHORT PERIOD O F RETENTION AND OTHER FACTORS WHICH ARE MISSING IN TH E CASE OF APPELLANT. ON THE OTHER HAND, THE DECISIONS IN THE CASE OF M/S. ASTRIX ENTE RPRISES AND M/S. ETERNA STEEL & INVESTMENT PVT. LTD . SUPRA ARE SQUARELY APPLICABLE IN THE APPELLANT'S CASE. IT MAY ALSO BE MENTIONED THAT THE MATTER HAD BEEN CONSIDER ED IN APPEAL IN HER OWN CASE FOR AY 1 992-93, AND DECIDED IN HER FAVOUR BY THE CIT(A )XXVI, KOLKATA IN HIS ORDER DATED 27-02-2002. CONSIDERING THE ABOVE, THE CONTEN TION OF THE APPELLANT IS ACCEPTED AND THE INCOME FROM SHARE TRANSACTIONS OF RS. 43,59 ,492/- IS TO BE TREATED AS OFFERED BY APPELLANT IN ITS LONG TERM CAPITAL GAIN AND INCO ME-TAX RETURN AS RS.18,39,391/- AS SHORT TERM CAPITAL GAINS.' 3 ITA NO.863/KOL/2015 DAULAL KOTHARI., AY, 2010-11 THE QUESTIONS RAISED DO NOT INCLUDE A CHALLENGE ON PERVERSITY. THE FINDINGS OF THE COMMISSIONER OF APPEALS ARE ON FACTS CONCURRED BY T HE TRIBUNAL. WE FIND, THEREFORE, NO SUBSTANTIAL QUESTION OF LAW ARISES. ACCORDINGLY, THE APPLICATION AND THE APPEAL ARE DIS MISSED. URGENT CERTIFIED PHOTO COPY OF THIS ORDER BE SUPPL IED TO THE PARTIES, IF APPLIED FOR, UPON COMPLIANCE OF ALL REQUISITE FORMALITIES. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE H ONBLE CALCUTTA HIGH COURT, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE C IT(APPEALS) ALLOWING RELIEF TO THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ASSESS THE INCO ME FROM PURCHASE AND SALE OF SHARES UNDER THE HEAD SHORT TERM CAPITAL GAIN. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE BY THE DECISION OF COORDINATE BENCH, CITED SUPRA AND THE FACTS ARE ALSO IDENTICAL AND THERE IS NO CHANGE IN LAW AS WELL AND SINCE THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDING, WE RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE T RIBUNAL AND DIRECT THE AO TO ASSESS THE INCOME FROM PURCHASE AND SALE OF SHARES UNDER THE H EAD SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS AS CLAIMED BY THE ASSESSE E. THEREFORE, THE GROUND OF APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 6TH OCT OBER, 2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH OCTOBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ACIT, CIRCLE-44, KOLKATA 2 RESPONDENT SHRI DAULAL KOTHARI, 4, BYSACK STREE T, KOLKATA-700 007. 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY