DIPTI ATISH SANGHVI, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 8645/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100792 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Source of fund
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND LALIT KUMAR, JM ./ I.T.A. NO . 8645 / MUM/20 1 1 ( / ASSESSMENT YEA R : 200 6 - 07 ) S MT.DIPTI ATISH SANGHVI, 2, SURAJ, 77, SARASWATI ROAD, SANTACRUZ (W), MUMBAI - 400054 / VS. INCOME TAX OFFICER 19 (2)( 1 ), MUMBAI , ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : ANPPS3923H / APPELLANT BY SHRI H S PARIKH / RSPONDENT BY MS.ANU AGGARWAL / DATE OF HEARING : 1 9 .8 . 201 5 / DATE OF PRONOUNCEMENT: 19 . 8. 201 5 / O R D E R P ER B .R.BASKARAN : T HE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 20.10.2011 PASSED BY THE LD. CIT(A) - 3 5, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 200 6 - 07 . 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ASSESSMENT OF CAPITAL GAIN S ARISING ON SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE . 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING SHORT TERM CAPITAL GAINS (STCG) OF RS.1,29,641/ - AND LONG T ERM CAPITAL GAINS (LTCG) OF RS.7,37,746/ - , BESIDES OTHER SOURCES OF INCOME OF RS.63,607/ - . THE ITA NO. 8645/MUM/2011 2 AO TREATED THE CAPITAL GAINS DECLARED BY THE ASSESSEE AS BUSINESS INCOME AND ACCORDINGLY ASSESSED THE SAME. THE LD. CIT(A) ALSO CONFIRMED THE ORDER OF THE A O AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4 . IT IS SETTLED PROPOSITION THAT THE QUESTION WHETHER AN ASSESSEE IS A TRADER OR INVESTOR IN SHARES HAS TO BE DECIDED ON THE BASIS OF VARIOUS ILLUSTRATIVE CRITERIA GIVEN BY THE HONBLE COURTS A ND ALSO BY THE CBDT IN ITS CIRCULARS ISSUED FROM TIME TO TIME. ONE OF THE MAIN CRITERIA IS TO ASCERTAIN THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASES OF SHARES. ON A PERUSAL OF THE ORDERS PASSED BY THE TAX AUTHORITIES, WE NOTICE THAT THEY HAVE D ISCUSSED ABOUT THE PRINCIPLES FOLLOWED TO ANSWER THE QUESTION AS TO WHETHER AN ASSESSEE IS A TRADER OR AN INVESTOR. WE NOTICE THAT THEY HAVE NOT EXAMINED THE FACTS PREVAILING TO THE CASE BY APPLYING THE VARIOUS CRITERIA GIVEN BY THE HONBLE COURTS/CBDT. 5. ON EXAMINATION OF RECORD, WE NOTICE THAT THE ASSESSEE HAS EARNED LONG TERM CAPITAL ON SALE OF 12 SCRIPS, I.E., THE ASSESSEE HAS HELD THOSE SHARES FOR A PERIOD EXCEEDING 12 MONTHS . THE CONDUCT OF THE ASSESSEE TO HOLD THE SHARES FOR SUCH A LONG TIME WO ULD SHOW THAT THE ASSESSEES INTENTION AT THE TIME OF PURCHASE OF THOSE SHARES WAS TO HOLD THEM INVESTMENT ONLY. THE STCG EARNED BY THE ASSESSEE WAS A SMALL AMOUNT OF RS.1,29,641/ - ONLY. W E FURTHER NOTICE THAT THE ASSESSEE HAS DECLARED CAPITAL GAINS IN T HE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ALSO. IT HAS BEEN ACCEPTED BY THE AO IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2004 - 05 . COPY OF ASSESSMENT ORDER IS ENCLOSED IN THE PAPER BOOK. WE HAVE ALSO EXAMINED THE B ALANCE SHEE T FILED BY THE ASSESSEE AND NOTICE THAT THE ASSESSEE IS HAVING SUFFICIENT AMOUNT OF INTEREST FREE FUNDS FOR MAKING INVESTMENTS IN SHARES , MEANING THEREBY THE ASSESSEE HAS NOT BORROWED FUNDS FOR PURCHASING SHARES . IT IS ALSO NOT THE CASE OF THE AO THAT THE ASSESSEE HAD INDULGED IN REPETITIVE TRANSACTIONS. ITA NO. 8645/MUM/2011 3 THE ASSESSEE HAS ALSO EARNED DIVIDEND INCOME OF RS.63,392/ - . THUS WE ARE OF THE VIEW THAT THE CONDUCT OF THE ASSESSEE BY APPLYING VARIOUS CRITERIA WOULD ALSO SHOW THAT HE HAS ACTED AS AN INVESTOR ONLY. 6. UNDER THESE SET OF FACTS , WE ARE OF THE VIEW THAT THE PROFIT ARISING ON SALE OF SHARES SHOULD BE ASSESSED AS LTCG/STCG. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ASSESSEE THE PROFIT AR ISING FROM THE SALE OF SHARE S UNDER THE HEAD C APITAL GAINS . 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 19TH AUGUST 2015. 19 TH AUGUST, 2015 S D SD ( LALIT KUMAR) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 19TH AUG , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, T RU E COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI