The ACIT, Circle-5, RAJKOT-GUJARAT V. Shri Shashikant H. Koticha, RAJKOT-GUJARAT

ITA 908/RJT/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56697 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 04-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Capital asset converted into stock in trade; Business income; Depreciation
• Section: 45(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI D.K. TYAGI (JUDICIAL MEMBER) AND SHRI A .L. GEHLOT (AM) I.T.A. NO.907 & 908/RJT/2010 (ASSESSMENT YEARS 1996-97 & 97-98) ACIT, CIR.5 VS SHRI SHASHIKANT H KOTICHA RAJKOT AJAY MANSION, MALVIA ROAD, OPP SAURASHTRA COLD STORAGE RAJKOT-2 PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI KALPESH DOSHI DATE OF HEARING : 26-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011 O R D E R PER D.K. TYAGI, JM THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-IV, RAJKOT DATED 10-02-2010 AND PERTAINS TO ASSESSMENT YEARS 1996-97 1997-98. 2. THE FIRST GROUND RAISED IN THE APPEALS IS THAT T HE CIT(A) ERRED IN LAW AND ON FACT IN DELETING ADDITION MADE BY THE AO ON ACCOUNT OF BUSINESS INCOME TREATED AS CAPITAL GAIN. ITA NO.907/RJT/2010 2 3. THE ASSESSEE IS A STOCK BROKER AND IS HAVING PRO PRIETORY CONCERN, VIZ. M/S SH KOTICHA & CO AND IS A DIRECTOR IN JAYSH REE FIN. INVEST PVT LTD, DEALING IN SHARES AND SECURITIES. BESIDES OTHER TRADING ACTIVITY, THE ASSESSEE HAS SHOWN INCOME FROM SALE OF INVESTMENTS I.E. LONG TERM CAPITAL GAIN AND DIVIDEND INCOME. THE ASSESSING OFFICER, I N THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED A LARGE NUMBER OF TR ANSACTIONS RELATING TO PURCHASE, SUBSCRIPTION AND SALE OF SHARES YEAR AFTE R YEAR IN A REGULAR AND CONSISTENT MANNER. WHEN SHOW CAUSED WHY THE TRANSA CTIONS SHOULD NOT BE TREATED AS BUSINESS TRANSACTIONS, THE ASSESSEE R EPLIED THAT FOR ASSESSMENT YEAR 1993-04 THE ASSESSING OFFICER TAXED STOCK IN TRADE U/S 45(2) AND BUSINESS PROFIT / LOSS WAS DETERMINED ACC ORDINGLY, THEREFORE, SIMILAR VIEW HAS TO BE TAKEN FOR THE ASSESSMENT YEA RS 1994-05 AND 1995- 06. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPT ED ON THE GROUND THAT THE ASSESSEE WAS HAVING BUSINESS INCOME FROM SHARE DEALING FROM THE BEGINNING AND THAT THE VIEW TAKEN IN THE ASSESSMENT YEARS 1993-94 AND 1994-05 DOES NOT STOP THE ASSESSING OFFICER TO TAKE A VIEW DIFFERENTLY IN A.Y. 95-96. THE ASSESSING OFFICER, ACCORDINGLY, TR EATED AN INCOME OF RS. RS.4,59,168 INSTEAD OF RS. 3,92,516 CLAIMED AS CAPI TAL GAIN WHICH RESULTED IN AN ADDITION OF RS.66,652 FOR THE ASSESSMENT YEAR 1996-97. FOR THE ASSESSMENT YEAR 1997-98 THE ASSESSING OFFICER ADDED THE AMOUNT OF RS.5,28,756 ON ACCOUNT OF SURPLUS OF THE AGGREGATE OF SALE CONSIDERATION OVER AGGREGATE OF PURCHASE PRICE BY TREATING THE SA ME AS CAPITAL GAIN. ITA NO.907/RJT/2010 3 4. ON APPEAL, THE CIT(A) FOUND THAT UNDER SIMILAR F ACTS AND CIRCUMSTANCES, IN THE CASE OF ASSESSEE AND HIS FAMI LY MEMBERS FOR ASSESSMENT YEAR 1994-95 THE APPEALS HAVE BEEN ALLOW ED BY THE CIT(A) BY DIRECTING THE ASSESSING OFFICER TO TREAT THE INCOME UNDER QUESTION AS INCOME FROM CAPITAL GAINS AND NOT AS BUSINESS INC OME WHICH WAS UPHELD BY THE ITAT IN ITA NO. 49/RJT/99 & OTHERS. THE LD. CIT(A) ALSO FOUND THAT THE ABOVE ORDER OF THE TRIBUNAL UPHOLDING THE ORDER OF CIT(A) WAS UPHELD BY THE GUJARAT HIGH COURT ALSO. THESE FACTS REMAIN UNCONTROVERTED BEFORE US. IN SUCH A SITUATION, THERE REMAINS LITTLE SCOP E FOR US TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY WE CONFIRM THE OR DER OF CIT(A). 5. IN THE SECOND GROUND RAISED THE REVENUE FOR THE ASSESSMENT YEAR 1997-98 CHALLENGES THE DELETION OF ADDITION OF RS.1 ,25,000 OUT OF TELEPHONE EXPENSES, TRAVELING AND CAR EXPENSES INCL UDING DEPRECIATION. UPON HEARING THE PARTIES AND ON PERUSAL OF RECORD W E FIND THAT THE CIT(A) HAS NOT RECORDED HIS FINDINGS ON THE ABOVE GROUND W HICH WAS ALSO. THEREFORE, THE ISSUE IS RESTORED TO THE FILE OF CIT (A) WITH A DIRECTION TO RECORD HIS FINDINGS ON THE ISSUE AFTER AFFORDING OP PORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.907/RJT/2010 4 6. THE THIRD GROUND FOR AY 1997-98 AGITATES THAT TH E CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING TO CARRY FORWARD THE LOSS OF LTCG OF RS.2,71,860. THIS GROUND IS AKIN TO GROUND 1 OF THE APPEAL. THE REFORE, IN LINE WITH OUR DECISION AT PARAGRAPH 4 ABOVE, WE DO NOT SEE ANY ME RIT IN THE GROUND RAISED BY THE REVENUE, THE SAME IS REJECTED. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR T HE ASSESSMENT YEAR 1996-97 IS DISMISSED WHEREAS THE APPEAL FOR ASSESSM ENT YEAR 1997-98 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2011. SD/- SD/- (A.L. GEHLOT) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 30 TH SEPTEMBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, RAJKOT 4. THE CIT, III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT