ACIT 2(1), MUMBAI V. ASHOK CONSTRUCTION CO. P. LTD, MUMBAI

ITA 913/MUM/2010

• Counselvise Citation: 91319914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G BEFORE SHRI D. MANMOHAN (VP) & SHRI R.K. PANDA (AM) I.T.A.NO. 913/MUM/2010 (ASSESSMENT YEAR : 2006-07) ACIT (OSD)-2(1) AAYAKAR BHAVAN ROOM NO. 561, 5 TH FLOOR M.K. ROAD MUMBAI-400 020. VS. M/S. ASHOK CONSTRUCTION CO.(P) LTD. RAHIMTUALL HOUSE 2 ND FLOOR, 7-HOMJI STREET FORT, MUMBAI-400 001. APPELLANT RESPONDENT PAN/GIR NO. : AAACT3150F ASSESSEE BY : NONE DEPARTMENT BY : SHRI A.K. NAYAK ORDER PER SHRI D.MANMOHAN VP :- THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENU E AND IT PERTAINS TO A.Y. 2006-07. 2. THE CASE WAS ADJOURNED FROM TIME TO TIME AND FIN ALLY, AT THE REQUEST OF THE ASSESSEE, CASE WAS LISTED FOR HEARIN G ON 6.4.2011 ON WHICH DATE LEARNED COUNSEL REQUESTED FOR ADJOURNMENT ON T HE GROUND THAT HE WOULD BE BUSY IN SOCIAL FUNCTION IN THE FAMILY. SIN CE CASE WAS ADJOURNED ON NUMBER OF OCCASIONS AND DATE WAS ANNOUNCED IN TH E OPEN COURT WELL IN ADVANCE WE ARE UNABLE TO ACCEPT THE REQUEST OF T HE ASSESSEE. SINCE SEEKING FREQUENT ADJOURNMENTS IS NOT A MATTER OF RI GHT, WE PROCEED TO DISPOSE THE APPEAL EX-PARTE, QUA THE ASSESSEE. 3. WE HAVE HEARD LEARNED DR AND CAREFULLY PERUSED T HE RECORD. FACTS OF THE CASE IN SHORT ARE THAT THE ASSESSEE, WHO IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES, HAD DECLARED SHORT TERM CAPITAL GAIN ON SALE OF SHARES. ACCORDING TO THE ASSESSING OFFICER THE AMOUNT OF ` 28,23,815/- DESERVES TO BE TREATED AS INCOME FROM B USINESS. IN THIS REGARD HE OBSERVED THAT THE ASSESSEE HAS NOT SUBMIT TED ANY DETAILS IN RESPECT OF THE SHARE TRANSACTIONS AND, THUS, TAKING INTO CONSIDERATION THE 2 QUANTUM OF TRANSACTIONS EFFECTED DURING THE YEAR HE ARRIVED AT THE CONCLUSION THAT THE PROFITS THEREON IS ASSESSABLE T O TAX AS BUSINESS INCOME. HE HAS ALSO TAKEN NOTE OF THE FACT THAT SIM ILAR CONCLUSION WAS REACHED IN ASSESSEES OWN CASE FOR A.Y. 2005-06. 3.1 ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE INCOME EARNED ON SALE OF SHARES IS ASSESSABLE TO TAX UNDER THE HEAD CAPI TAL GAIN. IN THIS REGARD HE OBSERVED THAT SO LONG AS SHARES ARE HELD BY WAY OF INVESTMENT IN THE BALANCE SHEET, MERE MAGNITUDE OF TRANSACTION SHOULD NOT BE TAKEN AS THE BASIS FOR DECIDING THE NATURE OF A TRANSACTION. IN OTHER WORDS, THOUGH THE MAGNITUDE AND VOLUME OF TRANSACTIONS WAS ON A LARGE SCALE, NEVERTHELESS SHARES WERE NOT TREATED AS STOCK-IN-TRADE AND ASSES SEE HAVING SHOWN IN THE BALANCE SHEET AS INVESTMENT PROFIT THEREON IS C HARGEABLE TO TAX UNDER THE HEAD CAPITAL GAIN. IT MAY BE NOTICED HERE THA T THE CENTRAL BOARD OF DIRECT TAXES HAS LAID DOWN CERTAIN PARAMETERS TO AN ALYSE AS TO WHETHER CERTAIN SET OF TRANSACTIONS CAN BE TREATED AS TRADI NG TRANSACTIONS OR OTHERWISE BUT LEARNED CIT(A) HAS NOT ANALYSED THOSE ASPECTS IN ITS CORRECT PROSPECTIVE. THEREFORE THE REVENUE IS IN AP PEAL BEFORE US. 4. IT MAY BE NOTICED THAT THE ASSESSEE FILED A PAPE R BOOK CONSISTING OF 46 PAGES AND ALSO FILED COPY OF THE ORDER OF THE IT AT IN ASSESSEES OWN CASE FOR A.Y. 2005-06 (ITA NO.5409/MUM/2009) DATED 12.1.2011 IN SUPPORT OF THE ASSESSEES CONTENTION THAT UNDER SIM ILAR CIRCUMSTANCES SHARES HELD BY THE ASSESSEE WAS TREATED AS INVESTME NT AND NOT AS STOCK- IN-TRADE. LEARNED DR SUBMITTED THAT IN THE YEAR UND ER CONSIDERATION THE ASSESSEE HAS NOT FURNISHED DETAILS TO ANALYSE AS TO WHETHER FACTS ARE IDENTICAL TO THAT OF THE EARLIER YEAR. HE FURTHER S UBMITTED THAT IN RESPECT OF A.Y. 2005-06 APPELLATE TRIBUNAL HAS TAKEN NOTE O F THE FACT THAT 25 TRANSACTIONS HAVE TAKEN PLACE PRIOR TO 1.1.2004 AND EVEN WITH REGARD TO THE SHARES PURCHASED AND SOLD AFTER 1.1.2004, THE S AME WERE HELD FOR MORE THAN 100 DAYS AND THE ASSESSEE HAVING CLASSIFI ED THE SAME AS INVESTMENT, THE SAID INCOME HAS BEEN TREATED AS SHO RT TERM CAPITAL GAIN. HOWEVER, IN THE INSTANT CASE, FACTS WERE NOT IDENTI CAL. ADVERTING OUR ATTENTION TO SHORT-TERM CAPITAL GAINS, CHART FOR A. Y. 2006-07 LEARNED DR 3 SUBMITTED THAT THE ASSESSEE INDULGED IN REPETITIVE TRANSACTIONS OF THE SAME SCRIP WHICH REFLECTS INTENTION OF THE ASSESSEE I.E. TRADING IN SHARES. FOR EXAMPLE, SHARES OF RELIANCE INDUSTRIES LTD. ARE PURCHASED ON 18.1.2006 AND SOLD ON THE SAME DATE, AGAIN ON 24.1. 2006 SHARES WERE PURCHASED AND SOLD ON THE SAME DATE. ON 19 TH , 20 TH & 23 RD JANUARY, 2006 ASSESSEE PURCHASED SHARES OF RELIANCE INDUSTRI ES LTD. AND SOLD THEM ON THE SAME DATES. THERE WERE MANY SUCH INSTAN CES TO INDICATE THAT SHARES OF CERTAIN COMPANIES WERE FREQUENTLY PU RCHASED AND SOLD. THIS SHOWS THE INTENTION OF THE ASSESSEE. COUPLED W ITH THIS FACT, VOLUME OF TRANSACTIONS ALSO INDICATES THAT THE ASSESSEE IN TENDED TO CARRY ON THE BUSINESS OF PURCHASE AND SALE OF SHARES. NONE OF TH ESE ASPECTS WERE TAKEN NOTE OF BY LEARNED CIT(A). IN FACT THE ASSESS EE HAS NOT FURNISHED ANY DETAILS BEFORE THE ASSESSING OFFICER. THEREFORE IT CANNOT BE COMPARED WITH THE CASE PERTAINING TO A.Y. 2005-06. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LEARNED DR AND PERUSED THE RECORD. ADMITTEDLY THE ASSESSEE INDULGE D IN REPETITIVE TRANSACTIONS OF CERTAIN SCRIPS BY PURCHASING SCRIPS AND SELLING THE SAME ON SAME DATE AND AGAIN ON THE SAME DATE IT PURCHASE D THE SCRIP AND SOLD IT, WHICH REFLECTS INTENTION OF THE ASSESSEE COMPAN Y I.E. TRADING IN SHARES. HOWEVER, THESE FACTS HAVING NOT BEEN LOOKED INTO BY LEARNED CIT(A) AND ASSESSEE HAVING NOT FURNISHED THE DETAILS FOR A.Y. 2006-07, IN THE INSTANT CASE, WE SET ASIDE THE MATTER TO THE ASSESS ING OFFICER WHO IS DIRECTED TO RECONSIDER THE MATTER IN ACCORDANCE WIT H LAW. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTU NITY OF BEING HEARD. 6. WITH THESE OBSERVATIONS, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 6.4.201 1. SD/- (R.K. PANDA) ACCOUNTANT MEMBER SD/- (D.MANMOHAN) VICE-PRESIDENT DATED : 6 TH APRIL, 2011. COPY TO : 1. THE APPELLANT 4 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS