DCIT 24(3), MUMBAI V. RASILABEN M. SHAH, MUMBAI

ITA 9210/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79570 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DURGA DUTT
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) .. , , ./I.T.A. NO.9210/MUM/2010 AND 5856/MUM/2011 ( / ASSESSMENT YEARS : 2007-08 AND 2008-09) DY. COMMISSIONER OF INCOME TAX, 24(3), ROOM NO.701, C-11, 7 TH FLOOR, B C COMPLEX, BANDRA(E), MUMBAI-400051 / VS. SMT. RASILABEN SHAH 11/11-C, MANI BHAVAN, S V ROAD, GOREGAON (W), MUMBAI-400062 ( !' / APPELLANT) .. ( #$!' / RESPONDENT) ! ./ %& ./PAN/GIR NO. :AADPS5475J !' ' / APPELLANT BY : SHRI DURGA DUTT #$!' ( ' /RESPONDENT BY : SHRI JITENDRA SINGH ) * ( +, / DATE OF HEARING : 10.7.2014 -. ( +, /DATE OF PRONOUNCEMENT : 31.7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-34, MUMBAI AND THEY RELATE TO T HE ASSESSMENT YEARS 2007- 08 AND 2008-09. SINCE THE ISSUE URGED IN BOTH THE APPEALS IS IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF L D CIT(A) IN HOLDING THAT THE PROFIT ARISING ON SHARES DEALING IS ASSESSABLE AS CAPITAL GAINS IN BOTH THE YEARS I.T.A. NO.9210/MUM/2010 AND 5856/MUM/2011 2 BY REVERSING THE DECISION OF THE ASSESSING OFFICER IN ASSESSING THE SAME AS BUSINESS INCOME OF THE ASSESSEE. 3. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE US BOTH THE PARTIES PLACED RELIANCE ON CERTAIN CASE LAWS TO SUPPORT THEIR RESPECTIVE STAND. THE QUESTION WHETHER THE INCOME ARISING ON SHARE DE ALINGS IS ASSESSABLE AS CAPITAL GAINS OR BUSINESS INCOME WOULD DEPEND UPON THE FACT WHETHER THE SHARES WERE HELD AS INVESTMENT OR AS STOCK IN TRADE. IT I S WELL SETTLED LAW THAT THE SAID CLASSIFICATION IS NOT SOLELY DEPENDENT UPON THE CLA SSIFICATION ADOPTED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS, THOUGH IT IS HEL D THAT A PERSON CAN HAVE BOTH TYPE OF ACTIVITIES. HENCE THERE WAS DIVERGENT VIE WS ON THIS ISSUE. WE NOTICE THAT THE CENTRAL BOARD OF DIRECT TAXES HAS ISSUED C IRCULARS PRESCRIBING VARIOUS CRITERIA OR TESTS TO BE ADOPTED FOR DETERMINING THE NATURE OF TRANSACTION CARRIED ON BY A PARTICULAR ASSESSEE. BY APPLYING THOSE CRI TERIA TO THE FACTS OF A PARTICULAR CASE, ONE MAY BE ABLE TO ARRIVE AT A DECISION. THU S, IT IS SEEN THAT IT IS VERY DIFFICULT TO PRESCRIBE A TAILOR MADE FORMULA TO DET ERMINE THE NATURE OF TRANSACTION IN RESPECT OF SHARE DEALING ACTIVITY. 4. ON A PERUSAL OF THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER IN THE INSTANT CASE IN BOTH YEARS, WE NOTICE THAT THE ASSESSING OFFICER HAS NOT EXAMINED OR MADE A CRITICAL ANALYSIS OF THE NATURE OF SHARE DEALING INDULGED IN BY THE ASSESSEE. THE AO DID NOT REFER TO THE CIRCULAR ISSUED BY THE CBDT AT ALL. INSTEAD, WE NOTICE THAT THE ASSESSING OFFICER HAS M ADE GENERALIZED OBSERVATIONS AND CAME TO THE CONCLUSION THAT THE GAINS ARISING O N SHARE DEALING IS ASSESSABLE AS BUSINESS INCOME OF THE ASSESSEE. THE SAME IS TH E POSITION WITH REGARD TO THE ORDERS PASSED BY LD CIT(A). WE NOTICE THAT THE LD CIT(A) ALSO DID NOT EXAMINE I.T.A. NO.9210/MUM/2010 AND 5856/MUM/2011 3 THE SHARE TRANSACTIONS BY APPLYING VARIOUS TESTS PR ESCRIBED BY THE CBDT IN ITS CIRCULAR. THOUGH THE LD CIT(A) HAS OBSERVED THAT T HE ASSESSING OFFICER HAS REJECTED THE EXPLANATIONS OF THE ASSESSEE WITHOUT G IVING COGENT REASONS, YET HE REVERSED THE DECISION OF THE AO BY SIMPLY FOLLOWING THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CAS E OF SHRI GOPAL PUROHIT (228 CTR 582). 5. IN VIEW OF THE FOREGOING, WE ARE UNABLE TO APPR AISE THE FACTS PREVAILING IN THE INSTANT CASE AND HENCE WE ARE NOT ABLE TO ADJUD ICATE THE ISSUE CONTESTED BEFORE US. ACCORDINGLY, WE ARE OF THE VIEW THAT TH IS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER IN BOTH THE YEARS. ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) IN BOTH THE YEARS AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE ACTIVITIES OF THE ASSESSEE IN TERMS OF THE TESTS PRESCRIBED BY THE CB DT IN ITS CIRCULAR. AFTER HEARING THE ASSESSEE AND GIVING DUE CONSIDERATION T O THE EXPLANATIONS FURNISHED BY HER, THE ASSESSING OFFICER MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. WITH THESE OBSERVATIONS, WE DISPOSE OF BO TH THE APPEALS FILED BY THE REVENUE. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31ST JULY , 2014. -. ) / 0 1 31ST JULY, 2014 . ( 2* 3 SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) * MUMBAI: 31ST JULY,2014. I.T.A. NO.9210/MUM/2010 AND 5856/MUM/2011 4 . . ./ SRL , SR. PS !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. ) 5+ ( ) / THE CIT(A)- CONCERNED 4. ) 5+ / CIT CONCERNED 5. 62 #+ 7 , , 7 , ) * / DR, ITAT, MUMBAI CONCERNED 6. 2 8* / GUARD FILE. 9 ) / BY ORDER, TRUE COPY : % (ASSTT. REGISTRAR) , 7 , ) * /ITAT, MUMBAI