THE DY. CIT, Circle-5, Ahmedabad V. SMT. NITA MADHU PATEL, Ahmedabad

ITA 937/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60364 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 27-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Keywords: Business income; Set aside
• Section: 263

Judgement Text

ITA NO.9 37/AHD/2009 ASSESSME NT YEAR 2005- 06 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI T.R. M EENA, A.M.) I.T.A. NO.937/AHD/2009 (ASSESSMENT YEAR: 2005- 06) DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-5, KENDRIYA PRATYAKSHA BHAVAN, NEAR PANJARA POLE, AMBAWADI, AHMEDABAD. (APPELLANT) VS. SMT. NITA MADHU PATEL, 7 GADHVI SOCIETY, NAVRANGP;URA, AHMEDABAD/ (RESPONDENT) PAN: AAFPP1187P APPELLANT BY : SHRI S. K.GUPTA RESPONDENT BY : SHRI ASEEM THAKKAR ( )/ ORDER DATE OF HEARING : 17-4-2012 DATE OF PRONOUNCEMENT : 15-5-2012 PER: SHRI T. R. MEENA,A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT (A)- XI, AHMEDABAD DATED 22-1-2009 FOR THE ASSESSMENT YE AR 2005-06. 2. IN THIS APPEAL THE REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. THE LD. CIT (A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO TREAT THE INCOME OF RS.2,95,4 4,976/- AS LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME. ITA NO.9 37/AHD/2009 ASSESSME NT YEAR 2005- 06 . 2 2. THE LD. CIT (A)-XI, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DIRECTING TO TREAT THE INCOME OF RS.3,91,9 40/- AS SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A)-XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT (A)-XI, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 28-10-2005, DECLARING TOTAL INCOME AT RS.19,71,1 50/-. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT W AS COMPLETED ON 26-12-2007 DETERMINING THE TOTAL INCOME AT RS.2,95, 05,540/-. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALA RY, TRADING ACTIVITY IN SHARES AND SECURITIES AND CAPITAL GAIN FROM INVE STMENT IN SHARES ETC. THE A.O. MADE THE ADDITIONS ON ACCOUNT OF LON G TERM CAPITAL GAIN OF RS.2,95,44,976 AND ON ACCOUNT OF SHORT TERM CAPI TAL GAIN AMOUNTING TO RS.3,91,940/- RESPECTIVELY INSTEAD OF BUSINESS I NCOME. 4. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 5. THE A.R. OF THE ASSESSEE SUBMITTED THAT ON SIMIL AR ISSUE A.O HAD ACCEPTED THE LONG TERM CAPITAL GAIN IN A.Y. 200 4-05 AND SHORT TERM CAPITAL GAIN ALSO. FOR THE ASSESSMENT YEAR 2004-05 THE CIT-III, AHMEDABAD HAD ISSUED NOTICE U/S.263 OF THE ACT BUT LATER VIDE HIS ITA NO.9 37/AHD/2009 ASSESSME NT YEAR 2005- 06 . 3 ORDER DATED 5-3-2009 THE PROCEEDINGS U/S.263 CAME T O BE DROPPED. THE SAID ADDITIONS WERE DELETED BY THE CIT (A). BEF ORE THE CIT (A) A.R. OF THE ASSESSEE FILED DETAILED WRITTEN SUBMISS IONS. THE CIT (A) ALSO CALLED FOR THE REMAND REPORT FROM THE A.O. A.O . SUBMITTED HIS REPLY AS PER LETTER DATED 6-5-2008. ON THIS REPLY OF THE A.O., A.R., OF THE ASSESSEE SUBMITTED COUNTER COMMENTS AS PER LETT ER DT.17-5-2008 (BOTH PLACED ON RECORD IN THE FORM OF PAPER BOOK AT PAGES 41 TO 52). AGAIN DURING THE COURSE OF APPELLATE PROCEEDINGS WH ICH TOOK PLACE ON 29-7-2008 AND THE HEARING WAS ADJOURNED TO 31-7-200 8 AND THEN ON1-8- 2008 AND THE ASSESSEE WAS ASKED TO SUBMIT SOME MORE DETAILS. ASSESSEE AGAIN VIDE LETTER DT. 17-9-2008 FILED COUN TER COMMENTS (PLACED IN FORM OF PAPER BOOK AT PAGES 55 TO 58). A .R. HAS ALSO FILED BEFORE US VARIOUS DOCUMENTS AND EVIDENCES AND PAPER S IN SUPPORT OF HER CASE. THE A.R. CONTENDED THAT SHARE TRANSACTION S ARE EITHER SHORT TERM OR LONG TERM AS PER HOLDING PERIOD AND ARE NOT BUSINESS INCOME BUT ARE CAPITAL GAIN. HE REFERRED PAGES 7 AND 8 OF PAPER BOOK-II WHERE PERIOD OF HOLDING HAS BEEN MENTIONED. 6. THE LD. D.R. SUPPORTED THE ORDER OF THE A.O. TH E D.R. HAS ALSO FILED VARIOUS DOCUMENTS AND CITED VARIOUS DECISIONS IN SUPPORT OF THE CASE AS UNDER:- (1) SMT. HARSHA N. MEHTA VS. DCIT (2011) 43 SOT 33 2(MUM) (2) JAYSHREE PRADIP SHAH VS. ACIT (2012) TAXMANN.C OM.44 (MUM.). ITA NO.9 37/AHD/2009 ASSESSME NT YEAR 2005- 06 . 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE PAPER BOOK A ND RELEVANT DECISIONS CITED BY BOTH THE PARTIES. THE INTENTION OF HOLDING SHARES FOR A LONG PERIOD AS INVESTMENT DOES NOT AMOUNT TO BUSINESS INCOME. THE CIT HAS ALSO DROPPED THE PROCEEDINGS INITIATED U/S. 263 OF THE I.T. ACT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 20 04-05 ON SIMILAR FACTS. THEREFORE, THESE TRANSACTIONS ARE TO BE TREA TED AS LONG TERM OR SHORT TERM CAPITAL GAIN AND NOT BUSINESS INCOME. TH US THESE TRANSACTIONS ARE INVESTMENT AND NOT BUSINESS. WE A RE OF THE CONSIDERED OPINION THAT THE SHARE TRANSACTIONS ARE LONG TERM AND SHORT TERM CAPITAL GAIN, ON SALE CAPITAL GAIN TAX I S LIABLE TO BE PAID. THUS THESE GROUNDS OF APPEAL ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 15 -5 - 2012. SD/- SD/- (G.C.GUPTA) (T. R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.9 37/AHD/2009 ASSESSME NT YEAR 2005- 06 . 5 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) XI, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 17 - 4 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 19 / 4 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 15 - 5 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 15 - 5 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 15 - 5 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 5 - 5 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..