The ACIT, B.K.Circle, Palanpur V. Smt. Alkaben Vasantlal Vora, Deesa

ITA 955/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8703 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Business income
• Section: 143(3)

Judgement Text

, *,LK *,LK *,LK *,LK- -- -,E ,E,E ,E- -- -LH* LH*LH* LH* ( ) IN THE INCOME TAX APPELLATE TRIBUNAL SMC (D) BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.955/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) ACIT BANASKANTHA CIRCLE, PALANPUR # VS. SMT. ALKABEN VASANTLAL VORA 9, JAY PARK SOCIETY, HIGHWAY ROAD, AT- DEESA 385535 DIST- BANASKANTHA $ # % & # PAN/GIR NO. : ABGPV 5376 F ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI PRASOON KABRA, SR. D.R. ($'*) / RESPONDENT BY : SHRI A. C. SHAH, A.R. + ,*-. / DATE OF HEARING 16/08/2017 /012*-. / DATE OF PRONOUNCEMENT 18/08/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABAD, DATED 30/01/2014, IN THE MATTER OF ASSESSMENT UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), FOR T HE ASSESSMENT YEAR (AY) 2010-11, ON THE GROUNDS: I. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 2 - MADE ON ACCOUNT OF CAPITAL GAIN TREATED AS BUSINESS INCOME AMOUNTING TO RS.74,27,690/- EVEN THOUGH ALL THE IND ICATORS SHOW THAT THE TRANSACTIONS WERE IN THE NATURE OF BUSINES S/TRADE II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-XX, AHMEDABAD O UGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, A PERUSAL OF RETURN AND OTHER DOCUME NTS/EVIDENCES PLACED ON RECORD SHOW THAT THE ASSESSEE HAS TRANSAC TED IN SALE AND PURCHASE OF SHARES. THE ASSESSEE HAS SHOWN SHORT TE RM CAPITAL GAIN OF RS.74,27,690/-. 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 19/01/2013 WAS ASKED TO EXP LAIN WHY THE STCG FROM TRANSACTION IN SHARES SHOULD NOT BE TREATED AS INCOME FROM BUSINESS AND PROFESSION KEEPING IN VIEW THE VOLUME AND FREQU ENCY OF TRANSACTIONS. THE ASSESSEE REPLIED VIDE LETTER DATED 15/01/2013 S AME IS ATTACHED AS ANNEXURE I, PAGES 1 TO 14 IN ASSESSMENT ORDER. 2.3 LEARNED AO STATED THAT AN ANALYSIS OF THE TRANS ACTIONS OF SHARES REFLECTED IN THE SO-CALLED INVESTMENT PORTFOLIO W AS MADE. IT WAS NOTED THAT SHARES ARE BEING CONTINUOUSLY TRANSACTED. A PE RUSAL OF DETAIL SHOWS THAT TRANSACTIONS HAVE BEEN MADE IN 65 SHARES IN TH E INVESTMENT PORTFOLIO. THE VOLUME OF TRANSACTIONS IS AS HIGH A S 800351 SHARES. APEX COURT HAS HELD THAT SYSTEMATIC AND ORGANIZED COURSE OF ACTIVITY IS IN THE ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 3 - NATURE OF BUSINESS. THE RELEVANT JUDGMENTS OF THE A PEX COURT ARE REPRODUCED AS UNDER: TO REGARD AN ACTIVITY AS BUSINESS, THERE MUST BE A COURSE OF DEALINGS EITHER ACTUALLY CONTINUED OR CONTEMPLATED TO BE CON TINUED WITH A PROFIT MOTIVE, AND NOT FOR SPORT OR PLEASURE. WHETHER A PE RSON CARRIES ON BUSINESS IN A PARTICULAR COMMODITY MUST DEPEND UPON THE VOLUME FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTION S OF PURCHASE AND SALE IN A CLASS OF GOODS AND THE TRANSACTIONS MUST ORDIN ARILY BE ENTERED INTO WITH A PROFIT MOTIVE. BUSINESS IS AN ACTIVITY CAPAB LE OF PRODUCING A PROFIT WHICH CAN BE TAXED SOLE TRUSTEE, LOKA SHIK SHANA TRUST VS. CIT[1975] 101 ITR 234 (SC). THUS, THE TRANSACTION OF SHARES IN THE SO CALLED I NVESTMENT PORTFOLIO OF THE ASSESSEE ARE UNDOUBTEDLY IN THE NATURE OF SYSTE MATIC AND ORGANIZED BUSINESS ACTIVITY ONLY. 2.4 LEARNED AO FURTHER HELD IN ORDER TO EXAMINE THE CONTENTION OF THE ASSESSEE AND EXAMINATION WAS MADE OF THE SHARES TRA NSACTED IN THE SO CALLED INVESTMENT PORTFOLIO. THIS ANALYSIS SHOWS THAT TRANSACTIONS IN A MAJORITY OF THE SCRIPS HAVE BEEN AFFECTED WITHIN A PERIOD RANGING FROM 1 DAY TO 30 DAYS. TRANSACTIONS OF THE SHARES DURING T HIS PERIOD IS VERY FREQUENT. DETAILS OF SCRIP-WISE PERIOD OF HOLDING A ND FREQUENCY OF TRANSACTIONS WITHIN THIS PERIOD OF HOLDING IS TABUL ATED AND ATTACHED AS PER ANNEXURE II. FROM THE ABOVE ANALYSIS IT IS CRYSTAL CLEAR THAT SH ARES REFLECTED IN THE SO- CALLED INVESTMENT PORTFOLIO HAVE BEEN HELD FOR VE RY SHORT PERIODS AND TRANSACTED VERY FREQUENTLY. THE CLAIM OF THE ASSESS EE THAT SHARES HAVE BEEN HELD FOR A LONG PERIOD THUS STANDS NEGATED. ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 4 - 2.5 AN EXERCISE WAS ALSO CONDUCTED TO ANALYSE THE S CRIPS IN TERMS OF VOLUME OF TRANSACTIONS. THE RESULTS ARE DETAILED AS UNDER: TABLE I SR. NO. NAME OF THE SCHEME VOLUME OF TRANSACTION (NO. OF SHARES) 1. ALOK INDUSTRIES LTD. 1,50,000 2. ASSAM COMPANY LTD. 10,000 3. AUSTRAL COKE & PROJECTS 19,565 4. BRAND HOUSE RETAILS LTD. 20,000 5. D. S. KULKARNI 10,000 6. FIRST SOURCE SOLUTIONS LTD. 10,000 7. HINDUSTAN CONSTRUCTION CO. 5000 8. IFCI LTD. 25,000 9. ISPAT INDUSTRIES 1,05,000 10. IKF TECHNOLOGIES LTD. 25,000 11. MAYTAS INFRA 10,000 12. NAGARJUNA FERTILIZERS LTD. 26,800 13. PETRONET LNG 40,000 14. SATYAM COMPUTER LTD. 10,000 15. SPECIALITY PPER 10,000 16. SAL SHEET 10,000 17. TAMILNADU PETRO PRODUCTS LTD. 50,000 18. UGAR SUGAR 10,000 19. WIRE AND WIRELESS (INDIA) LTD. 25,000 FROM THE ANALYSIS OF THE SHARES AS DETAILED ABOVE I T IS EVIDENT THAT THE VOLUME OF TRANSACTIONS IS SUBSTANTIAL, 52 SHARES HA VE BEEN TRANSACTED IN THE SO CALLED INVESTMENT PORTFOLIO AND THE NUMBER OF SHARES PURCHASED AND SOLD AMOUNTS TO 8,00,351. THE VOLUME AND FREQUE NCY OF THE TRANSACTIONS OF SHARES IN THE SO CALLED INVESTMENT PORTFOLIO IS CLEARLY ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 5 - INDICATIVE OF THE FACT THAT THE TRANSACTIONS ARE IN THE NATURE OF BUSINESS ACTIVITY YIELDING BUSINESS INCOME AND NOT CAPITAL I NVESTMENT AS SHOWN BY THE ASSESSEE. THUS THE TRANSACTIONS OF THE ASSESSEE FALL WITHIN THE AMBIT OF INDICATORS LAID DOWN BY THE VARIOUS JUDGMENTS AND A CCORDINGLY SHORT TERM CAPITAL GAIN OF RS.74,27,690/- FROM SHARE TRAD ING IS TREATED AS BUSINESS INCOME. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A). IN PARA NO.5.12, LEARNED CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE, WHICH IS REPRODUCED AS UNDE R: IN VIEW OF THE ABOVE DISCUSSION, ON FACTS AND LEGA LLY ALSO THE APPELLANT HAS CORRECTLY SHOWN THE CAPITAL GAIN FOR TAXATION A ND THE INCOME CANNOT BE TERMED AS BUSINESS INCOME. THE IDENTICAL ISSUE HAS ALSO BEEN DECIDED IN APPELLANTS OWN CASE FOR A.Y.2008-09 IN APPEAL NO. CIT(A)-XX/17/12-13 DTD. 17/10/2013, WHEREBY THE INCOME DERIVED ON TRANSACTI ON OF SHARES AND SECURITIES WERE HELD TO BE AS SHORT/LONG TERM CAPIT AL GAIN AND NOT THE BUSINESS INCOME. IN VIEW OF THE ABOVE, THE A.OS ACTION FOR TREATING THE SAME AS BUSINESS INCOME IS REJECTED AND SHORT TERM CAPITAL GAIN OFFERED BY THE APPELLANT IS ACCEPTED AS SUCH. THUS, GROUNDS OF APP EAL ARE ALLOWED. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LEARNED AR CITED THAT A SIMILAR APPEAL WAS ALSO ALL OWED BY THE COORDINATING BENCH OF ITAT IN ITA NO.3026/AHD/2013 FOR ASST. YEAR 2008-09 IN ASSESSEES OWN CASE, OPERATIVE PARA IS R EPRODUCED HERE UNDER: 9. IN VIEW OF THE ABOVE DISCUSSION AND LUCID FINDI NGS OF LEARNED COMMISSIONER OF INCOME TAX(A) AND ALSO REFERRING TO THE PAPER BOOK FILED BY THE ASSESSEE WE FIND THAT ASSESSEE IS CONS ISTENTLY SHOWING INCOME FROM SHORT TERM AND LONG TERM CAPITAL GAIN I N SALES OF SHARE AND SHOWING THE INVESTMENTS AT COST PRICE IN THE BALANC E SHEET AND NOT AS A STOCK-IN-TRADE. WE FURTHER OBSERVE THAT ASSESSEE IS MAINLY ENGAGED IN ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 6 - THE BUSINESS OF DIAMOND TRADING AND APART FROM SHE IS HAVING INCOME FROM SHORT TERM CAPITAL GAINS FROM SALE OF SHARES. FURTHER FOR ASST YEAR 2009-10 ALSO PROFIT FROM SHARES IS SHOWN AS LONG TE RM AND SHORT TERM CAPITAL GAIN. IN VIEW OF THOSE RELEVANT FACTS AND T HE CONSISTENT APPROACH OF ASSESSEE SHOWING INCOME FROM SHARES UNDER THE HE AR LONG TERM AND SHORT TERM CAPITAL GAIN AND ALSO SHOWING OF INVEST MENTS IN SHARES AND DEBENTURES UNDER THE HEAD INVESTMENT AND NOT AS A C LOSING STOCK, WE ARE OF THE FIRM VIEW THAT LD. COMMISSIONER OF INCOME TA X (A) HAS RIGHTLY ALLOWED THE ASSESSEES CLAIM. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) AND WE UPHOLD THE SAME. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED.' ON THE SIMILAR GROUND THE APPEAL OF THE DEPARTMENT WAS DISMISSED. 5. RESPECTFULLY, FOLLOWING THE COORDINATING BENCHS ORDER AS WELL AS WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A). THEREFORE, WE DISMISS THE APPEAL OF THE DEPARTMENT. 6. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/08/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/08/2017 PRITI YADAV, SR.PS ITA NO.955/AHD/ 2014 ACIT VS. ALKABEN VASANTLAL VORA ASST.YEAR 2010-11 - 7 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-XX, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 16/08/2017 (DICTATION-PAD 4 PAGE S ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/08/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER