ASST CIT 32(3), MUMBAI V. RAJESH DAMJI NANDU, MUMBAI

ITA 958/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0923 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 958/MUM/2015 ASSESSMENT YEAR: 2010-11 ASST CIT 32(3) VS. MR. RAJESH DAMJI NANDU 1 ST FLOOR, R. NO. 108 BLDG NO C-11 C-1091, SHA ILESH APARTMENTS, PRATYAKSHKAR BHAVAN, BKC BANDRA SVP ROAD, BO RIVALI (W) MUMBAI 400051 MUMBAI - 400103 PAN NO. AABPN3386R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PURUSHOTTAM KUMAR, DR ASSESSEE BY: SHRI MANISH SANGHAVI, AR DATE OF HEARING : 01/02 /2017 DATE OF PRONOUNCEMENT: 19/04/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 35, MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: I . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ASSESSEE AS INVEST OR AND ASSESS THE PROFIT ON SALE OF DELIVERY BASED SHARES AS SHORT TE RM CAPITAL LOSS TO THE TUNE OF RS. 23,09,931/- TO BE CARRIED FORWAR D TO A.Y. 2011- 12 FOR SET OFF AND LONG TERM CAPITAL GAIN OF RS. 17 ,24,828/- ALTHOUGH THE ASSESSEE IS ENGAGED IN TRADING IN SHAR ES CONSISTENTLY. ITA NO. 958/MUM/2015 2 II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE A SSESSEE HAS WITHDRAWN THE APPEAL FILED AGAINST THE SIMILAR ADDI TION IN A.Y. 2008-09 AND ACCEPTED THAT SHARE TRANSACTIONS ENTERE D BY HIM WAS HIS BUSINESS INCOME. III. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT( A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2010-11 ON 30.07.2010 DECLARING TOTAL INCOME OF RS. 53,53,262/ -. THE ASSESSEE HAD DECLARED SHORT TERM CAPITAL LOSS (STCL) OF RS. 23,09,931/- IN SHARE TRANSACTIONS AND CARRIED FORWARD THE SAME TO THE A.Y. 2011-12. THE ASSESSEE HAD ALSO EARNED LONG TERM CAPITAL GAIN S (LTCG) OF RS. 17,24,828/-. THE ASSESSING OFFICER (AO) FOLLOWED TH E ORDER OF THE LEARNED CIT(A) IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2008-09 AND BROUGHT THE STCL OF RS. 23,09,931/- AND LTCG OF RS. 17,24,828/- UNDER THE HEAD BUSINESS AND BROUGHT TO TAX THE NET AMOUNT OF RS. 5,85,103/- AS BUSINESS INCOME. 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FI LED AN APPEAL BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) FOLLOWED THE ORDER OF HER PREDECESSOR-IN-OFFICE FOR THE A.Y. 2009-10 AND DIRECTED THE AO TO ASSESS THE PROFIT ON SALE OF SHA RES AS CAPITAL GAINS. 5. BEFORE US, THE LEARNED DR RELIES ON THE ORDER OF THE AO. ON THE OTHER HAND THE LEARNED COUNSEL OF THE ASSESSEE RELI ES ON THE ORDER OF THE LEARNED CIT(A) AND ALSO THE ORDER OF THE TRIBUN AL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2009-10 (ITA NO. 5866/MUM /2013) DECIDED BY D BENCH, MUMBAI. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT SIMILAR ISSUE AROS E BEFORE THE CO- ITA NO. 958/MUM/2015 3 ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR2009-10. THE GROUND OF APP EAL BEFORE THE TRIBUNAL WAS THE FOLLOWING: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ASSESSEE AS INVESTOR A ND ASSESS THE PROFIT ON SALE OF DELIVERY BASED SHARES AS SHORT TERM / LO NG TERM CAPITAL GAIN TO THE TUNE OF RS. 3,957/- AND RS. 21,06,430/- RESP ECTIVELY DESPITE THE FACT THAT IN A.Y. 2008-09 THE ASSESSEE HAS ACCEPTED THAT HE IS ENGAGED IN TRADING OF SHARES THE TRIBUNAL HELD AS UNDER: 4. WE FIND THAT ISSUE IN APPEAL WAS DECIDED IN FAVOUR OF ASSESSEE BY CIT(A) VIDE THEIR ORDERS DATED 27.04.2009 FOR A.Y. 2 008-09 AND 12.02.2010 FOR A.Y. 2009-10. IN FACT, CIT(A) HAS FOL LOWED THIS ORDER FOR A.Y. 2006-07. HONBLE BOMBAY HIGH COURT IN CASE OF C IT VS. GOPAL PUROHIT IN INCOME TAX APPEAL NO.1121 OF 2009 DATED 06.01.2010, WHEREIN ISSUE WAS WHETHER A PARTICULAR HOLDING OF S HARES IS BY WAY OF INVESTMENT OR FORMS PART OF STOCK IN TRADE IS A MAT TER WHICH IS WITHIN THE KNOWLEDGE OF ASSESSEE WHO HOLDS THE SHARES. HON BLE HIGH COURT HELD THAT PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR FORMS PART OF STOCK IN TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF ASSESSEE WHO HOLDS THE SHARES IN CASE OF ASSESSEE. SAME HAS BEEN DISCLOSED AT THE TIME OF ACQUISITION OF SHARES THAT SHARES WERE ACQUIRED AS INVESTMENT AND NOT AS TRADING IN SHARES. HENCE, ASSESSING OFFICER SHOULD NOT PRESUME OTHERWISE, MORE PARTICULARLY WHE N NOTHING HAS BEEN BROUGHT ON RECORD BY HIM TO SUBSTANTIATE HIS F INDINGS. THE SHARES PURCHASED BY ASSESSEE ON WHICH CAPITAL GAIN WAS ADM ITTED, WERE SHOWN AS INVESTMENT IN BALANCE SHEET AND IN EARLIER YEARS CLAIM OF CAPITAL GAIN HAS BEEN ACCEPTED AND ASSESSEE HAS CONSISTENTLY BEE N FOLLOWING THE METHOD OF ADMITTING THE PROFIT ON SALE OF SHARES SH OWN AS INVESTMENT UNDER THE HEAD CAPITAL GAIN. ASSESSING OFFICER HA S NOT DISPUTED THE FACT THAT ALL THE SHARES WERE TRANSFERRED IN THE NAME OF ASSESSEE AS EVIDENCED BY DEMAT ACCOUNT AND AS SUCH ALL ARE DELI VERY BASED TRANSACTIONS IN RESPECT OF WHICH ASSESSEE ADMITTED CAPITAL GAIN. IN VIEW OF ABOVE, CIT(A) RIGHTLY DIRECTED THE ASSESSING OFF ICER TO TREAT THE ASSESSEE AS INVESTOR AND ASSESS THE PROFIT ON SALE OF DELIVERY BASED SHARES AS SHORT TERM/LONG TERM CAPITAL GAINS AS DEC LARED BY ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT D BENCH, MUMBAI IN ASSESSEES OWN CASE IN ITA NO.4330/MUM/2009 AND OTH ERS FOR A.Y. 2006-07 & 2007-08 AS DISCUSSED ABOVE. ITA NO. 958/MUM/2015 4 6.1. FACTS BEING SIMILAR, WE FOLLOW THE ABOVE ORDER OF THE CO- ORDINATE BENCH AND UPHOLD THE ORDER OF THE LEARNED CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/04/2017 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 19/04/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI