RAJAN M SHAH, MUMBAI V. ASST CIT CIR 25(3), MUMBAI

ITA 971/MUM/2013

• Counselvise Citation: 97119914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: KETAN L VAJANI
• Keywords: Business income
• Section: 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALD BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./ I.T .A. NO . 971 / MUM/20 1 3 ( / ASSESSMENT YEAR S : 20 0 6 - 07 ) SHRI RAJAN M SHAH, 4, HEM NIWAS, KALICHAND ROAD, KANDIVALI (W), MUMBAI - 400067 / VS. THE ASSTT. COMMISSIONER OF INCOME CIRCLE 25(3), PRATYA KSHAKA R BHAVAN, BANDRA KURLA COMPLEX , BA NDRA (E), MUMBAI - 400051 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AKJPS7525D / ASSESSEE BY SHRI KETAN L VAJANI / REVENUE BY SHRI LOVE KUMAR / DATE OF HEARING : 3 . 3 . 2015 / DATE OF PRONOUNCEMENT : 29. 5. 2015 / O R D E R PER B R BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 5.11. 2012 PASSED BY THE L D. CIT(A) - 35, MUMBAI AND IT RELATES TO THE ASSESSMENT YEA R 2008 - 09. 2. THE ASSESSEE IS AG GRIEVED BY THE DECISION OF THE L D. CIT(A) IN CONFIRMING THE ASSESSMENT OF S HORT T ERM C APITAL G AINS (STCG) AND L ONG T ERM C APITAL G AINS (LTCG) ARIS I NG ON SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. ITA. NO . 971 /M/201 3 2 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE DECLARED STCG OF RS.16.20 LAKHS AND LTCG OF RS.15.82 LAKHS , B OTH ARIS ING ON SALE OF SHARES. THE AO TREATED THE SAME AS BUSINESS INCOME OF THE ASSESSEE AND IT WAS ALSO CONFIRMED BY TH E LD . CIT(A). 4. BEFORE US, THE MAIN CONTENTION S OF THE LD.AR ARE THAT (A) THE ASSESSEE IS AN INVESTOR MAINLY INVOLVED IN PURCHASE AND SALE OF BONDS/SECURITIES AND HE HAS ALSO DEALT IN AS PART OF HIS INVESTMENT ACTIVITY. (B) T HE ASSESSEE HAS ONLY INVESTED HIS OWN FUNDS AND HE HAS NOT BORROWED ANY FUNDS FOR THIS PURPOSE. (C) T HERE IS NO MAJOR REPETITIVE PURCHASE S AND SALE OF SAME SHARES. (D) THE ASSESSEE HAS RECEIVED D IVIDEND INCOME OF RS.14.3 0 LAKHS (E) THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND SHARES HAVE BEEN SHOWN AS INVESTMENT S ONLY . 5 . ON THE CONTRARY, THE LD. DR SUBMI TTED THAT THE ASSESS E E SHOULD BE TREATED AS TRADER IN SHARES CONSIDERING THE VO LUME AND FREQUENCY OF TRANSACTION S IN SHARES AND REPETITIVE TRANSACTION S ENTERED BY THE ASSESSEE. 6 . A PERUSAL OF THE B ALANCE S HEET FURNISHED BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAS INVESTED HIS OWN FUNDS AND HE HAS NOT BORROWED ANY FUND FOR THE PURPOSE OF MAKING INVESTMENT IN SHA R ES. THE INVESTMENT DETAILS OF THE ASSESSEE AS AT THE END OF THE YEAR UNDER CONSIDERATION ARE GIVEN AS UNDER : ITA. NO . 971 /M/201 3 3 PARTICULARS AMOUNT IN RS . LIC NEW 5,19,000 MKVDC BOND 1,14,96,000 ICICI BOND 9,00,000 SHARES IN 3A CAPITAL SERVICES LTD 1,39,80,000 TOTAL 2,68,95,000 A PERUSAL OF THE INVESTMENT DETAILS WOULD SHOW THAT MORE THA N 50 % OF THE INVESTMENT S HAVE BEEN MADE IN BONDS ISSUED BY VARIOUS F INANCIAL I NSTITUTI ONS . FURTHER THE ASSESSEE HAS CLASSIFIED THE SHARE P URCHASES AS PART OF HIS INVESTMENTS ONLY. 7 . THE DETAILS OF PURCHASES AND SALE OF SHARES UNDERTAKEN DURING THE YEAR UNDER CONSIDERATION ARE GIVEN IN PARAGRAPH 16 (PAGES 13 TO 15) OF THE ORDER OF LD CIT(A). A CAREFUL PERUSAL OF THE DETAILS OF SHARES PURCH ASED AND SOLD BY HIM WOULD SHOW THAT THOUGH THE ASSESSEE HAD HELD SHARES RANGING FROM 2 DAYS TO 354 DAYS , YET THE MAJORITY OF THE SHARES HAVE BEEN HELD FOR MORE THAN 100 DAYS. THE ASSESSEE HAS FURNISHED AN ANALYSIS OF SALE OF SHARES IN PERIOD RANGE AND T HE SAME FINDS PLACE IN PAGE 25 OF THE ORDER OF LD CIT(A). A PERUSAL OF THE SAME WOULD SHOW THAT ONLY 13% OF THE SHARES THAT WERE SOLD (FALLING IN STCG) WERE HELD FOR LESS THAN 100 DAYS, MEANING THEREBY THE ASSESSEE HAS HELD ABOUT 87% OF THE SHARES THAT WE RE SOLD UNDER STCG CATEGORY FOR MORE THAN 100 DAYS. WITH REGA R D TO THE ALLEGATIO N OF REPETITIVE TRANSACTION S , WE NOTICE THAT THE ASSESSEE HAS EITHER SOLD SHARES IN MORE THAN ONE LOT IN SOME OF THE CASES OR THERE IS CONSIDERABLE TIME GAT BETWEEN ONE SET OF TRANSACTION ANOTHER SET. 8 . UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE CONSIDERED TO BE A TRAD ER IN SHARES AND ACCORDINGLY, WE HOLD THAT THE ASSES S EE HAS CARRIED ON SHARE TRANSACTIONS AS INVESTOR ONLY. IN ITA. NO . 971 /M/201 3 4 VIEW OF THE ABOVE , WE SET ASIDE THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO ASSESS THE PRO F IT ARISING ON SALE OF SHARES AS CAPITAL GAINS ONLY. 9 . IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH MAY , 2015 . 29TH MAY , 2015 SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 29TH MAY , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, (ASSTT. REGISTRAR) , /ITAT, MUMBAI