Darshan Naranbhai Patel, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-6, Ahmedabad

MA 139/AHD/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4837 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. M.A. NO. 139 /AHD/2016 [IN ITA NO.2374/AHD/2012] (ASSESSMENT YEAR:2009-10) DARSHAN NARANBHAI PATEL 19,ROYAL CRESANT BUNGLOWS, NR. ASOPALV BUNGLOW, TAHLTEJ, AHMEDABAD 380 052 APPELLANT VS. THE A.C.I.T., CIRCLE-6, AHMEDABAD RESPON DENT PAN: ABCPP4905C / BY ASSESSEE : SHRI A. C. SHAH , A.R. /BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /DATE OF HEARING : 16.09.2016 /DATE OF PRONOUNCEMENT : 17.10.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES MISCELLANEOUS APPLICATION FILED UND ER SECTION 254(2) OF THE ACT SEEKS TO RECTIFY TRIBUNALS ORDER DATED 29.06.2016 DISMISSING M.A. NO.139/AHD/2016 (DARSHAN N. PATEL VS. ACIT) A.Y. 2009-10 - 2 - REVENUES MAIN APPEAL ON MERITS. ITS PLEADINGS IN THE INSTANT APPLICATION READ AS UNDER: 1. I AM IN RECEIPT OF THE APPELLATE ORDER DATED 29 -06-2016 ON 19-07-2016. THERE ARE CERTAIN APPARENT MISTAKES IN THE SAID ORD ER. 2. THE HON'BLE TRIBUNAL HAS OBSERVED IN PARA NO. 5 OF IT AT ORDER AS UNDER: '5. BOTH THE PARTIES HEARD. CASE RECORDS PERUSED. T HERE IS NO DISPUTE THAT THE ASSESSEE ADMITTEDLY IS TRADER IN SHARES. THE IN STANT LITIGATION HOWEVER DOES NOT ARISE FROM HIS TRADING TRANSACTIONS. THE D ISPUTE RATHER IS THAT THE REVENUE SEEKS TO TREAT HIS PROFITS I LOSSES FROM SH ARE INVESTMENTS AND REDEMPTION OF INVESTMENTS AS BUSINESS INCOME BY GIV ING COLOUR OF ADVENTURE IN THE NATURE OF TRADE TO BE INVOLVED THEREIN..........................................' 3. FROM THE ABOVE, IT MAY PLEASE BE SEEN THAT THE HON'BLE ITAT HAS GIVEN A CLEAR FINDING THAT 'THERE IS NO DISPUTE THAT THE AS SESSEE ADMITTEDLY IS TRADER IN SHARES'. IN FACT, THE ASSESSEE IS NOT A DEALER I N SHARES AT ALL. HE HAS INVESTED HIS MAJOR FUNDS IN MUTUAL FUNDS AND ONLY N EGLIGIBLE FUNDS FOR GIVING TO PMS. KINDLY SEE THE STATEMENT OF INCOME G IVEN FROM PAGE NO. 11 TO 16 IN PAPER BOOK DATED 27-02-2013 FILED WITH THE ITAT. THE ONLY SOURCE OF INCOME IS LTCG / STCG & INCOME FROM OTHER SOURCE S AND THAT THERE IS NO BUSINESS INCOME WHATSOEVER. 4. THEREFORE, THERE IS A CONTRADICTION IN THE FIN DING OF THE IT AT. IN FACT, THERE IS A FACTUAL ERROR. WHAT SHOULD HAVE BEEN MENTIONED IN THE FINDING THAT 'THERE IS NO DISPUTE THAT THE ASSESSEE ADMITTEDLY I NVESTOR IN MUTUAL FUNDS'. 5. SIMILARLY, IT IS STATED IN ITAT ORDER IN PARA N O. 5 3RD LINE THAT 'THE DISPUTE RATHER IS THAT THE REVENUE SEEKS TO TREAT H IS PROFITS I LOSSES FROM SHARE INVESTMENTS AND REDEMPTION OF INVESTMENTS AS BUSINESS INCOME BY GIVING COLOUR OF ADVENTURE IN THE NATURE OF TRADE T O BE INVOLVED THEREIN........................................... ' 6. IT WOULD BE BETTER IF THE LANGUAGE USED IS REDE MPTION OF INVESTMENTS IN MUTUAL FUNDS. IN FACT, THE ENTIRE FINDING IN PARA N O.5 IS ABOUT THE SHARES AND NOT ABOUT THE MUTUAL FUNDS AS CAN BE SEEN FROM PARA NO. 6 OF THE ITAT ORDER AS UNDER: '6. WE PROCEED FURTHER AND NOTICE FROM ASSESSEE'S I NVESTMENT CHART REGARDING LONG AND SHORT TERM CAPITAL GAINS THAT MO ST OF THE INVESTMENTS HAVE SEEN HOLDING PERIOD FOR QUITE A LONGER DURATIO N. THERE IS A VERY MINISCULE PERCENTAGE OF SHARE INVESTMENTS BEING MAD E AND SOLD IN A VERY SHORT SPAN OF TIME LESS THAN A WEEK. THE ASSESSEE'S LONG TERM CAPITAL GAINS FROM INVESTMENT HELD FOR MUCH LONGER DURATION OF MO RE THAN A YEAR.................................' 6.1 FROM PARA NO. 5 & 6 OF IT AT ORDER, THE READER GETS THE IMPRESSION THAT THE ASSESSEE IS INVESTOR IN SHARES AND THAT THE DUR ATION OF HOLDING PERIOD IS M.A. NO.139/AHD/2016 (DARSHAN N. PATEL VS. ACIT) A.Y. 2009-10 - 3 - LONG. IN FACT, THE ASSESSEE IS INVESTOR IN MUTUAL F UNDS AND SO FAR AS SHARES ARE CONCERNED, THEY ARE ONLY THROUGH PMS AND THAT T HE ASSESSEE HIMSELF HAS NOT PURCHASED OR SOLD THE SHARES ON HIS ACCOUNT . THEREFORE, THE ASSESSEE PLACED RELIANCE ON THE DELHI HIGH COURT JU DGEMENT IN THE CASE OF YAMA FINANCE LTD. V/S. ACIT 224 TAXMAN 260. THE REL EVANT CATCH-NOTE IS REPRODUCED AS UNDER: '............... WHETHER UNITS OF MUTUAL FUNDS IS A SPECIAL CATEGORY OF 'INVESTMENTS' AND INVESTMENT IN MUTUAL FUNDS CANNOT BE CLUBBED WITH INVESTMENT IN SHARES OR COMMODITIES - HELD, YES.... ........' 6.2 IN FACT, AS STATED ABOVE AS PER STATEMENT OF INCOME FROM PAGE NO. 11 TO 16 OF PAPER BOOK DATED 27-02-2013 FILED WITH THE ITAT. THE MAJOR FUNDS ARE INVESTED IN MUTUAL FUNDS AND THE LTCG AND STCG IS A LSO FROM MUTUAL FUNDS. THE TRANSACTIONS IN PMS SHARES ARE NEGLIGIBL E. THEREFORE, THE STRESS SHOULD BE GIVEN ABOUT THE INVESTMENTS IN MUTUAL FUN DS RATHER THAN SHARES AS IS SEEN FROM THE FINDING FROM PARA NO. 5 & 6 OF THE ITAT ORDER. 7. THIS BEING FACTUAL MISTAKE, YOUR HONOURS ARE P RAYED TO MODIFY THE ORDER BY WITHOUT MAKING ANY CHANGES IN THE OUTCOME OF THE AP PEAL THAT THE APPEAL OF THE REVENUE IS DISMISSED. 2. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. THERE IS NO DISPUTE ABOUT THE FACTUAL POSITION THAT WE HAVE HELD THE AS SESSEE TO BE A TRADER IN SHARES AND MUTUAL FUNDS. LD. COUNSEL TAKES US TO HI S GROUNDS OF APPEAL/STATEMENT OF FACTS FORM NO.35 RAISING A CATE GORIC PLEA THAT THE ASSESSEE IS AN INVESTOR ONLY. HIS FURTHER CASE IS THAT THI S CRUCIAL STATEMENT OF FACT HAS NEITHER BEEN REBUTTED IN LOWER APPELLATE ORDER NOR BEFORE THE TRIBUNAL. THE ASSESSEE INVITES OUR ATTENTION TO HIS STATEMENT OF INCOME AS WELL (SUPRA). LD. COUNSEL STATES THAT THE ASSESSEE IS MERELY AN INVES TOR IN MUTUAL FUNDS FORMING SUBJECT MATTER OF ADJUDICATION IN THE MAIN APPEAL A ND THE SAME ARE NOT TRADED BUT REDEEMED. WE FIND THAT THE CIT(A)S FINDINGS I N PARA 2-4 ALSO TREAT THE ASSESSEE AS INVESTOR ONLY INSTEAD OF A SHARE TRADER . LD. DEPARTMENTAL REPRESENTATIVE FAILS TO LEAD US TO ANY MATERIAL IN THE CASE FILE WHICH COULD INDICATE THE ASSESSEE TO HAVE TRADED IN SHARES/MUTU AL FUNDS IN QUESTION. WE ACCORDINGLY FIND FORCE IN ASSESSEES SUBMISSION AS PLEADED IN THE INSTANT MISCELLANEOUS APPLICATION. IT IS ACCORDINGLY DIREC TED THAT OUR FINDINGS IN ORDER DATED 29.06.2016 TREATING ASSESSEE AS A SHARE S/MUTUAL FUNDS TRADER M.A. NO.139/AHD/2016 (DARSHAN N. PATEL VS. ACIT) A.Y. 2009-10 - 4 - INSTEAD OF AN INVESTOR SHALL STAND RECALLED AS PRAY ED FOR. ORDERED ACCORDINGLY. 3. THIS ASSESSEES MISCELLANEOUS APPLICATION IS ALL OWED IN ABOVE TERMS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 17 TH DAY OF OCTOBER, 2016.] SD/- SD/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 17/10/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 / GUARD FILE. BY ORDER / . // . /0