PENTAGON BUILDERS P.LTD, V. DCIT 5(2),

MA 598/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9066 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 21-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G KUTTY
• Keywords: Business income

Judgement Text

MA NO.598 OF 2011 PENTAGON BUILDERS PVT LTD MUMBAI C BENCH PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO,, JUDICIAL MEMBER M.A.NO.598/MUM/2011 (ARISING OUT OF ITA NO.6045 /MUM/2009 (ASSESSMENT YEAR: 2006-07) PENTAGON BUILDERS PVT LTD, 6 TH FLOOR, DEEJAY APARTMENT, 46 BHULABHAI DESAI ROAD, MUMBAI 400026 PAN NO:AABCP 8971 F VS. DCIT -5(2), ROOM NO.571, 5 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI DEEPAK TRALSHAWALA DEPARTMENT BY: SHRI K.G. KUTTY, DR DATE OF HEARING: 10/8/2012 DATE OF PRONOUNCEMENT: 31/8/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A MISCELLANEOUS APPLICATION BY ASSESSEE IN WHICH IT WAS POINTED OUT THAT THE FOLLOWING ERRORS HAVE CREP T INADVERTANTLY: A) HON'BLE BENCH HAVE NOT ADDRESSED THE REVENUES GROUND OF APPEAL ABOVE. REVENUES GROUND OF APPEAL IS ACTUALLY IN ASSESSEES FAVOUR. B) LEARNED AO HAS GIVEN NO DISCUSSION AT ALL TO SHOW THAT LONG TERM CAPITAL GAINS ARE ALSO BUSINESS INCOME. IN UPHOLDING AOS ORDER, THIS NON- APPLICATION OF MIND HAS APPARENTLY ESCAPED THE NOTICE OF THE HON'BLE BENCH. C) THE LEARNED CIT (A) HAS GIVEN HIS REASONS AT PAGE 5 , PARA 3.5 OF HIS ORDER TO CONCLUDE THAT LONG TERM CAPITAL GAINS ARE EXEMPT UNDER SECTION 10(38). THE HON'BLE BENCH HAVE NOT FOUND ANY FLAW THIS ORDER. MA NO.598 OF 2011 PENTAGON BUILDERS PVT LTD MUMBAI C BENCH PAGE 2 OF 4 D) IT APPEARS THAT THE HON'BLE BENCH HAVE RELIED UPON, THOUGH THEY HAVE NOT SAID SO, ON THE ORDER OF THE HON'BLE ITAT FOR THE EARLIER ASSESSMENT YEAR 2005- 06 REPRODUCED AT PARA 5 OF THE PRESENT ORDER. EVEN HERE, THE FACTS ARE DIFFERENT IN AS MUCH AS IN THE CURRENT ASSESSMENT YEAR 2006-07, NO MENTION HAS BEEN MADE OF SHARES HAVING BEEN PURCHASED OUT OF ADVANCES RECEIVED FROM CUSTOMERS, OR UNLIKE HOLDING PERIOD OF SHARES IS JUST A FEW DAYS (SUCH AS 1,5,6,8 AND 9 DAYS) THE LONG TERM HOLDING OF SHARES HAVE BEEN FOR MORE THAN A YEAR AND IN SHARES OF 8 COMPANIES ONLY.. THE APPLICANTS THEREFORE, MOST HUMBLY AND RESPECTFU LLY SAY THAT THERE WAS AN INADVERTANT MISTAKE APPARENT FROM RECORD IN NOT CONSIDERING THE APPLICABILITY OF SECTION 10(38) AND PRAY THAT THE HON'BLE BENCH MAY FAVOURABLY CONSIDER SUITABLY AMENDING THEIR ABOVE MENTIONED ORDER AND GRANT RELIEF BY EITHER SENDING THE ISSUE ABCK TO THE FILE OF AO TO DETERMINE THE HOLDI NG PERIOD OF THE LONG TERM SHARES, OR BY HOLDING THAT THE GAINS FROM THE SALE OF LONG TERM SHARES ATTRACT THE PROVISIONS OF SECTION 10(38) OF THE I.T. ACT 2. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED D R. 3. THIS M.A. ARISES OUT OF THE ITA NO. 6045 /MUM/2009 WHICH IS A REVENUE APPEAL AND ITA NO.6110/MUM/2009 IS ASS ESSEES APPEAL AGAINST THE ORDER OF THE CIT (A)-9 MUMBAI DA TED 14/09/2009. IN PARAS 2 AND 3 THE FACTS WERE SET OUT AND THE GROUNDS WERE EXTRACTED. IN PARA-4 OF THE ORDER IT W AS STATED THAT AT THE OUTSET BOTH THE PARTIES HAVE STATED THAT THE IS SUE IS COVERED IN FAVOUR OF THE REVENUE AND AGAINST ASSESSEE BY THE O RDER OF THE ITAT IN ITA NO.4384/MUM/2008 FOR ASSESSMENT YEAR 2005-06 AND THE ITAT EXAMINED THE FACTS AND REVERSED THE ORDER OF T HE CIT (A) AND UPHELD THE ACTION OF AO IN TREATING THE INCOME AS B USINESS INCOME. IN PARA-5 THE FINDINGS OF THE ITAT WERE EXTRACTED. ACCORDINGLY IN PARA-6 IN VIEW OF THE FACTUAL FINDINGS THAT ASSESSE E HAS INDULGED IN MA NO.598 OF 2011 PENTAGON BUILDERS PVT LTD MUMBAI C BENCH PAGE 3 OF 4 BUSINESS TRANSACTIONS AND NOT AS INVESTMENT, PART O F THE CIT (A) ORDER UPHELD TO THE EXTENT TREATING OF SHORT TERM C APITAL GAIN AS BUSINESS INCOME WAS UPHELD AND REVERSED THE DIRECTI ON OF THE CIT TO TREAT LONG TERM CAPITAL GAIN AS SUCH. THE LONG T ERM CAPITAL GAIN OFFERED WAS TO BE ASSESSED AS BUSINESS INCOME OF AS SESSEE AS ASSESSEE HAS INVOLVED IN THE SHARE TRADING AS HIS B USINESS ACTIVITY. ACCORDINGLY THE CIT(A) ORDER WAS MODIFIED AND AOS ORDER UPHELD. ON THIS DIRECTION ASSESSEE HAS RAISED THE ABOVE M.A . 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT THERE IS NO NEED TO MODIFY THE ORDER. FIRST OF ALL, THIS ISSUE IS TAKEN UP AS A COVERED ISSUE BASED ON THE FINDINGS I N ASSESSMENT YEAR 2005-06 IN WHICH ASSESSEE IS HELD TO HAVE DONE TRADING AND NOT AS INVESTMENT ACTIVITY. THIS WAS CLEARLY STATED IN PARA 5 OF THE ORDER. CONSEQUENT TO THAT THE CIT (A)S ORDER WAS M ODIFIED AS HE HAS NOT FOLLOWED HIS PREDECESSORS ORDER ON THE SAME IS SUE. THE LEARNED COUNSELS CONTENTION THAT THE CLAIM UNDER SECTION 1 0(38) WAS NOT CONSIDERED, DOES NOT ARISE AS THE INCOME WAS CONSID ERED AS BUSINESS INCOME. THE LONG TERM CAPITAL GAIN HAS ARI SEN OUT OF THE SHARES PURCHASED IN EARLIER YEARS WHICH WERE HELD T O BE STOCK IN TRADE. ONCE THE SHARES WERE HELD AS STOCK IN TRAD E IN ASSESSMENT YEAR 2005-06, CONSEQUENTIAL RESULT IS THAT THE SALE OF THE SAME HAS TO BE CONSIDERED AS BUSINESS INCOME AND CANNOT BE T REATED AS LONG TERM CAPITAL GAIN, AS THE NATURE OF THE SHARE HOLDI NG CHANGED FROM INVESTMENT TO TRADING. SINCE THIS ISSUE WAS CONNECT ED WITH THE DECISION IN ASSESSMENT YEAR 2005-0, EVEN LONG TERM CAPITAL GAIN OFFERED HAS TO BE ASSESSED AS BUSINESS INCOME, THE DIRECTION OF WHICH WAS GIVEN IN THE ORDER. IN VIEW OF THIS, WE D O NOT SEE ANY MERIT IN THE M.A. RAISED BY ASSESSEE. ACCORDINGLY T HE SAME WAS DISMISSED. MA NO.598 OF 2011 PENTAGON BUILDERS PVT LTD MUMBAI C BENCH PAGE 4 OF 4 5. IN THE RESULT MISCELLANEOUS APPLICATION FILED BY AS SESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- SD/- (VIJAY PAL RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST AUGUST, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI