I.T.O.,Ward-30(3), Kolkata, Kolkata V. Supriya Gupta, Kolkata

MA 97/KOL/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 6017 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V N DATTA
• Assessee Lawyers: SOUMYAJIT DASGUPTA
• Keywords: Business expenditure; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SRI M.B ALAGANESH, AM ] M.A. NO. 97 OF 2017 (A/O I.T.A NO. 1908/KO L/2016) ITO, WARD-30(3), KOLKATA -VS.- SUPRIYA GU PTA [PAN : AEAPG 8162 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI V.N. DATTA, A R FOR THE RESPONDENT : SHRI SOUMYAJIT DASGUPTA, ADDL. CIT SR. DR DATE OF HEARING : 01.12.2017 DATE OF PRONOUNCEMENT : 01.12.2017. ORDER PER M.BALAGANESH, AM 1. BY VIRTUE OF THIS MISCELLANEOUS APPLICATION TH E REVENUE SEEKS TO RECALL THE ORDER PASSED BY THIS TRIBUNAL IN I.T.A. NO. 1908/KO L/2016 DATED 23.01.2017 FOR ASSESSMENT YEAR 2009-10 WHEREIN THIS TRIBUNAL HAD D ISMISSED THE APPEAL OF THE REVENUE DUE TO LOW TAX EFFECT BY PLACING RELIANCE ON THE CI RCULAR ISSUED BY THE CBDT VIDE CIRCULAR NO. 21/2015 DATED 10.12.2015. ACCORDING TO REVENUE, THE SAID CIRCULAR IS NOT APPLICABLE THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE TAX EFFECT ON THE DISPUTED ADDITION IS MUCH MORE THAN THE PRESCRIBED LIMIT THE REON. IN RESPONSE TO THIS, THE LD. AR STATED THAT THE LD. AO HAD ULTIMATELY DISALLOWED ON LY SUM OF RS. 26,28,874/- IN THE ASSESSMENT AND THE LOW TAX EFFECT ON THE SAME IS LE SS THAN RS. 10 LACS. ACCORDINGLY, HE ARGUED THAT THE CBDT CIRCULAR DATED 10.12.2015 IS V ERY MUCH APPLICABLE IN THE INSTANT CASE. 2 MA NO. 97/KOL/2017 (A/O I.T.A NO. 1908/KOL/2016) SUPRIYA GUPTA A.YR.2009-10 2 2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE IS AN INDIVIDUAL AND HAD BEEN CARRYING ON THE BUSINESS OF EQUITY DERIVAT IVES TRADING SINCE PAST SEVERAL YEARS AND HAD ALWAYS CLASSIFIED SUCH ACTIVITIES AS HER BU SINESS INCOME. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD STARTED THE BUSINES S OF EQUITY TRADING AND HAD AVAILED MARGIN FUNDING FROM THE NBFC ATTACHED TO THE BROKER AGE HOUSE AND HAD ALSO BORROWED CAPITAL FOR MEETING HER MARK TO MARKET LOSSES AND F OR PROVIDING MARGINS TO THE BROKERS. BESIDES THIS, THE BUSINESS OF SHARE TRADING, THE AS SESSEE WAS ALSO AN INVESTOR IN SHARES AND SECURITIES. THE ASSESSEE MAINTAINED SEPARATE SE TS OF RECORDS FOR HER SHARE TRADING AND INVESTMENT ACTIVITIES. SHARES ACQUIRED FOR TRADING PURPOSES WERE RECORDED AS PURCHASE AND SALE IN THE BOOKS OF ACCOUNTS AND SHARES ACQUIR ED FOR CAPITAL APPRECIATION WERE CLASSIFIED AS INVESTMENTS. THE ASSESSEE HAD MAINTAI NED COMPLETE DISTINCTION IN RESPECT OF HER SHARES AND DERIVATIVES TRADING BUSINESS AND SHARE INVESTMENTS ACTIVITY. THE ASSESSEE HAD INCURRED LOSSES IN RESPECT OF SHARE TR ADING BUSINESS AND HAD CARRIED FORWARD SUCH LOSSES AS BUSINESS LOSSES. THE LD. AO HOWEVER TREATED THE ACTIVITY OF SHARES TRADING AS INVESTMENT ACTIVITY AND DISALLOWED ALL E XPENSES RELATING TO SHARE TRADING BUSINESS AND COMPUTED THE DIFFERENCE IN PURCHASE AN D SALE PRICE OF SHARES AS SHORT TERM CAPITAL LOSSES. THE LD. CIT(A) OBSERVED THAT IT IS NOT THE FACT AS ALLEGED BY THE LD. AO THAT IN THE PRECEDING ASSESSMENT YEARS, THE ASSESSE E HAD SHOWN SUCH INCOME AS CAPITAL GAIN. HE OBSERVED THAT THE ASSESSEE HAD BEEN CARRYI NG ON THE BUSINESS PAST SEVERAL YEARS AND HAD ALWAYS CLASSIFIED SUCH ACTIVITIES AS HER BU SINESS INCOME ONLY. FINALLY SHE HAD ALSO INVESTED HER SHARES AND THE RESULTANT GAIN OR LOSSES ARE REFLECTED UNDER THE HEAD CAPITAL GAINS ONLY. HE FURTHER OBSERVED THAT SEPARA TE ACCOUNTS WERE MAINTAINED FOR BOTH THE ACTIVITIES BY THE ASSESSEE. HE APPRECIATED THE RELIANCE PLACED BY THE LD. AR ON THE CBDT CIRCULAR NO. 6/2016 DATED 29.02.2016 WHEREIN T HE BOARD HAD CLARIFIED THAT IN THE EVENT, WHEN THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PERIOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO THEM AS STOCKING TRADE, THE INCOME ARISING FROM TRANSFER OF SUCH SHARES/SECURITY WOULD BE TREATED AS ITS BUSINESS IN COME. THE LD. CIT(A) ON VERIFICATION ON PAST CONDUCT OF THE ASSESSEE IN THE INCOME TAX R ETURNS, SEPARATE BOOKS OF ACCOUNTS 3 MA NO. 97/KOL/2017 (A/O I.T.A NO. 1908/KOL/2016) SUPRIYA GUPTA A.YR.2009-10 3 MAINTAINED BY THE ASSESSEE FOR BOTH TRADING AS WEL L AS INVESTMENT ACTIVITIES BY THE ASSESSEE AND PLACING RELIANCE ON THE CBDT CIRCULAR DATED 29.02.2016(SUPRA) GRANTED COMPLETE RELIEF TO THE ASSESSEE AND ALLOWED THE APP EAL OF THE ASSESSEE. 3. WE FIND AS RIGHTLY POINTED OUT BY THE LD. AR THA T THE LD. AO HAD DISALLOWED THE CLAIM OF BUSINESS EXPENDITURE IN RESPECT OF THE ASS ESSEE TO THE TUNE OF RS. 26,28,874/- IN THE ASSESSMENT. BARRING THIS, THE LD. AO HAD ONLY T REATED THE BUSINESS LOSS INCURRED BY THE ASSESSEE AS SHORT TERM CAPITAL LOSS, WHICH MEAN S IT IS ONLY MERELY SHIFTING A HEAD OF INCOME. IT IS NOT IN DISPUTE THAT THE LD. AO HAD AL LOWED THE SHORT TERM CAPITAL LOSS TO BE CARRIED FORWARD TO SUBSEQUENT YEARS. HENCE, IN VIEW OF THESE FACTS AND FINDINGS, WE HOLD THAT THE TAX EFFECT ON THE DISPUTED ADDITION BEFORE US IN THE APPEAL PREFERRED BY THE REVENUE IS LESS THAN THE LIMIT PRESCRIBED IN THE CI RCULAR OF CBDT DATED 10.12.2015 WHICH HAS BEEN RIGHTLY RELIED UPON BY THIS TRIBUNAL WHILE DISPOSING OFF THE REVENUES APPEAL. HENCE, WE DO NOT FIND ANY MERIT IN THE MISC ELLANEOUS APPLICATION PREFERRED BY THE REVENUE BEFORE US. ACCORDINGLY, THE MISCELLANEO US APPLICATION OF THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 01.12.2017 SD/- SD/- [N.V.VASUDEVAN] [ M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.12.2017 SB, SR. PS 4 MA NO. 97/KOL/2017 (A/O I.T.A NO. 1908/KOL/2016) SUPRIYA GUPTA A.YR.2009-10 4 COPY OF THE ORDER FORWARDED TO: 1.ITO, WARD-30(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2,GARIAHAT ROAD(SOUTH), KOLKATA-700068. 2. SUPRIYA GUPTA, SOPAN APARTMENT, FLAT NO. 1D, 63B , BRIGHT STREET, KOLKATA-700019 3.CIT(A)- 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVA TE SECRETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHE S