COMMISSIONER OF INCOME TAX-IV vs. JINENDRA S JAIN

TAXAP/2280/2009 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 2280 of 2009 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI HONOURABLE MS.JUSTICE HARSHA DEVANI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= COMMISSIONER OF INCOME TAX-IV - Appellant(s) Versus JINENDRA S JAIN - Opponent(s) ========================================= Appearance : MS PAURAMI B SHETH for Appellant MR BANDISH SOPARKAR with MRS SWATI SOPARKAR for Respondent ========================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS.JUSTICE HARSHA DEVANI Date : 17/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE AKIL KURESHI)

TAXAP/2280/2009 2/3 JUDGMENT 1. Revenue is in appeal against the judgement of the Tribunal dated 19.12.2008, raising the following questions for our consideration : “[A] Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by CIT (A) and thereby allowing the assessee's appeal against the additional income of Rs.55,00,000/- (out of Rs.1,10,00,000/- shared equally with Shri Rishabh G. Jain)? [B] Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by CIT (A) and thereby directing the Assessing Officer to re-compute the income by applying average net profit rate @ 12.36% on gross receipt of Rs.4,38,81,688/- to be shared by Shri Rishabh G. Jain and Shri Jitendra S. Jain in equal ratio, and to set the same against disclosed “undisclosed income” of Rs.50,00,000/?” 2. The questions essentially overlap and pertain to an addition of Rs.4.38 crores (rounded off) made by the Assessing Officer in the hands of the assessee. In case of one Rishabh G. Jain, brother of the respondent – assessee, we had under identical circumstances, an occasion to consider such a question in Tax Appeal No.113 of 2010 filed by the revenue. We had upheld the view of the Tribunal making following observations : “13. Question “D” pertains to addition of Rs.4.38 crores (rounded off) made by the Assessing Officer. Such addition was deleted by CIT (Appeals) on the ground that the transactions pertain to the business of the assessee and that out of such transactions, profit element of Rs.1.10 crores alone could be sustained. Such business being jointly carried on, the profit was equally divided between two partners. It was this view that the Tribunal upheld. The Tribunal concluded that looking to the

TAXAP/2280/2009 3/3 JUDGMENT documents as well as the nature of receipts, the same must be held to be on account of business transactions and therefore, the revenue authorities were justified in considering the receipts as business turnover. The Tribunal also upheld CIT (Appeals)'s decoding of the documents. However, looking to the totality of the facts and circumstances, the Tribunal agreed that the assessee's contention that the transactions are business transactions and that, therefore, only the profit element embedded in such transactions should be charged to tax. 14. CIT (Appeals) as well as the Tribunal having given cogent reasons and having taxed income element of such transactions properly as business transactions, no question of law arises.” 3. The issue being identical, this tax appeal is dismissed. [AKIL KURESHI, J.] [HARSHA DEVANI, J.] parmar*