COMMISSIONER OF INCOME TAX, KOLKATA-II, KOLKATA vs. M/S. M. PRASAD & CO. LTD.

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ITA/87/2010HC CalcuttaWBCHCO001304201016 September 2022Bench: HON'BLE JUSTICE T. S. SIVAGNANAM,HON'BLE JUSTICE SUPRATIM BHATTACHARYA2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the tax effect involved in the appeal was much less than the threshold limit fixed by the CBDT Circular. Consequently, the Court held that the Revenue could not pursue the appeal on merits. The appeal was disposed of on the ground of low tax effect, and the substantial question of law was left open. No finding was given on the merits of whether the sum was short-term capital gains or business income.

What were the facts?

The Revenue, Commissioner of Income Tax, Kolkata-II, Kolkata, filed an appeal under Section 260A of the Income Tax Act against an order dated October 9, 2009, passed by the Income Tax Appellate Tribunal, "C" Bench, Kolkata. The appeal pertains to Assessment Year 2005-06. The dispute involves a sum of Rs. 1,55,95,911 realized on the sale of bonus shares of Jubillant Organosis Ltd. The Tribunal had held that this amount was in the nature of short-term capital gains, not business income. The appeal was admitted on a substantial question of law concerning this classification.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the sum of Rs. 1,55,95,911 realized on sale of bonus shares of Jubillant Organosis Ltd. received during the relevant year, was in the nature of short-term capital gains and not business income? Assessee's contentions: Not recorded. Revenue's contentions: The Revenue argued that the Tribunal erred in classifying the income from the sale of bonus shares as short-term capital gains instead of business income. The substantial question of law admitted by the High Court reflects this contention.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

O-115 ITA/87/2010 IN THE HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE COMMISSIONER OF INCOME TAX, KOLKATA – II, KOLKATA -Versus- M/S. PRASAD AND CO. LIMITED Appearance : Mr. Tilak Mitra, Adv. . . . for the appellant. Mr. Anurag Bagaria, Adv. ...for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE SUPRATIM BHATTACHARYA Date : 16th September, 2022. The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, is directed against the order dated 9th October, 2009 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata (the Tribunal) in ITA No.1011/Kol/2008 for the assessment year 2005-06. The appeal was admitted on the following substantial question of law: (i) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the sum of

2 Rs.1,55,95,911/- realised on sale of bonus shares of Jubillant Organosis Ltd. received during the relevant year, was in the nature of short term capital gains and not business income ?” We have heard Mr. Tilak Mitra, learned standing counsel for the appellant/revenue and Mr. Anurag Bagaria, learned advocate for the respondent/assessee. From the substantial question of law which has been admitted it is seen that the tax effect involved in this appeal is much less than the threshold limit fixed by the Circular issued by the CBDT. Therefore, the revenue cannot pursue this appeal. Accordingly, the appeal (ITA/87/2010) stands disposed of on the ground of low tax effect and the substantial question of law is left open. (T.S. SIVAGNANAM, J.) (SUPRATIM BHATTACHARYA, J.) S.Das/As.

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