ACIT 19(2), MUMBAI vs. PHEROZ R. MODY, MUMBAI

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ITA 2084/MUM/2018Status: DisposedITAT Mumbai31 October 2019AY 2009-106 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in treating the income from sale of securities as capital gains, following its own previous decision in the assessee's own case for an earlier assessment year. The Tribunal found no change in facts to warrant a different conclusion.

What were the facts?

The assessee declared income from trading in derivatives. The Assessing Officer treated capital gains/losses on sale of securities as business income and made additions. The CIT(A) partly allowed the assessee's appeal, treating the gains/losses as capital gains.

What were the issues?

Whether gains/losses on sale of securities should be treated as capital gains or business income, and whether the principle of consistency applies based on earlier ITAT decisions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 94(7)

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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI

Before: SHRI S. RIFAUR RAHMAN (AM) & SHRI RAM LAL NEGI (JM)

For Appellant: Shri Pradeep Sharma (AR)
For Respondent: Shri Kumar Padmapani Bora (DR), Shri Pradeep Sharma (AR)
Hearing: 18/09/2019Pronounced: 31/10/2019

O R D E R

PER RAM LAL NEGI, JM

1.

This appeal has been filed by the revenue against the order dated 22.01.2018 passed by the Commissioner of Income Tax (Appeals)-6 (for short ‘the CIT(A), Mumbai, for the assessment year 2009-10, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (for short the ‘Act’).

2.

The assessee engaged in the business of trading in derivatives and employed with Bombay Real Estate Development Co. Ltd. filed its return of income for the assessment year under consideration declaring total income of Rs. 71,61,030/- Since the case was selected for scrutiny, the AO issued notice u/s 143(2) and 142(1) of the Act. In response thereof, the authorized representative of the assessee appeared before the AO, furnished the details and discussed the case. The AO after hearing the representative of the assessee determined the total income of the assessee at 71,61,031/-, however, made disallowance of Rs.56,10,337/- claimed by the assessee as PMS fees against short term capital loss, made addition of Rs. 78,783/-by applying section 94(7) Assessment Year: 2009-10 of the Act. The assessee challenged the assessment order before the CIT(A). The Ld. CIT(A) partly allowed the appeal of the assessee. The revenue is in appeal against the findings of the Ld. CIT(A). 3. The revenue has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:-

“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in accepting the contention of the assessee in treating the capital gains/loss incurred on sale of securities of Rs. 6,65,44,965/- as LTCG/STCG as against business income as held by the Assessing Officer.

2.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in allowing the assessee’s appeal for the sake of principal of consistency and principles of judicial discipline in spite of the fact that the Assessing Officer has clearly elaborated in the assessment order that the assessee has been trading in shares and not only investing as can be observed from the factors such as holding period of shares, frequency of transactions of shares, motive of the assessee to earn quick profit”.

4.

At the outset, the Ld. counsel for the assessee submitted before us that the issue raised by the revenue is covered in favour of the assessee by the orderv of the Tribunal rendered in assessee’s own case for the assessment year 2007-08. The Ld. counsel further submitted that since, the Ld. CIT(A) has decided the identical issue in the present case by following the decision of the Tribunal, there is no infirmity in the order of the Ld CIT(A) to interfere with the same.

5.

The Ld. DR on the other hand, admitted that the ITAT has decided the identical issue in favour of the assessee in assessee’s own case for assessment year 2007-08, however, supporting the assessment order passed by the AO, submitted that since the principle of estoppel is not applicable in the proceedings under the Income Tax Act, the assessee cannot take benefit of the orders pertaining to the earlier assessment years. Assessment Year: 2009-10 6. We have heard the rival submissions and carefully gone through the material on record including the cases relied upon by the authorities below, in the light of the rival contentions of the parties. As pointed out by the Ld counsel, the Ld. CIT(A) has decided the issue in favour of the assessee by following the dwcision of the Tribunal rendered in assessee’s own appeal ITA No. 4572/Mum/2040. The findings of the Ld. CIT(A) read as under :

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