Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, BENCH ‘A’ KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM & Shri S.S.Viswanethra Ravi, JM ]
This is an appeal by the revenue against the order dated 03.10.2016 passed by C.I.T-(A)-4, Kolkata for A.Y.2011-12. 2. Ground Nos. 1 and 2 raised by the revenue are relating to the only issue i.e. questioning the action of CIT(A) in allowing the deduction of business loss as against the finding of the AO in the facts and circumstances of the case.
The ld. DR relied on the order of the AO. The ld. AR submits that the issue is covered by the order dt. 29.03.2017 of this Tribunal in assessee’s own case for A.Y.2009-10 and referred to para no.4 of the said order and argued that the Tribunal held the stocks were shown as stock-in-trade which has been accepted by the AO for A.Y.2009-10 vide its order passed u/s 143(3) of the Income Tax Act, 1961 (Act). The ld. AR further submits that the CIT(A) for A.Y.rs. 2009-10 to 2010-11 held that the assessee was in the business trading of shares and cannot be said there was no business due to the fact that there was lull in the share market and the income of the assessee is to be treated as business. The ld. AR submits that the issue involved in M/s Pressman Realty Ltd. A.Y.2011-12 A.Y.2009-10 and in the year under consideration are identical and supported the order of CIT(A).
Heard the rival submissions and perused the records. During the course of assessment proceedings, it is noted that the assessee claimed business loss to an expenditure of Rs.1,27,82,705/-. The AO on examination of record in the profit and loss account of the assessee was of the opinion that the assessee has no business during the year and the major income as earned by the assessee was from house property and service charges connected thereto. The AO held that the major revenue @ 83% as earned by the assessee from service charges and computed the income of the assessee from house property and short term capital gain and denied the business loss as claimed by the assessee at Rs.1,27,82,705/- vide his order dated 20.02.2014 u/s 143(3) of the Act. Before the CIT(A) it was contended that the AO allowed expenditure that has been incurred by the assessee in A.Y.2009-10 and 2010-11 as deduction. The AO without following the consistency that has been followed in the earlier years arbitrarily computed the income of the assessee on different heads as against the claim of the assessee. The CIT(A) considering the submissions of the assessee along with the assessment orders and by following the earlier orders of first appellate authority for A.Y.2009-10 and 2010-11 allowed the business loss and computed the income of the assessee from business. We note that the order of CIT(A) for A.Y.2009-10 was challenged before the Tribunal and the Tribunal considered the treatment of stocks as held by the assessee as stock-in-trade and upheld the order of CIT(A) in computing the income of the assessee from business. The relevant portion of which is reproduced herein below :- “4. We have heard rival submissions. and perused the material available on record. We note that the five scrips .in question were purchased by the assessee on 14.03.2008 and were shown by the assessee as stock in trade which has been accepted by the AO in the previous assessment year done u/s 143(3) of the Act and it has been taken as the opening stock in trade on 01.04.2008. When the AO has accepted in the previous assessment year that the scrips in question as stock- in-trade, the AO without valid reason cannot hold that the opening stock in trade has to be treated as investment. The Ld. AR drew our attention to the scrutiny assessment carried out by the AO u/s. 143(3) of the Act for the AY 2008-09 to support the said fact. The Ld. CIT(A) has taken note of the fact that the assessee M/s Pressman Realty Ltd. A.Y.2011-12
has purchased and sold the trading shares in question and have routed the transaction through P&L Account. The assessee had shown the shares as stock in trade and the AO u/s. 143(3) of the Act for AY 4008-09 has accepted it as stock in trade and. therefore, the assessee has shown the scrips in question as opening stock in trade as on 01.04.2008. Since there is no change in facts from the earlier assessment year and when in the earlier year AO is permitting the treatment given by the assessee for the very same shares as stock-in-trade, then in the instant assessment year without change in the facts or law, the AO ought not to have treated the shares as investment and not as stock-in-trade. The CBDT Circular No. 6 of 2016 on 29.02.2016 has noted the dispute which consistently arose in respect to treatment of trading or shares as business or investment in shares. From a perusal of para 3(a) of the said circular, we note that 'the CBDT has given clear direction that where the assessee has treated the listed shares and securities as stock-in-trade. irrespective or the period or holding, the income arising from transaction of such shares/securities would be treated as its business income. The only condition expressed by the CBDT Circular is that once the assessee has taken a stand in an assessment year that he is trading in shares as business, or as investment, then he should not change, which means that the assessee should be consistent. We note that the assessee in AY 2008-09 'has treated the said five scrips purchased as stock in trade which was accepted by the AO and the same was the opening stock for the instant assessment year i.e. as on 01. 4.2008, therefore, as per the Circular of the CBDT, since the assessee has taken a stand that the shares are stock in trade then irrespective of the time of holding. the income arising from the transaction of such shares needs to be treated as business income. Therefore, the ld. CIT(A\) has rightly treated the same as business income and we do not find any infirmity in the order of the ld. CIT(A) and, therefore. we dismiss this ground of appeal of the revenue.
5. In view of the same we do not find any infirmity in the order of CIT(A) and accordingly the appeal is dismissed. Ground nos. 1 and 2 raised by the revenue are dismissed.
In the result the appeal of the revenue is dismissed. Order pronounced in the open Court on 13.04.2018.