Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Mahavir Singh & Shri Manoj Kumar Aggarwal
Date of Hearing :04.10.2017 Date of Pronouncement : 18.10.2017 O R D E R
Per Mahavir Singh, Judicial Member
This appeal by Revenue is arising out of the order of the Commissioner of Income Tax (Appeals) – 30,Mumbai [in short CIT(A)] in appeal No.CIT(A)- 30/CIT(OSD)/19(2)/47/2014-15, dated 30.10.2015. The assessment was framed by the Commissioner of Income Tax (OSD) or Assessing Officer, Mumbai, [in Short CIT(A) or AO] for Assessment Year 2011-12, u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), vide order dated 12.03.2014.
The first issue in this appeal of Revenue is against the order of the CIT(A) deleting the addition made by the Assessing Officer on account of excess of sale of Smt Mala Ravi Chadha shares as business income inspite of Short term capital gain declared by the assessee. For this the Revenue has raised following ground no.1:
“1. Whether on the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in treating the transaction of purchase and sale of shares as Short Term Capital Gain instead of Business Income?”
Briefly stated facts of the case are that, the assessee is an individual deriving income from business, capital gains and other sources. During the course of assessment proceedings, the Assessing Officer observed that the assessee has disclosed Short term capital gains from sale of shares at ` 77,81,586/- and also claimed dividend income of ` 6,90,620/-. The Assessing Officer noted details of transactions of sale and purchase of shares script wise and holding period, which is given in assessment order as under:
Sr. Name of Scripts Date of Date of sale No. of days No. purchase 1 Kotak Bank 06.12.2010 27.12.2010 22 2 Mundra Port & SEZ Ltd 11.10.2010 01.11.2010 22 3 Ranbaxy Laboratories Ltd 04.01.2011 31.01.2011 28 4 Benchmark Liquid Bees 24.08.2010 31.08.2010 7 5 Benchmark Liquid Bees 24.08.2010 06.09.2010 14 6 Benchmark Liquid Bees 24.08.2010 13.09.2010 21 7 Benchmark Liquid Bees 24.08.2010 20.09.2010 28 8 Benchmark Liquid Bees 20.12.2010 05.01.2011 17 In view of the above, the Assessing Officer noted that total sale of shares made by the assessee was ` 6,87,13,813/- and purchase was made for a sum of ` 6,06,69,094/- resulting into Short term capital gain of ` 77,41,516/-. According to the Assessing Officer there were thirteen transactions in which holding of shares
Smt Mala Ravi Chadha was less than fifty days and seventeen transactions in which holding of shares was between fifty one to hundred days. Even there are holdings for less than a month as given in the above table. According to the Assessing Officer the assessee is carrying on systematic activity of sale and purchase of shares and, hence, he is in the business of sale and purchase of shares. Hence, he treated the surplus arising out of sale and purchase of shares as business income instead of Short term capital gains declared by the assessee. Aggrieved, the assessee preferred appeal before the CIT(A), who after considering the submissions of the assessee and details of transactions noted that the assessee has made investment in shares and entire investment is shown as investment in balance sheet and not as stock in trade. He also noted that the assessee has taken delivery of shares; no doubt the holding period is between seven to hundred days in all the transactions of shares. After going through these details, the CIT(A) directed the Assessing Officer to treat the profit earned from sale of shares as Short term capital gain instead of business income. For this observed in para 5.4 as under:
“5.4 Perused the submissions and records and found that the appellant is investing in shares over the years and consistently treating the entire amount put in shares as ‘investment’ and not ‘stock-in-trade’ and offering the income under the head 'capital gains’. On some of the investments made the appellant is receiving dividend which shows that the investment in some cases are kept for a longer period of lime. In a very few transactions where the appellant held the shares for less than 50 days and also the assessee has not resorted to churning of shares of repetitive transactions as seen from the tables furnished in the submissions. In many cases there is a Smt Mala Ravi Chadha long gap between purchase and sale of shares. While rejecting the claim of the appellant that the income is STCG for the Assessment Year under consideration, the Assessing Officer has mainly relied on the findings/conclusions drawn in the assessment year 2008- 09 which has now been reversed by the Hon’ble Tribunal in their order mentioned above. Since nothing has been brought on record to show that the factual situation for the assessment year under appeal differsfrom that existed in the A.Y, 2008-09, I am constrained to follow the decision of the ITAT on the issue; Accordingly, respectfully following the decision of the ITAT in appellant's own case for the A.Ys 2008-09, the Assessing Officer is directed to treat the profit earned on sale of shares as 'Short, term Capital Gains'. Consequently, the treatment of such income by the Assessing Officer as 'Business Income' is reversed. The appellant succeeds in grounds of appeal No. 1(1) to 1(5).”
Aggrieved, the Revenue is in second appeal before the Tribunal.
We have heard the learned Senior Departmental Representative (DR) and gone through the facts and circumstances of the case. The learned DR merely relied on the assessment order. We find that above facts are undisputed that the assessee has shown these shares as investment in balance sheet and not as stock in trade. Even the shares are taken as delivery and kept in Demat account. The assessee has kept these shares and holding period is between seven days to hundred fifty days. In similar circumstances, the Tribunal in assessee’s own case for Assessment Year 2008-09, has treated the profit from sale of shares as Short term capital gain and there is no change in facts and circumstances. We find that Smt Mala Ravi Chadha the Tribunal in assessee’s own case for Assessment Year 2008-09,in Income Tax Appeal No. 1672/Mum/2012, which was followed in AY 2010-11 in vide order dated 10-02-2017 has held as under:
“On appraisal of the above said finding, it is not in dispute that the income of the assessee has been treated as Short Term Capital Gain by observing his transaction on record specifically in the circumstances when there is no change of business of the assessee. The facts and circumstance of the case is not quite different. The transaction of the assessee was being dealt by the revenue as Short Term Capital Gain instead of income from business. The order passed by the CIT(A) for the A.Y.2008-09 dated 12.12.2011 has been confirmed by the Hon'ble Income Tax Appellate Tribunal in the assesses own case in dated 11.09.2013 titled as Assistant Commissioner of Income Tax 16(2) Vs. Smt. Mala R. Chadha. No material was produced to differentiate the facts and circumstances of the present case. In view of the said circumstances we are of the view that the CIT(A) has passed the order judiciously and correctly which is not required to be interfere with at this appellate stage.”
Respectfully following the decision of the Tribunal and going through the facts as narrated above, we also treat the profit earned from sale of shares as Short term capital gain. This ground of the Revenue is dismissed.
The next issue in this appeal is against the order of CIT(A) in allowing Short term capital loss. For this the Revenue has raised following ground no. 2:-
Smt Mala Ravi Chadha “2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the claim of assessee for set off of Short Term Capital Loss of Rs.1994389/- pertaining to A.Y. 2009-10 against the S.T.C.G of assessment year 2011-12.”
We have heard the learned Senior Departmental Representative and gone through the facts and circumstances of the case. We find that the assessee has claimed set off of Short term capital loss of ` 19,94,389/- pertaining to Assessment Year 2009-10 against the capital gains earned during the year under consideration. We find that the Assessing Officer has simply ignored the claim made in the return of income filed by the assessee while computing tax on total income for the reason that the Assessing Officer has treated Short term capital gain as business income and carry forward of loss cannot be set off against current years Short term capital gain. We find that the CIT(A) has simply directed the Assessing Officer to verify the claim and allow the same. We find no infirmity in the order of the CIT(A) and, hence, the same is confirmed on this issue. Thus, ground no.2 is also dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on this day of 18th October 2017.