DCIT 25(1), MUMBAI vs. NARENDRA S. SHAH, MUMBAI

Dy. Commissioner of Income Tax, Shri Naendra S. Shah Pratyakshkar Bhavan, R. B-10, Blue diamond Chs Ltd. No.202, 2nd Floor, Bandra Kurla Vs. C.S. Complex, RD No.4 Complex, Bandra (E) Anandn Nagar Dahisar (E) Mumbai-400 051 Mumbai-400 068 Appellant .. Respondent PAN No. AANPS0866M Revenue by .. Shri Suman Kumar, DR Assessee by .. Shri Naveen Kumar Mishra, AR Date of hearing .. 07-03-2017 Date of pronouncement .. 07-03-2017 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the Revenue is arising out of the order of CIT(A)-35, Mumbai, in appeal No. CIT(A)-35/ACIT.25(1)/ITA.17/13-14 dated 14-02-2014. The Assessment was framed by ACIT Circle 24(1), Mumbai for the A.Y. 2008- 09 vide order dated 25-03-2013 u/s 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in treating the income from sale of shares as Short Term Capital Gain as against the business income as the assessee has himself shown business loss from sale of shares in AY 2009-10 and assessee was engaged in Trading activities of shares.”

Shri Naendra S. Shah; A.Y:08-09 3. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the AO treated the short term capital gain of Rs. 52,82,574/- as business income. Aggrieved assessee preferred the appeal before CIT(A) who treated the gain as capital gains by observing as under: -

“7C . Regarding the fourth ground of appeal, I have gone through the facts and it is seen from the Assessment Order that the A.O. has treated the Short Term Capital Gain of Rs.52,84,574/- as business income by stating that the volume and nature of transactions as discussed hereinabove clearly indicates and establishes that the delivery based transactions of shares is nothing but trading activity of the appellant during the year under consideration and the income declared under the head capital gain in respect of certain transactions of shares unlike the other transactions of the similar nature needs to be termed as trading in shares liable to be taxed as business income and not income under the head capital gains. The short term capital gain of Rs.52,82,574/- is taxed as income from business or profession. However, after going through the contention of the appellant, it is seen that the appellant has been regarding the said income as income from capital gain and this position has also been confirmed by my predecessor in the order passed for A.Y;2009-10. In any case, I also find merit in the other arguments advanced by the appellant that the AO has made double addition of the same amount firstly by making separate addition in trading profit and then by taxing in profit and loss account. The computation of the total income provides evidence to this fact and therefore the appellant gets relief on this ground.”

Aggrieved Revenue came in second appeal before us. 4. Now, before us the learned Sr. DR stated that the assessee himself has shown business losses from sales of shares in AY 2009-10 and admitted that the Page 2 of 3 Shri Naendra S. Shah; A.Y:08-09 assessee was engaged in trading activities of shares. When a query was put, the learned Counsel for the assessee fairly agreed that the appeal is to be allowed as the assessee’s income from sales of shares is business income. In term of concession given by the learned Counsel for the assessee and also the fact that the assessee himself is declaring the profit arising out of sale of shares as business income or loss consistently, the same is to be followed. Accordingly, we allow the appeal of Revenue.