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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, ACIT, Circle 26 (1), New Delhi (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 19.01.2017 passed by the Commissioner of Income-tax (Appeals)-33, New Delhi qua the assessment year 2010-11 on the grounds inter alia that :- “1. On the facts and in the circumstances of the case and law, the ld. CIT (A) has erred in deleting the addition of
Rs.4,24,77,684/- on account of long term capital gains treating as business income. 2. On the facts and in the circumstances of the case and law, the ld. CIT (A) has erred in deleting the addition of Rs.41,20,064/- on account of short term capital gains treating as business income.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is into the business of trading in shares, securities and debentures etc., declared income from Long Term Capital Gain (LTCG) to the tune of Rs.59,06,169/-. Assessing Officer (AO), declining the contentions raised by the assessee, made addition of Rs.4,24,77,684/- on account of LTCG. AO also made addition of Rs.41,20,064/- on account of Short Term Capital Gain (STCG) by treating the same as business income.
3, Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has deleted the aforesaid additions by partly allowing the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
GROUNDS NO.1 & 2 5. Ld. DR for the Revenue challenging the impugned order passed by the ld. CIT (A) relied upon the order passed by the AO and contended that additions made by the AO on account of LTCG and STCG by treating the same as business income is not liable to be upset by the ld. CIT (A). However, on the other hand, ld. AR for the assessee to repel the arguments addressed by the ld. DR for the Revenue contended that intention of the assessee in purchase of shares was never for realizing profits but for retention and appreciation of its value and further contended that this issue has already been decided in favour of the assessee by the coordinate Bench of the Tribunal in assessee’s own case for AYs 2006-07 & 2008-09 vide order dated 22.12.2015.
Perusal of the impugned order passed by the ld. CIT (A) goes to show that in para 5.5, ld. CIT (A) examined every minute detail of LTCG as well as STCG on sale of shares qua every transaction entered into by the assessee company during the year under assessment and reached the conclusion that 73.5% of the shares sold during the year were held by the assessee for more than one year and 26% shares were held for more than 3&1/2 years and only 4.2% shares sold during the year were retained for less than 60 days.
Issue at hand has been duly examined by the coordinate Bench of the Tribunal in assessee’s own case for AYs 2006-07 & 2008-09 (supra) and decided the issue in favour of the assessee.
The Tribunal further decided the assessee’s appeal for AY 2011-12 in vide order dated 07.02.2020 in its favour, by following the order of the coordinate Bench of the Tribunal in AYs 2006-07 & 2008-09 (supra). Ld. DR for the Revenue has failed to point out if facts of the year under consideration are distinguishable from the Assessment Years 2006-07 and 2008-09 decided by the Tribunal in favour of the assessee.
Hon’ble Delhi High Court in case of CIT vs. Ashok Vadia while dealing with identical issue held as under :-
“7. …………Suffice it to say that there is no single, universal standard to distinguish between the two. The Court must instead look into the nature of the shares, the volume and frequency of the transactions, the manner in which the shares have been shown by the assessee in its own books of account, dividend earned on the shares, if any. Rarely will any one factor be conclusive; the purpose of the exercise is to ascertain the true intention through a composite test. In some cases, volume becomes determinative; in others the duration of time it is held; at times it can be the manner it is shown in the books whereas in still, the use of borrowed funds could be decisive.”
So, keeping in view the factual aspect of the case that only fraction of 4.2% shares out of the total stock with the assessee company, have been sold during the year by retaining the same for less than 60 days and 73.5% of shares sold during the year were in the stock of the assessee for more than one year and 26% shares were held for more than 3&1/2 years and as such cannot be treated as business income on account of LTCG & STCG. So, following the order (supra) passed by the coordinate Bench of the Tribunal and facts & circumstances of the case thrashed by the ld. CIT (A) at length, no ground is made out to interfere into the order passed by the ld. CIT (A), hence grounds no.1 & 2 are determined against the Revenue and accordingly, the appeal filed by the Revenue is dismissed. Order pronounced in open court on this 17th day of February, 2021.