DCIT, CIRCLE-3, KOLKATA, KOLKATA vs. M/S MEGHNA COMMERCIAL CO. LTD., KOLKATA

ORDER Per Shri M. Balaganesh, AM:

This appeal by revenue is arising out of order of CIT(A)-I, Kolkata vide Appeal No. 308/CIT(A)-I/Circle-3/2008-09 dated 08.05.2014. Assessment was framed by DCIT, Circle- 3, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2006-07 vide his order dated 16.12.2008.

2.1. The brief facts of this issue are that during the assessment proceedings the AO though elaborately discussed about the treatment of long term and short term capital gains of Rs.99.05.050/- and Rs.21,88,420/- respectively to be treated as trading profits of the assessee by construing the assessee as a trader in shares, did not resort to make any addition thereon in the computation of tax liability. Since the assessee was aggrieved to be construed as trader in shares, the assessee contested the same before the Ld. CIT(A) who concluded that no addition was made by the AO and even on facts, the assessee needs to be treated only as an investor and accordingly, the gains derived thereon in the sums of Rs.99,05,050/- 2.2. Aggrieved, the revenue is in appeal before us on the following grounds: “

1. Whether the Ld. CIT(A) has erred in facts and law by holding that the amount of Rs.99,05,050/- and Rs.21,88,420/- are long term and short term capital gains respectively and not trading profits.

2. Whether the Ld. CIT(A) has erred in facts and law by holding that the profits from the share investment is capital gain while actually the assessee is into the primary business of share trading and has high frequency and multiplicity of operation from the same Demat Account of then share investments and clear the intention of the assessee was to earn profits and not earning of dividends and are actually trading profits.”

2.3. The ld DR was directed to bring the assessment records in this regard to verify whether any action u/s. 154 of the act was resorted to by the AO for treating the assessee as a trader and making the additions in respect of these gains as trading profits which would have consequential impact in the tax liability of the assessee. Accordingly, the case was adjourned on several occasions. On the final date of hearing on 22.11.2016 the Ld. DR produced a letter from the AO expressing the inability to produce the relevant assessment records.

2.4. We have heard rival submissions and gone through the facts and circumstances of the case. The facts stated hereinabove remain undisputed and hence, the same are not reiterated for the sake of brevity. During the course of hearing the Ld. DR filed a letter dated 16.11.2016 from the AO expressing the inability to produce the assessment records. The Ld. AR also argued that no action u/s. 154 of the Act was resorted to by the revenue in the instant case. In the absence of any contrary evidence to this produced by the revenue, we do not find any merit in the grounds raised by the revenue and do not find any infirmity in the order of the Ld. CIT(A) and hence, the appeal of revenue is dismissed.

3. In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 02.12.2016

Sd/- Sd/- (S.S. Viswanethra Ravi) (M. Balaganesh) Judicial Member Accountant Member Dated : 2nd December, 2016 Jd.(Sr.P.S.)

Copy of the order forwarded to: