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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: The Present Appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)- 35, dated 24.12.2013 for A.Y. 2010-11 on the following grounds of appeal.
(A.Y. 2010-11) ACIT vs. Rajesh D. Nandu 1. “On the facts and circumstances of the case and in law, the Learned CIT(A) erred in holding the income of the asessee from share transaction as profits from capital gain and not as Business income. 2. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in not appreciating the fact that in the proceedings years also i/e/ A.Y.
2005-06 to 2009-10, the major activity of the assessee is share trading and for A.Y. 2008-09 the assessee has accepted the fact and withdrawn the appeal on this ground. 3. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in deleting the disallowance Rs.84,13,028/- which was made u/s 14A r.w.r.8D.”
The brief facts of the case are that the return of income declaring total income of Rs.86,10,747/- was e-filed on 21.09.2010. The case was selected for scrutiny through CASS and accordingly required statutory notices u/s 143(2) of the Act were issued and served upon the assessee. After considering the reply of the assessee, it was held by the AO that the short term capital gain of Rs.57,196,225/- and long term capital gain of Rs.74,44,211/- amounting to Rs.6,46,40,436/- is to be taxed as income from business or profession. Apart from that disallowance of Rs. 84,13,028/- u/s 14A r.w. Rule8D was made while passing order of assessment.
(A.Y. 2010-11) ACIT vs. Rajesh D. Nandu
Aggrieved by the order of the AO, assessee filed the appeal before CIT(A) and the CIT(A) after considering the case of the assessee had allowed the appeal vide its order dated 24.12.13.
3.1 Aggrieved by the order of CIT(A) the revenue filed the present appeal before us on the grounds mentioned herein above.
Ground No. 1,2 &3
4. Since all the grounds raised by the assessee are inter-connected and inter- related therefore we thought it fit to dispose off the same through the present common order.
4.1 At the very outset ld. DR submitted that the assessee had offered Rs.10,108,850/- for taxation under the head short term capital gain after setting off the brought forward loss of Rs.47,087,374/- against the total short term capital gain of Rs.57,196,225/- through share transaction. The assesse had also claimed exempt income towards long term capital gains of Rs.74,44,211/-. While supporting the order of the AO it was submitted that the AO has rightly noted that the activity undertaken by the assessee was very high as the assessee was (A.Y. 2010-11) ACIT vs. Rajesh D. Nandu consistently engaged in the business of dealing in shares in the preceding A.Ys., i.e. 2005-06 to 2009-10. Therefore, considering the facts and circumstances of the case the AO has rightly treated the assessee’s income shown as capital gains to be a income from business. The ld. DR further submitted that during the course of assessment proceeding it was noticed by the AO that the assessee had debited a sum of Rs.2,17,57,184/- on account of interest payment. In this connection no evidence was submitted by the assessee and since the assesse has shown exempt income of Rs.40,14,086/-, therefore disallowance of Rs.84,13,028/- was rightly made u/s 14A read with Rule 8D.
On the contrary ld. AR representing the assessee submitted that the principles of res judicata or estoppels by record has no application to the decisions of income tax authorities. Income tax authorities are not courts, and secondly, the purpose and subject matter of the proceedings in a subsequent year are not the same as those in the previous years and therefore an assessment for a particular year is final and conclusive between the parties only in relation to that year. It was further argued by ld. AR that the decisions given in an assessment for an earlier year are not binding either on the assessee or on the Department in subsequent years. It was further pointed out that the AO in the present case has himself admitted that the activities undertaken by the assessee was low which shows that (A.Y. 2010-11) ACIT vs. Rajesh D. Nandu the underlying facts have undergone major changes and as such rule of consistency was not warranted. As per ld. AR, assessee is an ‘investor’ and not a trader as assumed by the AO. Ld. AR further relied upon the judgement rendered by the Hon’ble Supreme Court in the case of ‘CIT vs. Holck Larsen’ (160 ITR67)(SC)
And submitted that the Hon’ble Supreme Court has laid down adequate guidelines to determined the issue involve in the case. Applying the principles as well as guidelines laid down by the Hon’ble Supreme Court in the aforesaid mentioned case the asessee is an ‘investor’ only.
5.1 ld. AR further relied upon the judgement rendered by the Hon’ble ITAT in the case of ‘Gopal Purohit vs. JCIT’ (29 SOT 117) (Mum) where the ITAT has also considered all the decision and CBDT Circular in this regard and since the activities of the assessee are similar to the facts of the case relied upon by the ld. AR. Hence, ld. AR supported the orders passed by the CIT(A) and requested to dismiss the present appeal filed by the revenue at the end ld. AR further relied upon the following judgements.
Ms. Karishma V. Shah v/s Addl. CIT (ITA No. 2735/Mum/2009, A.Y. 2005-06, dated 23-7-10).
2. Mr. Nehal V. Shah v/s ACIT (ITA No. 2733/Mum/2009, A.Y. 2005-06,
dated 15-12-10).
(A.Y. 2010-11) ACIT vs. Rajesh D. Nandu 3. Vinod K. Nevatia v/s ACIT (ITA No. 6556/Mum/2009, A.Y. 2005-06, dated
3-12-10).
CIT v/s PNB Finance & Industries Ltd. (Delhi High Court, ITA No.
306/Mum/2010, dated 18-10-10).
5. Dy. CIT v/s SMK Shares & Stock Broking Pvt. Ltd. (ITA No.
799/Mum/2010, A.Y. 2005-06, dated 24-11-10).
6. Management Structure & System Pvt. Ltd. v/s ITO (ITA No.
6966/Mum/2007, dated 30-04-10).
7. Smt. Sadhana Nabera v/s ACIT (ITA No.2566/Mum/2009, dated 26-3-10)
Sarnath Infrastructure (P) Ltd. v/s ACIT 124 ITD 71 (Luck.).
We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by the lower authorities and after considering the same, we found that since the ld. CIT(A) has based his entire findings by passing a reasoned and speaking order and also by taking into consideration the principles of consistency as similar situation was found in the case of Rajesh. D. Nandu, an individual in which similar issue was decided in favour of the assesse vide order dated 12.2.2010 and 11.7.2013. Subsequently those orders were also upheld by the ITAT (Mum) Bench in (A.Y. 2006-07) and in ITA NO. 3384/Mum/2010 (A.Y. 2007-08).
(A.Y. 2010-11) ACIT vs. Rajesh D. Nandu And since the facts of the present case are identical therefore CIT(A) has rightly held that there is no reason to take difference decision in the case of HUF and CIT(A) has also followed the case of ‘Gopal Purohit’. In view of the above, we are of the view that the order passed by the learned CIT(A) do not require any interference from us therefore, we uphold the same.
In the result, the Revenue’s appeal is dismissed. Order pronounced in the open court on 2nd March, 2016
Sd/- Sd/- (D. Karunakara Rao) (Sandeep Gosain) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated :02.03.2016 Ps. Ashwini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File आदेशानुसार/ BY ORDER,