The ACIT,, Ratlam v. Shri Ravi Kumar Kataria, Ratlam

ITA 109/IND/2009 | 2005-2006
Pronouncement Date: 05-05-2010 | Result: Dismissed

Appeal Details

RSA Number 10922714 RSA 2009
Assessee PAN RESIN2003A
Bench Indore
Appeal Number ITA 109/IND/2009
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant The ACIT,, Ratlam
Respondent Shri Ravi Kumar Kataria, Ratlam
Appeal Type Income Tax Appeal
Pronouncement Date 05-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 05-05-2010
Date Of Final Hearing 03-05-2010
Next Hearing Date 03-05-2010
Assessment Year 2005-2006
Appeal Filed On 02-03-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO. 109/IND/2009 A.YS. 2005-06 ASSTT. COMMISSIONER OF INCOME TAX RATLAM APPELLANT VS SHRI RAVI KUMAR KATARIA RATLAM PAN ACMPK-3617P RESPONDENT APPELLANT BY : SMT. APARNA KARAN SR. DR RESPONDENT BY : SHRI P.D. NAGAR O R D E R PER BENCH THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDER DATED 4.12.2008 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) UJJAIN ON THE GROUND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN FACTS AND ON LAW BY NOT APPR ECIATING THE FACTS THAT THE PURCHASE OF SHARES OF M/S OFF SHORE FINVEST LIM ITED DOES NOT FALL WITHIN THE AMBIT OF EXPLANATION TO SECTION 10(36) O F THE ACT BY PLACING RELIANCE ON THE CBDT CIRCULAR NO. 704 DATED 28.4.19 95. 2 DURING HEARING OF THIS APPEAL WE HAVE HEARD LEARNE D REPRESENTATIVES FROM BOTH THE SIDES. THE CRUX OF A RGUMENTS ON BEHALF OF THE REVENUE IS THAT FIRSTLY NO CONFIRMATION WAS FIL ED BY THE ASSESSEE AND THE BALANCE-SHEET WAS NOT FILED ALONG WITH THE RETU RN/DURING ASSESSMENT PROCEEDINGS. THE ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND IT WAS ASSERTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE PAYMENTS ARE EVEN DULY APPEARING IN THE BOOKS OF ACCOUNTS OF THE BROKERS DMAT COUNTER FILE WAS DULY FILED BEFORE THE ASSESSING OF FICER SHARES WERE LISTED IN THE CALCUTTA STOCK EXCHANGE SHARES WERE SOLD THROUGH DMAT ACCOUNT AND THE SAME WERE DULY SHOWN IN THE BALANCE -SHEET. 2. WE HAVE CONSIDERED THE ASSERTION MADE BY THE LEA RNED RESPECTIVE COUNSELS AND PERUSED THE MATERIAL AVAILABLE ON FILE . BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED EXEMPTION U/S 10(36) ON PROFIT DERIVED FROM LONG TERM CAPITAL GAIN ON THE SALE OF SHARES. THE ASSES SEE CLAIMED THAT HE PURCHASED 12 500 SHARES @ RS. 5.32 EACH ON 27.4.200 3 THROUGH V.K. SINGHANIA & COMPANY STOCK AND SHARE BROKERS OF M/ S OFFSHORE FINVEST LIMITED. THE ASSESSEE CLAIMED THAT THESE SHARES WER E SOLD ON DIFFERENT DATES AT THE RATE OF RS.169 PER SHARE THROUGH SIKAR IA SHARES & STOCK BROKING SERVICES PRIVATE LIMITED. FOR ITS CLAIM TH E ASSESSEE SUBMITTED COPY OF CONTRACT/BILL ISSUED BY V.K. SINGHANIA & CO MPANY FOR PURCHASE AND SIKARIA SHARES & STOCK BROKERS SERVICES PVT. LT D. FOR SALES. THE ASSESSEE ALSO SUBMITTED COPY OF SHARE CERTIFICATES EVIDENCING TRANSFER OF 3 SUCH SHARES IN THE NAME OF THE ASSESSEE ON 6.2.2004 . AS PER THE REVENUE NO CONFIRMATION WAS FILED BY THE STOCK BRO KERS CONSEQUENTLY THE CLAIM OF CAPITAL GAIN WAS DISALLOWED. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWED THE C BDT CIRCULAR NO. 704 DATED 28.4.1995 AND HELD THAT THE ASSESSEE IS E NTITLED TO LONG TERM CAPITAL GAIN WHICH IS UNDER CHALLENGE BEFORE THIS T RIBUNAL BY THE REVENUE. BEFORE COMING TO ANY CONCLUSION WE ARE R EPRODUCING HEREUNDER THE AFORESAID CIRCULAR :- WHEN THE SECURITIES ARE TRANSACTED THROUGH STOCK EXCHANGE IT IS THE ESTABLISHED PROCEDURE THAT THE BROKERS FIRST ENTER INTO CONTRACTS FOR PURCHASE/SAL E OF SECURITIES AND THEREAFTER FOLLOW IT UP WITH DELIVER Y OF SHARES ACCOMPANIED BY TRANSFER DEEDS DULY SIGNED BY THE REGISTERED HOLDERS. THE SELLER IS ENTITLED T O RECEIVE THE CONSIDERATION AGREED TO AS ON THE DATE OF CONTRACT. THE BOARD ARE OF THE OPINION THAT IT IS T HE DATE OF BROKERS NOTE THAT SHOULD BE TREATED AS THE DATE OF TRANSFER IN CASES OF SALE TRANSACTIONS OF SECURITIES PROVIDED SUCH TRANSACTIONS ARE FOLLOWED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. THE ASSESSEE DURING ASSESSMENT PROCEEDINGS FURNIS HED THE FOLLOWING DOCUMENTS/DETAILS :- 1. BROKERS NOTE/BILL DT. 27.04.03 2. COPY OF SHARE CERTIFICATE HAVING ENDORSEMENT AS OF 6/2/04 3. DEPOSITORY SLIP OF AFORESAID SHARES DT. 23.09.2004 4. BROKERS NOTE & STATEMENT RELATING SALE OF ABOVE SHARES IN DECISION 04/JAN 05 5. COPY OF BALANCE-SHEET OF THE APPELLANT AS ON 31.03.2004 REFLECTING COST OF ACQUISITION OF ABOVE SHARE IN F.Y. 2003-04. 4 IF THE AFORESAID DOCUMENTS ARE KEPT IN JUXTA-POSITI ON WITH THE REQUIREMENT OF CBDT CIRCULAR NO. 704 DATED 28.4.199 5 IT CAN BE SAID THAT THE ASSESSEE HAS FURNISHED THE NECESSARY DETAI LS OF RELEVANT DOCUMENTS AND TRANSACTIONS OF SHARES. AS FAR AS TH E CONTENTION OF THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE THAT NEC ESSARY DETAILS WERE NOT FURNISHED BY THE ASSESSEE IT WAS EXPLAINE D BY THE LD. COUNSEL FOR THE ASSESSEE THAT THOUGH SOME OF THE DETAILS WE RE NOT ANNEXED WITH THE RETURN BUT THE SAME WERE FILED DURING ASSESSMEN T PROCEEDINGS. THIS ASSERTION WAS NOT CONTROVERTED BY THE REVENUE WITH ANY EVIDENCE. IT IS ALSO SEEN THAT ON THE TRANSACTION OF RS. 5.53 CRORE S THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 50 000/- ON EXPENSE S LIKE TELEPHONE EXPENSES VEHICLE RUNNING AND TRAVELLING EXPENSES O N ESTIMATE BASIS FOR THE PERSONAL USE OF THESE FACILITIES. SECTION 10(36 ) GRANTS EXEMPTION ON LONG TERM CAPITAL GAIN ON EQUITY SHARES PURCHASED D URING THE RELEVANT PERIOD WHICH ARE HELD FOR A PRESCRIBED PERIOD. SECT ION 10(36) WAS BROUGHT IN STATUTE BY THE FINANCE ACT 2003 I.E. FO R THE ASSESSMENT YEAR 2004-05. THEREAFTER SECTION 10(38) WAS INSERTED B Y FINANCE (NO.2) ACT 2004 GRANTING EXEMPTION ON LONG TERM CAPITAL GAIN ON THE SALE OF EQUITY SHARES PROVIDED THE TRANSACTION IS EFFECTED AFTER S ECURITY TRANSACTION TAX ACT. BY FINANCE (NO. 2) ACT 2004 SECTION 111A WAS ALSO INSERTED MENTIONING CONDITIONS IDENTICAL TO SECTION 10(38). THE ASSESSING OFFICER LEVIED THE TAX ON SHORT TERM CAPITAL GAIN @ 10% U/S 111A OF THE ACT. THE 5 DISPUTE BEFORE THE ASSESSING OFFICER WAS WHETHER TH E INCOME WAS EXEMPT U/S 10(38) OR LIABLE TO TAX AT 10% U/S 111A OF THE ACT WHEREAS WHILE DEALING WITH THE MATTER THE ASSESSING OFFICE R REFERRED TO SECTION 10(3) OF THE ACT INSTEAD OF SECTION 10(38) AND THE SAME SECTION WAS MENTIONED IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IN FACT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 10(38) AND NOT U/S 10(36) OF THE ACT. SECTION 10(36) WAS NOT APPLICABLE WHERE STT WAS PAID AT THE TIME OF SALE. THE SHARES WERE P URCHASED IN APRIL 2003 AS EVIDENT FROM BROKERS CONTRACT NOTE BROKER S INVOICE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE BROKER. THE SHARES WERE SOLD THROUGH THE BROKER IN THE MONTH OF DECEMBER 2 004/JANUARY 2005 AFTER DMAT ON WHICH STT WAS PAID THEREFORE THE DA TE OF BROKERS NOTE SHOULD BE TREATED AS DATE OF TRANSFER PROVIDED TRA NSACTION IS FOLLOWED UP BY ACTUAL DELIVERY OF SHARES AS CLARIFIED BY CBDT I N THE AFORESAID CIRCULAR. THE DURATION BETWEEN SALE AND PURCHASE AN D DATE OF SALE BEING MORE THAN 12 MONTHS THEREFORE CAPITAL GAIN WAS EXEMPT FROM PAYMENT OF TAX U/S 10(38) OF THE ACT. JUST BECAUSE SHARES WERE PURCHASED IN CASH THE BROKERS NOTE THE CONTRACT A ND INVOICE CANNOT BE IGNORED. THE ASSESSEE BECAME ABSOLUTE OWNER OF SHA RES IN 2003 AND WAS IN FULL DOMAIN AND CONTROL OF SUCH SHARES FOR M ORE THAN 12 MONTHS. IN THE CASE OF IMMOVABLE PROPERTY THE LEGAL POSSES SION IN THE FORM OF AGREEMENT OF ALLOTMENT OF FLAT IS SUFFICIENT TO CLA IM BENEFIT U/S 54 OF THE 6 ACT THOUGH THE SALE DEED IS REGISTERED SUBSEQUENTLY FOR WHICH THE RATIO LAID DOWN IN SMT. SHASHI VERMA V. CIT; 224 ITR 106 (MP); CIT V. R.L. SOOD; 245 ITR 727 (DEL) AND CIT V. ANILABEN UPENDRA SHAHJ; 262 ITR 657 (GUJ) CAN BE QUOTED. THE ASSESSING OFFICER IS N OT PERMITTED TO BLOW HOT AND COLD IN THE SAME BREATH AS ON THE ONE HAND HE IS ACCEPTING THAT THE ASSESSEE MADE A HUGE BUSINESS TURNOVER AND ON T HE OTHER HAND HE IS MAKING A DISALLOWANCE ON ADHOC BASIS. WITHOUT CO MMENTING FURTHER SINCE THE NECESSARY DOCUMENTS/DETAILS WERE FURNISHE D DURING THE ASSESSMENT PROCEEDINGS ITSELF THEREFORE WE HAVE N O HESITATION TO SAY THAT THE REQUIREMENT OF CBDT CIRCULAR WHICH IS BIN DING ON THE REVENUE HAS BEEN FULFILELD CONSEQUENTLY THERE IS NO INFIR MITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS UPHELD. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH MAY 2010 SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MAY 5 TH 2010 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE