URMILA RAJESH GUPTA, MUMBAI v. ITO WD 19(3)(4), MUMBAI

ITA 1114/MUM/2012 | 2007-2008
Pronouncement Date: 29-04-2015 | Result: Partly Allowed

Appeal Details

RSA Number 111419914 RSA 2012
Assessee PAN ABQPG3160J
Bench Mumbai
Appeal Number ITA 1114/MUM/2012
Duration Of Justice 3 year(s) 2 month(s) 14 day(s)
Appellant URMILA RAJESH GUPTA, MUMBAI
Respondent ITO WD 19(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 29-04-2015
Date Of Final Hearing 12-11-2014
Next Hearing Date 12-11-2014
Assessment Year 2007-2008
Appeal Filed On 15-02-2012
Judgment Text
F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI N.K. BILLAIYA AM ./ I.T.A. NO.5318 /MUM/2011 ( / ASSESSMENT YEAR : 2006-2007 ./ I.T.A. NO.1114 /MUM/2012 ( / ASSESSMENT YEAR : 2007-2008 URMILA RAJESH GUPTA 11 CASSIAS PLOT NO. 21/22 TURNER ROAD BANDRA (W) MUMBAI - 50. / VS. INCOME TAX OFFICER - WARD 19(3) R. NO. 304 PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI- 12. ./ PAN : ABQPG3160J ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI SHASHIKANT J GOEL REVENUE BY SHRI PAWAN KUMAR BEERLA / DATE OF HEARING : 22-4-2015 / DATE OF PRONOUNCEMENT : 29-4-2015 [ !' / O R D E R PER N.K. BILLAIYA A.M . : #. . $%&' ! THESE TWO APPEALS FILED BY THE ASSESSEE ARE PREFERR ED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)- 30 MUMBAI PERTA INING TO ASSESSMENT YEARS 2006-07 & 2007-08. 2. FACTS BEING IDENTICAL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. FIRST WE SHALL TAKE UP ITA NO. 5318/MUM /2011 FOR A.Y. 2006-07 ITA 5318/M/11 & 1114/M/12 2 3. RETURN FOR THE YEAR UNDER CONSIDERATION WAS FIL ED ON 21-7-2006 DECLARING TOTAL INCOME AT RS. 9 14 140/-. THE RETU RN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICE WAS ISS UED AND SERVED UPON THE ASSESSEE. WHILE SCRUTINIZING THE RETURN OF INCOME THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN CAPITAL GAIN LONG TERM AS WELL AS SHORT TERM. SHORT TERM CAPITAL GAIN HAVE BEEN SHOWN AT RS. 7 33 819/-. DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A PETITI ON BEFORE THE ADDL. CIT SEEKING DIRECTION U/S 144A OF THE ACT ON THE ISSUE OF THE TREATMENT OF INCOME REALIZED FROM SHARES AS CAPITAL GAIN. THE DIRECTION S WERE RECEIVED BY THE A.O. AND AS PER THE DIRECTIONS OF THE ADDL. CIT THE ASS ESSEE WAS TREATED AS A TRADER AND NOT AS AN INVESTOR IN SHARES. 4. THE A.O. SOUGHT EXPLANATION FROM THE ASSESSEE AS TO WHY THE SHORT TERM CAPITAL GAIN BE NOT TREATED AS BUSINESS INCOME. TH E ASSESSEE FILED A DETAILED REPLY CLAIMING THAT SHE IS AN INVESTOR AND NOT A TR ADER ALL THE TRANSACTIONS ARE DELIVERY BASED TRANSACTIONS. THE SUBMISSION OF THE ASSESSEE DID NOT FIND FAVOUR BY THE A.O. DRAWING SUPPORT FROM CIRCULAR O F THE CBDT BEARING NO. 4/2007 DTD. 15-6-2007 AND AFTER CONSIDERING CERTAIN JUDICIAL DECISIONS THE A.O. COMPLETED THE ASSESSMENT BY TREATING THE SHORT TERM CAPITAL GAIN AS INCOME FROM SHARE TRADING BUSINESS. THE ASSESSEE C ARRIED THE MATTER BEFORE THE LD. CIT(A)BUT WITHOUT ANY SUCCESS. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE STATEMENT OF ACCOUNTS OF THE ASSESSEE FILED IN THE PAPER BOOK. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE HAS BEEN SHOWING SHARES UNDER THE HEAD INVESTMENT FROM PAST MANY YEARS. THE LD. COUNSEL FU RTHER STATED THAT IN THE EARLIER YEARS THE ASSESSEE HAS BEEN ACCEPTED AS AN INVESTOR AND ALSO IN THE SUBSEQUENT YEARS NO ADVERSE INFERENCE HAS BEEN DRAW N BY THE REVENUE AUTHORITIES. THE LD. COUNSEL STRONGLY RELIED UPON T HE DECISION IN THE CASE OF GOPAL PUROHIT IN ITA NO. 1121/M OF 2009. THE LD. C OUNSEL ALSO RELIED UPON ITA 5318/M/11 & 1114/M/12 3 VARIOUS OTHER JUDICIAL DECISIONS COPIES OF WHICH A RE PLACED IN THE FORM OF PAPER BOOK. 6. PER CONTRA THE LD. D.R. STRONGLY SUPPORTED THE ASSESSMENT ORDER. IN SUPPORT THE LD. D.R. RELIED UPON THE DECISION OF TH E MUMBAI TRIBUNAL IN THE CASE OF SMT. SADHANA NABERA VS. ACIT IN ITA NO. 258 6/MUM/2009 AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G. VENKATASWAMI NAIDU & CO. VS. CIT (1959) 35 ITR/594. 7. HAVING HEARD THE RIVAL SUBMISSIONS WE HAVE CARE FULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDICIAL DE CISIONS RELIED UPON BY THE RIVAL PARTIES. IN THE BALANCE SHEET FOR THE YEAR E NDING 31-3-2005 THE ASSESSEE HAS SHOWN SHARES AT RS. 16 32 291.96 AND IN THE BAL ANCE SHEET FOR THE YEAR ENDING 31-3-2006 (FOR THE YEAR UNDER CONSIDERATION) SHARES HAVE SHOWN AT RS. 2 92 914.36. IN BOTH THESE YEARS THE SHARES HAVE B EEN SHOWN UNDER THE HEAD INVESTMENT. A FURTHER PERUSAL OF THE DOCUMENTARY EVIDENCES PLACED BEFORE US SHOW THAT THE ASSESSEE HAS TAKEN DELIVERY OF THE SHARES AND THE SAME HAVE BEEN REFLECTED IN THE D-MAT ACCOUNT. WE FURTHER FI ND THAT MOST OF THE SHARES WERE ALLOTTED TO THE ASSESSEE THROUGH IPO. IT WOULD BE PERTINENT TO MENTION HERE THAT WHEN A PERSON APPLIES FOR SHARES THROUGH IPO THERE IS NO CERTAINTY WHETHER THE SHARES WILL BE ALLOTTED OR NOT. PRIMA F ACIE IT CAN BE SAID THAT SUCH ACTIVITY OF THE ASSESSEE CANNOT BE CONSTITUTED AS A TRADING ACTIVITY FOR WANT OF CERTAINTY. A PERUSAL OF THE COMPUTATION OF INCOME SHOWS THAT THE ASSESSEE HAS ALSO SHOWN LONG TERM CAPITAL GAIN ON S ALE OF SHARES AT RS. 2 23 999/-. THE SAME HAS BEEN ACCEPTED AS SUCH BY THE A.O. IF THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSESSEE IS NOT AN INVE STOR BUT A TRADER IN SHARES THEN IT COULD NOT MAKE ANY DIFFERENCE WHETHER THE S HARES ARE HELD FOR LESS THAN 12 MONTHS OR MORE THAN 12 MONTHS. THE A.O. HAS TAKEN TWO DIFFERENT VIEWS ON THE SAME SET OF FACTS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS INDULGED IN TO HIGH FREQUENCY OF TRANS ACTION NOR IS A CASE OF THE ITA 5318/M/11 & 1114/M/12 4 REVENUE THAT THERE IS CHURNING IN SHARES. WE ARE N OT GOING INTO THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES FOR THE SIM PLE REASON THAT SUCH CASES ARE DECIDED PURELY ON THE FACTS OF THE CASE AND CON SIDERING THE PECULIAR FACT OF THE CASE IN HAND WE DO NOT FIND ANY REASON WHY THE ASSESSEE SHOULD BE TREATED AS A TRADER. IN OUR CONSIDERED OPINION AND LOOKING TO THE PAST HISTORY OF THE ASSESSEE AS WELL AS STAND TAKEN BY THE REVEN UE AUTHORITIES IN SUBSEQUENT ASSESSMENT YEARS WE HAVE NO HESITATION T O HOLD THAT THE ASSESSEE IS AN INVESTOR AND ANY PROFIT OR GAINS DERIVED FROM THE SALE OF SHARES SHOULD BE TAKEN AS GAINS SHORT TERM OR LONG TERM AS THE C ASE MAY BE. WE THEREFORE DIRECT THE A.O. TO TREAT THE GAINS AS SHORT TERM CA PITAL GAINS. GROUND NO. 1 TO 4 OF THE ASSESSEES APPEAL ARE ALLOWED. 8. GROUNDS NO. 5 AND 6 READ AS UNDER:- 5. THE LD. AO AND THE CIT(A) ERRED IN NOT POINTING OUT TO THE APPELLANT THAT HE WAS ENTITLED TO CLAIM A SET-OFF O F UNABSORBED LOSSES OF EARLIER YEARS WHICH WAS NOT CLAIMED BY HIM THROUGH OVERSIGHT [CIRCULAR 14(XL) OF 1955 DATED 11-04-1955. 6. THE LD. A.O. AND THE CIT(A) ERRED IN NOT ALLOWIN G A CREDIT OF TAX PAID ON REGULAR ASSESSMENT U/S 143(1) WHICH WAS PAI D BY THE ASSESSEE ABOUT 19 MONTHS PRIOR TO THE DATE OF ORDER PASSED U /S 143 (3) THOUGH CREDIT FOR THE SAME IS REFLECTED IN FORM 26AS. 9. WE FIND THAT THE LD. CIT(A) HAS NOT ADJUDICATED UPON THESE GROUNDS. WE THEREFORE RESTORE THESE GROUNDS TO THE FILE OF T HE LD. CIT(A). THE LD. CIT(A) IS DIRECTED TO DECIDE THESE GROUNDS AS PER THE PROV ISIONS OF LAW. 10. IN THE RESULT APPEAL IN ITA NO.5318/MUM/2011 F OR A.Y. 2006-07 FILED BY THE ASSESSEE IS PARTLY ALLOWED. NOW WE SHALL TAKE UP ITA NO. 1114/MUM2012 FOR A.Y. 2007-08 11. AS STATED ELSEWHERE THE FACTS OF THIS APPEAL A RE IDENTICAL TO THE FACTS FOR THE A.Y. 2006-07. AS PER THE DETAIL DISCUSSION AND FINDING GIVEN IN ITA NO. 5518/MUM/ FOR A.Y. 2006-07 FOR SIMILAR REASONS WE DIRECT THE A.O. TO TREAT ITA 5318/M/11 & 1114/M/12 5 THE GAINS FROM THE SHARES UNDER THE HEAD CAPITAL GA INS SHORT TERM OR LONG TERM AS THE CASE MAY BE. GROUNDS NO. 1 TO 4 OF THIS APPEAL ARE ACCORDINGLY ALLOWED. 12. GROUND NO. 5 RELATES TO CLAIM OF SET OFF OF UNA BSORBED LOSSES OF EARLIER YEARS WE FIND THAT THIS GROUND HAS NOT BE ADJUDICA TED BY THE LD. CIT(A). WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE LD . CIT(A). THE LD. CIT(A) IS DIRECTED TO DECIDE THE ISSUE AS PER THE PROVISIONS OF LAW. 13. IN THE RESULT APPEALS FILED BY THE ASSESSEE AR E PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL 2015 !' ) *+ ! - 29-04-2015 . / SD/- SD/- (I.P. BANSAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER * % MUMBAI ; ! DATED 29-04-2015 .;../ R.K R.KR.K R.K . SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. < () / THE CIT(A) CONCERNED MUMBAI 4. < / CIT- CONCERNED MUMBAI 5. ?@. ;;AB AB * % / DR ITAT MUMBAI F BENCH 6. .CD E / GUARD FILE. ' / BY ORDER ? ; //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) * % / ITAT MUMBAI