Shri Anurag Vijayvargiya,, Indore v. The ACIT.,, Indore

ITA 122/IND/2010 | 2006-2007
Pronouncement Date: 01-03-2011 | Result: Dismissed

Appeal Details

RSA Number 12222714 RSA 2010
Bench Indore
Appeal Number ITA 122/IND/2010
Duration Of Justice 11 month(s) 29 day(s)
Appellant Shri Anurag Vijayvargiya,, Indore
Respondent The ACIT.,, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 01-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 01-03-2011
Date Of Final Hearing 13-10-2010
Next Hearing Date 13-10-2010
Assessment Year 2006-2007
Appeal Filed On 03-03-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.122/IND/2010 A.Y.2006-07 SHRI ANURAG VIJAYVARGIYA INDORE PAN ABTPV-2918A APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 5(2) INDORE RESPONDENT APPELLANT BY : SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL RESPONDENT BY : SHRI P.K. MITRA O R D E R PER JOGINDER SINGH JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 16.12.2009. 2. DURING HEARING WE HAVE HEARD LEARNED REPRESENTA TIVES OF BOTH THE PARTIES. GROUND NOS. 1 AND 2 OF THE APPEAL WERE NOT 2 PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE THEREF ORE THE SAME ARE DISMISSED AS NOT PRESSED. 3. THE ONLY EFFECTIVE GROUND PRESSED IS THAT THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTA INING THE FINDINGS OF THE LEARNED ASSESSING OFFICER THAT INCO ME OF RS.19 12 858/- ON SALE OF SHARES ARE BUSINESS INCOM E AS AGAINST CAPITAL GAINS DISCLOSED BY THE ASSESSEE. 4. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE HAS TWO PORT FOLIOS FOR WHICH OUR ATTE NTION WAS INVITED TO PAGES 42 TO 48 OF THE PAPER BOOK. OUR A TTENTION WAS FURTHER INVITED TO PAGE 1 OF THE ASSESSMENT ORDER A ND PARA 4.1 (PAGE 7) OF THE IMPUGNED ORDER. RELIANCE WAS PLACE D UPON THE DECISION IN KUNVARJI NONJI KENYA; 131 TTJ 87 (MUM) (PAGE 214) CIT V. REWASHANKAR A. KOTHARI; 155 TAXMAN 214 (GUJ) AND JANAK S. RANGWALA; 11 SOT 627 (MUM). ON THE O THER HAND THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIV E STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALREADY CO NSIDERED THE DECISIONS RELIED UPON BY THE ASSESSEE. 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSE SSEE SHOWED SHORT TERM CAPITAL GAINS OF RS.19 12 858/-. THE LEA RNED ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME SHOWN AS SHORT TERM CAPITAL GAIN SHOULD NOT BE TREATED AS BUSINESS INCOME AS THE VOLUME AND FREQUENCY OF TRANSACTION WAS SUBSTANTIAL AGAINST WHICH THE CLAIM OF THE ASSESSEE WAS THAT THE TRANSACTION OF SALE AND PURC HASE WAS DELIVERY BASED TRANSACTION VERIFIABLE FROM THE CO NTRACT NOTES AND DE-MAT ACCOUNT AND THE INVESTMENT HAS BEEN SHOW N IN THE BOOKS OF ACCOUNTS AND NO LOANS WERE TAKEN BY THE AS SESSEE FOR MAKING INVESTMENT IN SHARES. THE LEARNED ASSESSING OFFICER IN VIEW OF CBDT CIRCULAR NO. 4 OF 2007 TREATED THE AMO UNT OF RS.19 12 858/- AS BUSINESS INCOME. ON APPEAL THE ASSESSMENT ORDER WAS AFFIRMED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) WHICH IS UNDER CHALLENGE BE FORE THE TRIBUNAL. 4 6. NOW THE QUESTION ARISES AS TO WHETHER UNDER THE FACTS AVAILABLE ON RECORD THE INCOME OF THE ASSESSEE IN V OLUMINOUS AND FREQUENT TRANSACTION IS BUSINESS INCOME OR CAPI TAL GAIN. ADMITTEDLY THE ASSESSEE IS DEALING IN SHARES. DURI NG HEARING THE MAIN THRUST OF ARGUMENT IS RELIANCE ON THE DECI SION IN THE CASE OF KUNVARJI NANJI KENYA AND JANAK S. RANGWALA (SUPRA). WE HAVE PERUSED THESE ORDERS. IN THE CASE OF KUNVA RJI NANJI KENYA (SUPRA) THE ISSUE BEFORE THE HONBLE MUMBAI B ENCH PERTAINED TO TREATMENT OF RS.1 49 70 251/- BEING TH E SHARE TRADING INCOME AS BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE. THE ASSESSEE CONTINUED TO DERIVE INCOME FROM CAPITAL GAIN AND OTHER SOURCES. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WERE NUMEROUS TRA NSACTIONS ON DAILY BASIS IN LARGE QUANTITY OF SHARES PROFIT FROM WHICH WAS SHOWN AS SHORT TERM CAPITAL GAIN. THE CLAIM OF THE ASSESSEE WAS THAT HE EARNED SUBSTANTIAL DIVIDEND INCOME OF R S.1.36 CRORES AND THE INVESTMENT IN SHARES WAS MADE OUT OF OWN FUNDS AND NOT FROM BORROWED CAPITAL. IT WAS FOUND BY THE TRIBUNAL THAT THE INVESTMENT WAS MADE FOR SHARES AN D OTHER 5 SECURITIES AND THERE WERE NO BORROWED FUNDS. ASSESS MENT WAS FRAMED U/S 143(3) OF THE ACT. LIKEWISE IN THE CASE OF JANAK S. RANGWALA (SUPRA) THE ASSESSMENT WAS COMPLETED U/S 1 43(3) IN RESPECT OF PRECEDING YEARS WHEREIN THE TOTAL INCO ME DISCLOSED BY THE ASSESSEE WAS UNDER THE HEAD CAPITAL GAINS AND IT WAS ASSESSED AS CAPITAL GAINS AND THERE WAS NO BASIS FOR TREATING THE ASSESSEE AS A TRADER THEREFORE THESE JUDICIAL PRONOUNCEMENTS ARE ALSO ON DIFFERENT FACTS BECAUSE IN THE CASE OF THE ASSESSEE THE ASSESSMENT WAS FRAMED U/S 143(1 ) AND NOT U/S 143(3) OF THE ACT. THE IMPUGNED TRANSACTIONS WERE EXAMINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS MENTIONED IN PARA 4.3 OF THE IMPUGNED ORDER AND IN RESPECT OF SCRIPTS OF AN RAJ CLAY THERE WAS NO OPENING STOCK OF SHARES. THE ASSESSEE PURCHASED 2000 SHARE S OF THE COMPANY AND SOLD DURING THE YEAR ITSELF LEAVING NO CLOSING BALANCE. LIKEWISE IN THE CASE OF JAYSHRI T. AND I NDUS THE ASSESSEE PURCHASED 6000 SHARES AND SOLD 1500 SHARES DURING THE YEAR. IN THE CASE OF RAJESH EXPORTS LIMITED TH E ASSESSEE PURCHASED 500 SHARES OUT OF WHICH 150 SHARES WERE S OLD 6 DURING THE YEAR. IN THE CASE OF BANS STOCK SYNTEX T HE ASSESSEE PURCHASED 28900 SHARES AND SOLD 4500 SHARES DURING THE YEAR. THERE IS A ROTATION OF PURCHASE AND SALE OF SCRIPTS OF SHARES OF ALL THE COMPANIES. THE INTENTION OF THE ASSESSEE I S NOT TO RESTRICT HIMSELF AS INVESTOR AND THE INTENTION IS T O EARN MORE AND MORE PROFIT FROM TRADING IN SHARES AND SECURITIES R EGULARLY. THE CLAIM OF THE ASSESSEE IS THAT HE MAINTAINS BUSINESS PORT FOLIO CONSISTING OF SECURED TRANSACTION SEPARATE FROM IN VESTMENT PORT FOLIO. HOWEVER THE ASSESSEE HAS SET OFF SPECU LATIVE LOSS (FROM SQUARED UP TRANSACTION) OF RS.12 731/- FROM S HORT TERM CAPITAL GAINS OF RS. 19 25 589/-. IF THE CUMULATIVE EFFECT OF THE FACTS AVAILABLE BEFORE US IS ANALYSED ADMITTEDLY I T EMERGES THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE OF VA RIOUS SHARES IS THAT OF A TRADER AND NOT OF AN INVESTOR BECAUSE THE VOLUME AND FREQUENCY OF TRADING IS VERY SUBSTANTIAL THERE FORE THE ASSESSEE IS DEFINITELY A TRADER AND NOT A SMALL INV ESTOR THEREFORE IT IS PURELY A BUSINESS INCOME AND NOT I NCOME FROM CAPITAL GAIN BECAUSE IF THE NUMBER OF TRANSACTION IS ANALYSED THERE ARE MERELY ABOUT 400 TRANSACTIONS OUT OF WHI CH ABOUT 7 50% ARE MADE ON THE SAME DAY. FROM THE DETAILS AVAI LABLE ON RECORD WE FIND THAT THE ACTIVITY IN BUYING AND SEL LING SHARES IS QUITE FREQUENT JUSTIFYING THE INFERENCE THAT THE A SSESSEE IS TRADING IN THEM. THE RULE OF CONSISTENCY CANNOT BE APPLIED TO THE YEAR UNDER APPEAL. OUR ABOVE VIEW IS FURTHER F ORTIFIED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S UPENDRA V. DADIA VS. ACIT IN ITA NO. 485 1068 AND 1193/MUM/2009 ORDER DATED 18 TH FEBRUARY 2011 WHEREIN FACTS WERE IN PARA MATERIAL TO THE FACTS DISCUSSED HEREIN ABOVE. THUS WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINA TE BENCH ON SIMILAR FACTS AND DECIDE THE APPEAL OF THE REVENUE IN ITS FAVOUR. THE CBDT CIRCULAR NO. 4 OF 2007 FURTHER SUPPORTS TH E CASE OF THE REVENUE THEREFORE IT IS PURELY A BUSINESS INC OME. WE ACCORDINGLY CONFIRM THE STAND OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS). FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. 8 ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES ON IST MARCH 20 11. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: IST MARCH 2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE DN/- 9