DCIT, New Delhi v. M/s. Dhampur Alcochem Ltd., New Delhi

ITA 1304/DEL/2013 | 2009-2010
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 130420114 RSA 2013
Assessee PAN AAACD0732F
Bench Delhi
Appeal Number ITA 1304/DEL/2013
Duration Of Justice 2 year(s) 4 month(s) 24 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Dhampur Alcochem Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-07-2015
Date Of Final Hearing 28-07-2015
Next Hearing Date 28-07-2015
Assessment Year 2009-2010
Appeal Filed On 06-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI N.K. SAINI ACCOUNTANT MEMBER AND SHRI A.T. VARKEY JUDICIAL MEMBER ITA NO.1304/DEL./2013 (ASSESSMENT YEAR : 2009-10) DCIT CIRCLE 10 (1) VS. M/S. DHAMPUR ALCOCHEM LTD . NEW DELHI. 24 SCHOOL LANE NEAR WORLD TRADE CENTRE NEW DELHI. (PAN : AAACD0732F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. ADLAKHA ADVOCATE REVENUE BY : SMT. PARWINDER KAUR SENIOR DR DATE OF HEARING : 28.07.2015 DATE OF PRONOUNCEMENT : 31.07.2015 O R D E R PER A.T. VARKEY JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XIII NEW DELH I DATED 18.12.2012 FOR THE ASSESSMENT YEAR IS 2009-10. 2. THE SOLITARY GROUND TAKEN BY THE REVENUE IS AGAI NST THE TREATING THE INCOME FROM SALE AND PURCHASE OF SHARES AS LONG TER M CAPITAL GAIN AND SHORT TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME AS ASSESSED BY THE AO. ITA NOS.1304/DEL./2013 2 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSE SSEE COMPANY WAS ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS SU GAR REAL ESTATE COMMISSION AGENT AND TRANSPORTATION. THE RETURN OF INCOME WAS FILED ON 30.09.2009 DECLARING AN INCOME OF RS1 88 97 301/- I NCLUDING LONG TERM CAPITAL GAIN OF RS.48 60 320/-.THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) OF THE INCOME-TAX ACT 1961 (HEREINAFTER THE ACT) ALONG WITH QUESTIONNAIRE WA S ISSUED ON 13.07.2011. IN RESPONSE TO THESE NOTICES THE AR OF THE ASSESSE E APPEARED AND FILED THE REQUISITE DETAILS / INFORMATION FROM TIME TO TIME. THE AO OBSERVED THAT ON VERIFICATION FROM COMPUTATION OF INCOME FILED BY TH E ASSESSEE COMPANY IT WAS NOTICED THAT THE ASSESSEE COMPANY HAS SHOWN RS. 67 54 761/- AS LONG TERM CAPITAL GAIN (LTCG) AND AN AMOUNT OF RS.18 94 441/- AS EXEMPT ON LONG TERM CAPITAL GAIN. THE AO FURTHER OBSERVED TH AT THE ASSESSEE COMPANY CLAIMED RS.35 60 113/- AS LTCG WITHOUT STT AND PAID TAX @10% ON THE SAME. THE ASSESSEE ALSO DECLARED SHORT TERM CAPITAL GAIN (STCG) OF RS.20 33 237/-. THE AO NOTICED THAT THE RE WERE NUMEROUS TRANSACTION IN SALE PURCHASE OF SHARES AND VOLUME O F TURNOVER WAS HUGE THEREFORE THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY INCOME FROM STCG AND LTCG MAY NOT BE TREATED AS BUSINESS INCOME . IN RESPONSE TO THIS NOTICE THE ASSESSEE SUBMITTED ITS REPLY AS UN DER :- ALL THE TRANSACTIONS ARE IN CAPITAL NATURE AND THE RE ARE NO BUSINESSES OF THE CONCERN COMPANY OF TRADING OF SHA RES. HENCE ITA NOS.1304/DEL./2013 3 THERE ARE NO QUESTION OF SHORT TERM CAPITAL GAIN AN D LONG TERM CAPITAL GAIN TO BE TREATED AS BUSINESS INCOME.' THE AO AFTER CONSIDERING THE SUBMISSIONS OF ASSES SEE COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AT A TOTAL NET TAX ABLE INCOME AT RS.2 03 21 797/- AND MADE ADDITION ON ACCOUNT OF IN COME FROM LTCG OF RS.67 54 761/- AND STCG OF RS.20 33 237/- AS BUSINE SS INCOME. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL TO T HE FIRST APPELLATE AUTHORITY AND THE CIT (A) HAD HELD THAT THE ACTION OF THE AO OF TREATING THE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AS BUSINESS INCOME WAS NOT JUSTIFIED. 4. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFOR E US. 5. AT THE OUTSET OF THE HEARING THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR ASSESSMENT YEA R 2007-08 IN ITA NO.3949/DEL/2010 (ORDER DATED 23.03.2012) AND ASSES SMENT YEAR 2008-09 IN ITA NO.4259/DEL/2012 (ORDER DATED 19.07.2013). HE THEREFORE PRAYED THAT IN THIS VIEW OF THE MATTER THE ORDER OF THE L D. CIT (A) BE UPHELD. 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND P ERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL (SUPRA) IN THE ASSESSEES OW N CASE FOR AYS 2007-08 AND 2008-09. THE LD. DR COULD NOT CONTROVERT THIS FACT. FOR THE SAKE OF ITA NOS.1304/DEL./2013 4 CLARITY WE REPRODUCE THE RELEVANT FINDING OF THE A FORESAID ORDER IN THE ASSESSMENT YEAR 2008-09 OF THE TRIBUNAL AS UNDER:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT A SIMILAR ISSUE WHETHER TH E PROFIT EARNED BY THE ASSESSEE ON THE PURCHASE AND SALE OF SHARES RELATING TO M/S. DHAMPUR INVERTOS LTD. IS LONG TERM CAPITAL GAINS/SHORT TERM CAPITAL GAINS OR BUSINESS INCOME H AS COME BEFORE THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN A.Y 2007-08. IN THAT A.Y WE NOTED THIS TRIBUNAL VIDE ITS ORDER D T. 23.3.2012 TOOK THE VIEW IN FAVOUR OF THE ASSESSEE DISMISSING THE APPEAL OF THE REVENUE BY HOLDING AS UNDER: '2. IN THE GROUND NO.1 THE ISSUE RAISED IS DELETIN G THE ADDITION MADE BY THE ASSESSING OFFICER TO TREAT THE INCOME OF RS.5 18 654/- AS SHORT TERM CAPITAL GAIN AND RS.1 23 20 814/- AS LONG TERM CAPITAL GAIN INSTEAD OF INCOME FROM BUSINESS. THE REVENUE'S CLAIM IS THAT T HE ASSESSEE WAS INVOLVED IN FREQUENT TRADING OF SHARES AND NO SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED. 3. AFTER HEARING BOTH THE SIDES WE FIND THAT THE ASSESSEE WAS INDULGED IN THE PURCHASE AND SALE OF S HARES ON OCCASIONAL BASIS AND NOT ON USUAL TRADE. THE PUR CHASES WERE MADE IN NOVEMBER 2003 AND SALES WERE EFFECTED IN FEBRUARY 2007. IN SOME OF THE CASES THE HOLDING P ERIOD OF THE SECURITIES WAS AS LONG AS 38 MONTHS. THE RAT IO OF THE SALE PRICE OF THE SHARES WAS ONLY 2% OF THE TOT AL TURNOVER. THUS IT IS CLEAR THAT THE TIME DEVOTED T O THE ACTIVITY WAS NOT LARGE. KEEPING THESE FACTS IN VIEW WE FIND NO FAULT IN THE ORDER OF THE CIT (A) WHO HAS D ECIDED THE ISSUE AS UNDER :- GROUND NO.4: IN REGARD TO LONG TERM CAPITAL GAIN OF RS.1 23 20 814 ASSESSED AS BUSINESS INCOME I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND OBSERVATIONS OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT. THE APPELLANT COMPANY HAS SOLD ONLY 1 SCRIPT OF THE COMPANY WHICH WAS CLEARLY REFLECTING UNDER THE HEAD INVESTMENT IN SHARES OF THE BALANCE SHEET. THE ASSESSING OFFICER IN HIS ORDER HAS STATED THAT IN POINT NO 4.1 ITA NOS.1304/DEL./2013 5 'THE SHARES OF DHAMPUR INVERTOS LTD TO THE QUANTITY OF 1 11 225 SHARES WERE SOLD BY THE ASSESSEE COMPANY ON DIFFERENT DATES I.E. ON 9TH FEB 12TH FEB 15TH FEB 19TH FEB 21ST FEB 22ND FEB 23RD FEB 26TH FEB 2007 MEANS WITHIN A SHORT SPELL OF FEBRUARY 2007 ALL THE SHARES WERE SOLD WHICH WAS ALSO PURCHASED ON VARIOUS OCCASIONS SUCH AS ON 3RD NOV. 4TH NOV 6TH NOV AND ON 7TH NOV 2003 AND AGAIN ON 11TH NOVEMBER 2003 WHICH SHOWS THAT THE INTENTION OF THE ASSESSEE COMPANY WAS JUST TO MAKE A TRADING IN THESE SHARES INSPITE OF HAVING INTENTION OF INVESTMENT. .. HOWEVER THE APPELLANT SUBMITTED THAT THE PURCHASE AND SALE OF SHARES WAS AN OCCASIONAL INDEPENDENT AC TIVITY AND NOT USUAL TRADE SINCE PURCHASE OF SHARES HAVE TAKEN PLACE IN NOV 2003 AND SALES 0/ SHORES WAS MADE IN FEB 2007. MOREOVER. THE SHARES WERE PURCHASED OUT O F OWN FUND AND NOT BORROWINGS. THE APPELLANT SUBMITTE D THE BELOW DETAILS IN RESPECT OF LONG TERM CAPITAL G AIN. ... . ON GOING THROUGH THE FACTS AND SUBMISSIONS IT WAS ALSO NOTICED THAT SELLING OF SHARES ARE NOT MAIN OB JECTS BUT ARE OTHER OBJECTS AS STATED IN THE MEMORANDUM A ND ARTICLE OF ASSOCIATION 0/ THE ASSESSEE. THE APPELLA NT ALSO SUBMITTED THAT HOLDING PERIOD OF SECURITIES WHICH W ERE BOUGHT AND SOLD WAS ALSO AS LONG AS 38 MONTHS. FURTHERMORE THE APPELLANT ALSO SUBMITTED THAT THE RATIO OF SALES PRICE OF SHARES WAS ABOUT 2% OF TOTA L TURNOVER. THE TIME DEVOTED TO THE ACTIVITY AND THE EXTENT TO WHICH IT IS MEANS OF LIVELIHOOD ARE AVERAGE AND REASONABLE SINCE SOLITARY TRANSACTION. IN VIEW OF TILE ABOVE OBSERVATIONS I AM OF THE VIEW THAT TRANSACTION OF SHARES CARRIED OUT BY APPELLANT COMPANY DURING THE YEAR UNDER APPEAL SHOULD BE TREA TED AS INVESTMENTS AND THE LONG TERM CAPITAL GAIN ON SA LE OF SUCH SHARES SHALL BE ASSESSED UNDER THE HEAD 'CAPIT A GAIN' AND NOT 'BUSINESS INCOME'. THE ASSESSING OFFICER IS ITA NOS.1304/DEL./2013 6 THEREFORE DIRECTED TO ASSESS RS.1 23 20 814/- AS L ONG TERM CAPITAL GAIN ' HENCE THE GROUND NO.1 STANDS DISMISSED' NO CONTRARY MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. DR WHICH MAY COMPEL US TO TAKE A VIEW DI FFERENT FROM THE ONE WHICH HAS BEEN TAKEN BY THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING ASSESS EE IN THE IMMEDIATELY PRECEDING YEAR WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE OF TREATING THE INCOME FROM THE PURCHASE AND SALE OF SHARES AS LONG TERM CAPITAL GAINS AS WELL AS SHORT TERM CAPITAL GAINS RESPECTIVELY. IN THE RESULT THE GRO UND TAKEN BY THE REVENUE STANDS DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF T HE TRIBUNAL WE UPHOLD THE ORDER OF THE CIT (A) ON THIS ISSUE AND REJECT T HE GROUND OF THE REVENUES APPEAL. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31DAY O F JULY 2015. SD/- SD/- (N.K. SAINI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 DAY OF JULY 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIII NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.