The ITO, Ward-8(1),, Ahmedabad v. Typhoon Financial Services Ltd.,, Ahmedabad

ITA 1703/AHD/2009 | 2006-2007
Pronouncement Date: 21-01-2011 | Result: Dismissed

Appeal Details

RSA Number 170320514 RSA 2009
Assessee PAN AAACT6902F
Bench Ahmedabad
Appeal Number ITA 1703/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 27 day(s)
Appellant The ITO, Ward-8(1),, Ahmedabad
Respondent Typhoon Financial Services Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 21-01-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2006-2007
Appeal Filed On 25-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI BHAVNESH SAINI JUDICIAL MEMBER AND D.C. AGRAWAL ACCOUNTANT MEMBER) ITA NO.1703/AHD/2009 [ASSTT. YEAR : 2006-2007] DICTATED ON: 17-01-2011 THE ITO WARD-8(1) AHMEDABAD. VS. TYPHOON FINANCIAL SERVICES LTD. 35 OMKAR HOUSE CG ROAD NAVRANGPURA AHMEDABAD. PAN : AAACT 6902 F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SANJAYRAI ASSESSEE BY : SHRI G.C. PIPARA O R D E R PER BHAVNESH SAINI JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A)-XIV AHM EDABAD DATED 27-3-2009 FOR ASSESSMENT YEAR 2006-2007. 2. WE HAVE HEARD LEARNED REPRESENTATIVE OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NOS.1 AND 2 REVENUE CHALLENGED THE DE LETION OF ADDITION OF RS.15 10 000/- IN RESPECT OF SALE PRICE OF SHARES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASS ESSEE HAS SHOWN PURCHASE OF SHARES OF RS.85 45 000/- OF FOUR PRIVATELY HELD UNLISTED COMPANIES AND THE ASSESSEE WAS ASKED TO GIVE DETAILS OF THESE PURCHAS ES INCLUDING THE PURCHASE BILLS. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS S OLD SHARES AMOUNTING TO RS.60 40 000/-. THE ASSESSEE SUBMITTED THAT SALES OF SHARES HAVE BEEN MADE AT PURCHASE PRICE MEANING THEREBY THAT THE SHARES HAVE BEEN SOLD WITHOUT MAKING ANY PROFIT. FURTHER THE SHARES INVOLVED WERE OF C LOSELY HELD PRIVATE LIMITED COMPANIES. THE ASSESSEE WAS ASKED TO SUBSTANTIATE ITS CLAIM WITH DOCUMENTARY ITA NO.1136 AND 1137/AHD/2009 -2- EVIDENCES. THE AO WAS GIVEN DETAILS OF PURCHASE AN D SALES OF THE SHARES IN THE ASSESSMENT ORDER AND NOTICED THAT THE ASSESSEE HAS PURCHASED AND SOLD SHARES AT THE SAME PRICE AND THERE WAS NO JUSTIFICATION FOR T HE SALE AT THE PURCHASE PRICE. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESS EE AND MADE ADDITION OF RS.15 10 000/- TO THE SALE PRICE AT THE RATE OF 25% OF THE SALE PRICE. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) A ND SAME SUBMISSIONS WERE REITERATED AND IT WAS ALSO EXPLAINED THAT THE INVES TMENTS HAVE BEEN MADE BY THE ASSESSEE FOR THE PURPOSE OF TRADING IN SHARES AS TR ADING OF SHARES IS MAIN BUSINESS OF THE COMPANY. WHEN THE SHARES WERE PURC HASED THEY WERE SHOWN AS THE STOCK-IN-TRADE IN THE BOOKS OF ACCOUNTS AND FORM PART OF THE OPENING STOCK DURING THE YEAR UNDER CONSIDERATION AND THE S AME WERE PURCHASED IN THE NORMAL COURSE OF BUSINESS. SOMETIMES SHARES WERE GIVEN GOOD RESULTS BUT SOMETIMES IT WAS SOLD TO THE PROMOTERS OR THE OUTS IDERS AT SUBSTANTIAL PROFIT. HOWEVER DURING THE YEAR UNDER CONSIDERATION SHARE S WERE SOLD AT THE PRICE AT WHICH THEY WERE ACQUIRED AS THE WORKING OF THESE CO MPANIES WAS NOT GOOD AND DUE TO NEED OF THE FINANCES THE SHARES WERE SOLD A T PAR. IT WAS SUBMITTED THAT THE COMPLETE DETAILS WERE FILED IN WHICH NO DEFECTS HAVE BEEN POINTED OUT. IT WAS ALSO EXPLAINED TO THE AO THAT NO DIVIDENDS WERE COMING OUT FROM THESE INVESTMENTS THEREFORE ENTIRE SHARES HAVE BEEN SOL D. IT WAS SUBMITTED THAT THE AO WITHOUT BRINGING ANY MATERIAL ON RECORD MADE AD DITIONS MERELY ON SURMISES AND CONJECTURES AND THEREFORE THE ADDITIO N IS WITHOUT ANY BASIS. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSES SEE AND NOTED THAT THE ASSESSEE PURCHASED THE SHARES AS IT WAS DEALING IN SHARES AND THE SAME WERE SHOWN AS STOCK-IN-TRADE IN THE BOOKS OF ACCOUNTS AN D THE BALANCE SHEET. COMPLETE DETAILS WERE FILED TO SHOW THAT SALES HAVE BEEN MADE TO THE PARTIES. THE LEARNED CIT(A) ALSO NOTED THE COMPLETE DETAILS OF THE TRANSACTIONS AND THE CONFORMATIONS HAVE BEEN FILED AND THEREFORE THERE WERE NO THE BASIS TO MAKE THE ADDITION BY APPLYING 25% AS ADDITIONAL SALE PRI CE. THE ADDITION WAS ACCORDINGLY DELETED. ITA NO.1136 AND 1137/AHD/2009 -3- 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND IT TO BE A FIT CASE FOR OUR INTERFERENCE WITH THE ORDER OF THE LEA RNED CIT(A). THE LEARNED DR MERELY RELIED ON THE ORDER OF THE AO AND HAS NOT PO INTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE ASSESSEE FILE D COMPLETE DETAILS OF SHARES HELD AND THE SAME WERE HELD AS OPENING BALANCE IN T HE YEAR UNDER CONSIDERATION. THE SHARES WERE SHOWN AS STOCK-IN-T RADE. COMPLETE DETAILS WERE FILED TO SHOW THAT THE SHARES WERE SOLD AT THE PRICE OF THE PURCHASE. THE AO WITHOUT BRINGING ANY EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE EARNED MORE PROFIT ON THE SALES MADE THE ADDITION WITHOUT ANY JUSTIFICATION. IN THE ABSENCE OF ANY MATERIAL ON RECORD THE LEARNED CIT( A) WAS JUSTIFIED IN DELETING THE ADDITION. NO SPECIFIC MATERIAL IS BROUGHT TO O UR NOTICE TO DISPROVE THE FINDINGS OF THE LEARNED CIT(A). WE ACCORDINGLY DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE ON THIS GROUND. GROUND NOS.1 AND 2 OF THE REVENUE ARE ACCORDINGLY DISMISSED. 5. GROUND NOS.3 AND 4 OF THE REVENUE CHALLENGE THE DELETION OF DISALLOWANCE OF RS.1 11 369/- IN RESPECT OF THE DEP RECIATION AND OTHER EXPENSES ON CAR REGISTERED IN THE NAME OF THE DIRECTOR. THE AO DISALLOWED THE DEPRECIATION ON THE MOTOR CAR WHICH WAS PURCHASED I N THE NAME OF THE DIRECTOR AND NOT IN THE NAME OF THE ASSESSEE-COMPANY. IT WA S EXPLAINED THAT THE CAR WAS PURCHASED IN THE NAME OF THE DIRECTOR BUT THE SAME WAS USED FOR THE PURPOSE OF BUSINESS. BUT THE AO DID NOT ALLOW THE CLAIM OF TH E ASSESSEE. THE SAME SUBMISSIONS WERE REITERATED BEFORE THE LEARNED CIT( A) AND SEVERAL DECISION RELIED UPON TO SHOW THAT EVEN IF THE VEHICLES WERE PURCHASED IN THE NAME OF DIRECTOR AND WHEN THE SAME IS USED FOR THE PURPOSE OF BUSINESS THE DEPRECIATION IS ALLOWABLE TO THE ASSESSEE. THE LEARNED CIT(A) A CCEPTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE MOTOR CAR WAS PURCHA SED OUT OF THE FUND OF THE ASSESSEE-COMPANY. THE SAME WAS USED FOR THE PURPOS E OF ASSESSEE-COMPANY. THEREFORE DISALLOWANCE WAS DELETED. ITA NO.1136 AND 1137/AHD/2009 -4- 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE FI ND NO MERIT IN THESE GROUNDS OF THE REVENUE. THE LEARNED CIT(A) GAVE A SPECIFIC FINDING THAT THE MOTOR CAR WAS PURCHASED OUT OF THE FUNDS OF THE ASS ESSEE-COMPANY AND WAS ALSO USED FOR THE PURPOSE OF BUSINESS OF THE ASSESS EE-COMPANY. MERELY BECAUSE THE REGISTRATION WAS IN THE NAME OF ONE OF THE DIRE CTORS WOULD NOT DISALLOW THE CLAIM OF THE ASSESSEE. DECISION RELIED UPON BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER SUPPORT THE FINDINGS OF THE LEARNED CIT(A). WE THEREFORE DO NOT FIND ANY MERIT IN THE GROUND NOS.3 AND 4 OF THE ASSESSEE THE SAME ARE ACCORDINGLY DISMISSED. 7. IN RESULT THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY 2011 SD/- SD/- (D.C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 21-01-2011 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD