ITO Ward 15(1), v. Radhika Vitamalt (P) Ltd.,

ITA 1725/DEL/2008 | 1996-1997
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 172520114 RSA 2008
Assessee PAN AAACR3794D
Bench Delhi
Appeal Number ITA 1725/DEL/2008
Duration Of Justice 2 year(s) 2 month(s) 3 day(s)
Appellant ITO Ward 15(1),
Respondent Radhika Vitamalt (P) Ltd.,
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 09-07-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 1996-1997
Appeal Filed On 06-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F : NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A.NO.1725/DEL/2008 ASSESSMENT YEAR : 1996-97 INCOME-TAX OFFICER M/S. RADHIKA VITAMALT PVT. LT D. WARD 15(1) NEW DELHI. VS. 10394/13 MULTANI DHAND A PAHAR GANJ NEW DELHI. PAN: AAACR3794D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL SR. DR. RESPONDENT BY : SHRI G.S . GREWAL CA. O R D E R PER C.L. SETHI JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 26 .02.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SECTION 143(3)/254 OF THE INC OME-TAX ACT 1961 (THE ACT) DATED 29.11.2006 MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 1995-96. 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1) WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) HAS RIGHTLY HELD THAT THE EXPLANATIO N TO SECTION 73 OF IT ACT IS NOT APPLICABLE TO THE ASSESSEE. 2 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT MAINTE NANCE OF SAUDA BAHI BY THE ASSESSEE WAS NOT ESSENTIAL AND ST ATEMENT ON OATH GIVEN BY THE BROKER BEFORE THE AO WAS SUFFICIE NT TO PROVE THAT THE TRANSACTION WAS DELIVERY BASED. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE RETURN OF INCOME THE ASSESSEE HAS SHOWN A SHORT TERM CAPITAL LOSS OF RS.8 40 840/- IN RESPECT OF SALE OF 55 000 SHARES OF KARISHMA FLORICULTURE. IN THE COMPUTATIO N OF INCOME FILED ALONG WITH THE RETURN OF INCOME THE ASSESSEE HAS SHOWN T HAT THE ASSESSEE PURCHASED 55000 SHARES OF KARISHMA FLORICULTURE VID E PURCHASE CONTRACT DATED 16.1.1996 AND 17.1.1996 AT RS.15 07 660 WHICH WERE SOLD ON 29.2.1996 FOR RS.6 66 820/- AND HAS THUS INCURRED LOSS OF RS.8 40 840/- AS SHORT TERM LOSS WHICH WAS SET OFF AGAINST SHORT TER M CAPITAL GAIN OF RS.10 06 935/- SHOWING THE SHORT TERM CAPITAL GAIN AT RS.1 66 095/-. HOWEVER THE AO TREATED THE TRANSACTION TO BE OF SP ECULATIVE IN NATURE WITHIN THE MEANING OF SECTION 43(5) OF THE ACT AND ALSO IN THE LIGHT OF EXPLANATION TO SEC. 73 OF THE ACT. 4. ON APPEAL THE CIT(A) DELETED THE ADDITION FOR TH E FOLLOWING REASONS:- THAT MERELY BECAUSE SAUDA BAHI WAS NOT MAINTAINED B Y THE ASSESSEE IT CANNOT BE PROVED THAT THE TRANSACTION WAS DELIVE RY BASED OR NOT AND THE ASSESSEE HAS SUBMITTED THE EVIDENCES TO ESTABLISH T HE DELIVERY OF THE SHARES 3 NAMELY THE BILL OF THE BROKER PAYMENT FOR THE PUR CHASES AND SALE OF SHARES AND THE STATEMENT OF THE BROKER. THE CIT(A) FURTHER OBSERVED THAT THE BILLS OF THE B ROKER CONTAINED DISTINCTIVE NUMBER OF SHARES PURCHASED AND SOLD. THE CIT(A) FURTHER FOUND THAT COMPLETE DETAILS OF S HARES WERE ALSO GIVEN IN THE BILLS ISSUED BY THE BROKER. THE CIT(A ) THEREFORE HAS TAKEN A VIEW THAT THE TRANSACTION WAS DELIVERY BASED AND CA NNOT BE HELD TO BE OF SPECULATIVE IN NATURE WITHIN THE MEANING OF SECTION 43(5) OF THE ACT. THE CIT(A) FURTHER STATED THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE IS NOT A BUSINESS TRANSACTION ON WHICH EXPLANATION TO SECTIO N 73 COULD BE APPLIED. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE DETAILS OF THE SHARES SUCH AS BILLS WHICH BORE DISTINCTIVE NUMBE R OF SHARES NAME OF THE COMPANY AND NAME OF THE BROKER HAVE BEEN FURNISHED BY THE ASSESSEE. THE CIT(A) HAS ALSO NOTED THE FACT THAT THE BROKER HAS DEPOSED UNDER OATH BEFORE THE AO THAT THE DELIVERY OF THE SHARES WAS MADE TO THE ASSESSEE. IN THE COURSE OF HEARING OF THIS APPEAL THE LEARNED DR HA S NOT BEEN ABLE TO POINT OUT ANY MATERIAL ON THE BASIS OF WHICH IT COULD BE CONCLUDED THAT THE TRANSACTION WAS NOT DELIVERY BASED. THE CIT(A) HAS ALSO EXAMINED AND VERIFIED THE DATE OF PAYMENT AND RECEIPTS. THE PAY MENT OF PURCHASE CONSIDERATION WAS MADE IN JANUARY 1996 WHEREAS THE PAYMENT OF SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE IN MARCH 1996. IN THIS VIEW OF THE MATTER WE ARE IN FULL AGREEMENT WITH THE LEARN ED CIT(A) THAT THE 4 ASSESSEE HAS BEEN ABLE TO PROVE THAT THE TRANSACTIO N WAS DELIVERY BASED AND IS NOT A SPECULATIVE TRANSACTION WITHIN THE MEANING OF SECTION 43(5) OF THE ACT. 6. NOW COMING TO THE ISSUE WHETHER EXPLANATION TO SEC. 73 IS APPLICABLE TO THE PRESENT CASE WE FIND THAT THE ASSESSEE IS N OT ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. THIS IS THE ONLY S OLITARY TRANSACTION OF PURCHASE AND SALE OF SHARES WHICH HAS BEEN CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS DECLARED THE LOSS UNDER THE HEAD SHORT TERM CAPITAL LOSS AND NOT UN DER THE HEAD BUSINESS. THE AO HAS NOT BEEN ABLE TO PROVE AND ESTABLISH THA T THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHA RES OF OTHER COMPANIES. THERE IS NO ACTIVITY OF PURCHASE AND SALE OF SHARES REGULARLY CARRIED OUT BY THE ASSESSEE. THEREFORE THE TRANSACTION OF PURCHA SE AND SALE OF SHARES IN QUESTION BY THE ASSESSEE IS NOT IN THE COURSE OF AN Y BUSINESS OF PURCHASE AND SALE OF SHARES CARRIED OUT BY THE ASSESSEE. EXPLAN ATION TO SEC. 73 IS APPLICABLE ONLY TO THE BUSINESS OF PURCHASE AND SAL E OF SHARES. THE TRANSACTION IN QUESTION WHICH IS A CASE OF MAKING INVESTMENT IN SHARES DOES NOT COME UNDER THE PURVIEW OF EXPLANATION TO SEC. 7 3 OF THE ACT AND IN THAT RESPECT OF THE MATTER THE LEARNED CIT(A) HAS RIGHT LY TAKEN A VIEW THAT EXPLANATION TO SECTION 73 IS NOT APPLICABLE TO THE PRESENT CASE. MOREOVER THE PRESENT CASE IS COVERED BY EXCLUSIONARY PROVISI ON CONTAINED IN EXPLANATION TO SECTION 73 OF THE ACT INASMUCH AS TH E GROSS TOTAL INCOME OF 5 THE ASSESSEE IS MAINLY CONSISTS OF INCOME WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES OR CAPITAL GAINS . IN THE PRESENT CASE THE ASSESSING OFFICER HAS ASSESSED THE BUSINESS INC OME AT (-)RS.33 822/- AND INCOME FROM LONG TERM CAPITAL GAIN AT RS.10 06 935/ - AND INCOME FROM OTHER SOURCES AT RS.2 200/-. THE AO HAS TAKEN THE INCOME FROM CAPITAL GAIN AT RS.10 06 935/- WITHOUT ALLOWING THE LOSS ON SALE OF SHARES AMOUNTING TO RS.8 40 840/-. AS PER RETURN OF INCOME THE INCOME FROM BUSINESS HAS BEEN SHOWN AT NEGATIVE FIGURE OF RS.33 822/- INCOME FRO M CAPITAL GAIN AT RS.1 66 095/- (RS.10 06 935 8 40 840) AND INCOME FROM OTHER SOURCES AT RS.2 200/- AGGREGATING TO GROSS TOTAL INCOME AT RS .1 34 473/-. THIS MAKES IT CLEAR THAT THE ASSESSEES GROSS TOTAL INCOME EVEN F ROM THE POINT OF VIEW OF INCOME RETURNED OR FROM THE POINT OF VIEW OF INCOME ASSESSED IS MAINLY CONSISTS OF INCOME FROM CAPITAL GAIN AND INCOME FRO M OTHER SOURCES AS AGAINST INCOME FROM BUSINESS AT A NEGATIVE FIGURE O F MINUS RS.33 822/-. THEREFORE IN THIS VIEW OF THE MATTER EXPLANATION TO SEC. 73 OF THE ACT CANNOT BE APPLIED TO THE PRESENT CASE. THE ORDER O F THE CIT(A) ON THIS ISSUE IS THUS UPHELD. 6 ITA NO.1725/DEL/2008 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 9 TH JULY 2010. SD/- SD/- (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH JULY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.