Smt. Vasantha Kumari, Hyderabad v. JCIT, Hyderabad

ITA 176/HYD/2010 | 2006-2007
Pronouncement Date: 03-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 17622514 RSA 2010
Assessee PAN ACNPD7839H
Bench Hyderabad
Appeal Number ITA 176/HYD/2010
Duration Of Justice 10 month(s)
Appellant Smt. Vasantha Kumari, Hyderabad
Respondent JCIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 03-12-2010
Assessment Year 2006-2007
Appeal Filed On 03-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMBER ITA NO.176/HYD/10 : ASSTT . YEAR 2006-07 SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA HYDERABAD ( PAN - ACNPD 7839 H ) V/S. JOINT COMMISSIONER OF INCOME TAX RANGE-8 HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.P.RAMASWAMY RESPONDENT BY : SMT. MADHU VANI O R D E R PER G.C.GUPTA VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006- 07 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME -TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER- '1. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED ON LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE TO IN D ISMISSING THE APPEAL IN TOTO. 2. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE APPELLANT'S INVESTMENTS IN SHARES AND OTHER SECURITIES DURING T HE PREVIOUS YEAR WERE IN THE NATURE OF BUSINESS ADVENTURE AS AG AINST THE INVESTMENTS AS CLAIMED BY THE APPELLANT. 3. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THA T INCOME ARISING FROM THE INVESTMENTS IN SHARES AND OTHER SECURITIES AS INCOME FROM BUSINESS AS AGAINST THE INCOME FROM CAPITAL GA INS AS CLAIMED BY THE APPELLANT. 4. THE LEARNED CIT(APPEALS) FAILED TO APPRECIATE T HAT THE APPELLANT WAS ONLY AN INVESTOR IN SHARES AND NOT A DEALER IN SHARES AND CONSEQUENTLY ERRED IN TAXING THE INCOME ARISING FROM THE INVESTMENTS IN SHARES AND OTHER SECURITIES AS BUSINESS INCOME INSTEAD OF AS CAPITAL GAINS. ITA NO.176/HYD/10 SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA HYDERABA D 2 5. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THE I NCOME ARISING FROM SALE OF SHARES AND OTHER SECURITIES WHICH WERE HEL D FOR SHORT TERM AS ARISING FROM SPECULATIVE TRANSACTION S AND THUS IN NOT ALLOWING THE SET OFF OF LOSS ARISING THEREFROM AGAINST THE INCOME FROM OTHER TRANSACTIONS. HE FAILED TO APPRE CIATE THAT THE APPELLANT NEVER CONDUCTED ANY CONTRACT FOR PURCHASE /SALE OF SHARES WITHOUT DELIVERY. CONSEQUENTLY THE LOSS INC URRED IN SHARES TRANSACTIONS CANNOT BE TREATED AS SPECULATIV E LOSS. 6. THE LEARNED CIT(APPEALS) FAILED TO APPRECIATE T HAT THE AO FAILED IN HOLDING THAT CERTAIN TRANSACTIONS ARE IN THE NATURE OF TRANSACTIONS IN SECURITIES TO AVOID TAX AND IN APPL YING THE PROVISIONS OF SECTION 94 WITHOUT RECORDING ANY FAC T TO THAT EXTENT AND IN NOT CORRECTLY FOLLOWING THE PROVISION S THEREOF WHILE DISALLOWING THE CLAIM OF LOSS OF RS.60 284. 7. THE CIT(APPEALS) IS NOT JUSTIFIED IN HOLDING THA T THE APPELLANT IS NOT ENTITLED TO THE BENEFIT OF SETTING OFF OF LONG TERM CAPITAL LOSS OF RS.11 96 541 BROUGHT FORWARD FROM EARLIER YEARS. 8. THE CIT(A) IS NOT JUSTIFIED IN NOT ALLOWING THE ADDITIONAL GROUNDS RAISED DURING THE APPELLATE PROCEEDINGS OR THE GROU ND THAT THE PETITION WAS NOT SIGNED BY THE APPELLANT WHICH DEF ECT COULD HAVE BEEN CURED. 9. THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE AP PELLANT'S CONTENTION THAT IN THE FACTS AND CIRCUMSTANCES OF T HE CASE INTEREST UNDER SECTION 234B IS NOT CHARGEABLE. 10. THE LEARNED CIT(A) FAILED TO ISSUE AN ENHANCEMEN T NOTICE AND CONSEQUENTLY ERRED IN DIRECTING (VIDE PARA 7.1 TO RECOMPUTED CAPITAL GAINS WITHOUT INDEXATION.' 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS AN INVESTOR IN SHARES AND OTHER SECURITIES AND TH E REVENUE AUTHORITIES HAVE ERRED IN TREATING THE SAME AS IN THE NATURE OF BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS ONLY AN INVEST OR AND NOT A DEALER IN SHARES. HE HAS TAKEN DELIVERY OF SHARES AND OTHER SECURITIES AND HAS NEVER DEALT IN PURCHASE AND SALE OF SHARES WITHOUT D ELIVERY. HE SUBMITTED THAT THE DECISION OF THE HON'BLE MADRAS HIGH CO URT IN CIT V/S. S.RAMAAMIRTHAM (306 ITR 239) SUPPORTS THE CASE OF THE A SSESSEE. ALTERNATIVELY LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ADDITIONAL GROUND OF APPEAL FOR ALLOWANCE OF BENEFIT OF SETTING OFF OF LONG TERM CAPITAL LOSS BROUGHT FORWARD FROM EARLIER YEARS WAS TAKEN BEFOR E THE CIT(A) WHO HAS NOT ALLOWED THE SAME TO BE RAISED BEFORE HIM AND IN ALL FAIRNESS THAT ITA NO.176/HYD/10 SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA HYDERABA D 3 ADDITIONAL GROUND OF APPEAL TAKEN BY THE ASSESSEE BEFOR E THE CIT(A) SHOULD HAVE BEEN ADMITTED AND DISPOSED OFF ON MERITS. 4. LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). SHE SUBMITTED THA T THE ASSESSEE HAS BEEN DEALING IN SHARES ON DAY TO DAY BASIS AND WAS CLEARL Y A TRADER IN SHARES AND NOT MERELY AN INVESTOR IN SHARES. SHE SUBMITTED THA T THE ADDITIONAL GROUND OF APPEAL WAS NOT SIGNED BY THE ASSESSEE AND THER EFORE RIGHTLY NOT ADMITTED BY THE CIT(A). SHE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE HAVE A LSO PERUSED THE COPIES OF THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR ALONGWITH THE STATEMENT SHOWING THE PROFI T/LOSS ON SALE OF SCRIPS DURING THE RELEVANT PERIOD. WE FIND THAT THE ASSE SSEE HAS DEALT WITH SHARES AND OTHER SECURITIES OF VARIOUS COMPANIES AND MUTUAL FUNDS ON REGULAR BASIS ON MANY OCCASIONS DURING THE RELEVANT PREVI OUS YEAR. THE ASSESSEE HAS DECLARED SHORT TERM CAPITAL GAIN OF RS.1 30 47 715 AND SHORT TERM CAPITAL LOSS OF RS.99 15 952 ON EQUITY SHARES DURI NG THE RELEVANT ACCOUNTING YEAR. LIKEWISE THE ASSESSEE DECLARED GAIN/LOSS WITH REGARD TO SALE AND PURCHASE OF MUTUAL FUNDS. THE VOLUME OF BUSINESS AND THE FREQUENCY OF PURCHASE AND SALE OF EQUITY SHARES AND OTHER SECURITIES NO DOUBT INDICATES THAT THE ASSESSEE WAS IN THE BUSINESS OF PU RCHASE AND SALE OF EQUITY SHARES AND OTHER SECURITIES AND HE WAS NOT M ERELY AN INVESTOR. THE EQUITY SHARES WERE SOLD WITHIN A SHORT TIME OF PUR CHASE WHICH CLEARLY SHOWS THAT THEY WERE PURCHASED BY THE ASSESSEE NOT WITH THE INTENTION OF HOLDING THEM AS INVESTMENT BUT FOR SELLING THE SAME FO R GAIN AT A HIGHER RATE. ITA NO.176/HYD/10 SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA HYDERABA D 4 6. WITH REGARD TO THE ALTERNATIVE CONTENTION OF THE ASSESSEE WITH REGARD TO THE ACTION OF THE CIT(A) IN NOT ADMITTING AND DISPOSING OFF THE ADDITIONAL GROUND OF THE ASSESSEE FOR ALLOWING SET OFF O F BROUGHT FORWARD LONG TERM CAPITAL LOSSES OF EARLIER YEARS WE FIND THAT THE C IT(A) HAS NOT ADMITTED THE SAME ON THE GROUND THAT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE HAS NOT BEEN SIGNED BY PROPER PERSON IN THIS CASE. WE FIND THAT THE CIT(A) SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO RECTIFY THE DEFECT IN RAISING THE ADDITIONAL GROUND OF APPEAL B EFORE HIM REGARDING THIS ISSUE. IN THESE FACTS OF THE CASE WE HOLD THAT IT SHALL B E IN THE INTERESTS OF JUSTICE TO SET ASIDE THIS ISSUE TO THE FILE OF THE CIT(A ) WITH A DIRECTION TO ALLOW THE ASSESSEE AN OPPORTUNITY TO RECTIFY THE DEFECT I N RAISING THE ADDITIONAL GROUND OF APPEAL BEFORE HIM AND THE CIT (A) IS DIRECTED TO ADJUDICATE THE SAME ON MERITS IN ACCORDANCE WITH LAW AF TER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIE S. GROUNDS OF APPEAL OF THE ASSESSEE ARE ACCORDINGLY DISPOSED OFF. 7. AS FOR GROUNDS OF APPEAL AT SL.NO.9 AND 10 EXTRACT ED ON PAGE 2 OF THIS ORDER NO ARGUMENTS WERE ADVANCED BY THE LEARN ED COUNSEL FOR THE ASSESSEE. ACCORDINGLY THOSE GROUNDS WERE REJECTED. 8. IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 3.12.2010 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 3RD DECEMBER 2010 ITA NO.176/HYD/10 SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA HYDERABA D 5 COPY FORWARDED TO: 1. SMT. VASANTHA KUMARI L/R. OF LATE SHRI D.S.KRISHNA C/O. SHRI A.RAMACHANDRA RAO & CO. CHARTERED ACCOUNTAN TS 30-6-369/A/11 1ST FLOOR STREET NO.1 HIMAYAT NAGAR HYDERABAD 500 029 2. JOINT COMMISSIONER OF INCOME-TAX RANGE-8 HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS)-III HYDERABAD. 4. COMMISSIONER OF INCOME-TAX II HYDERABAD . 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.