The ACIT, Circle-8,, Ahmedabad v. Jitendra Jayantilal Shah, Ahmedabad

ITA 1873/AHD/2009 | 2006-2007
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 187320514 RSA 2009
Assessee PAN AFGPS4273J
Bench Ahmedabad
Appeal Number ITA 1873/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 20 day(s)
Appellant The ACIT, Circle-8,, Ahmedabad
Respondent Jitendra Jayantilal Shah, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-02-2011
Date Of Final Hearing 24-02-2011
Next Hearing Date 24-02-2011
Assessment Year 2006-2007
Appeal Filed On 04-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRIT. K.SHARMA T. K.SHARMA T. K.SHARMA T. K.SHARMA JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING 25-2-2011 DRAFTED ON:25-2-2011 ITA NO. 1 8 7 3 /AHD/ 200 9 ASSESSMENT YEAR :2006-07 THE ASSISTAN T COMMISSIONER OF INCOME TAX CIRECLE-8 4 TH FLOOR AJANTA COMMERCIALCENTRE AHMEDABAD. VS. SHRI JIOTENDRA JAYANTILAL SHAH J-7 NILAMANI APARTMENT OPP.SARTHI ROW HOUSE GURUKUL ROAD AHMEDABAD. PAN/GIR NO. : AFGPS 4273 J (A PPELLANT ) .. ( RESPONDENT ) AP PELLANT BY : SHRI SAMIR TEKRIWAL D.R. RESPONDENT BY: SHRI SANJAY SHAH. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- XIV AHMEDABAD DATED 13-3-2009. 2. THE SOLE GROUND OF APPEAL OF THE REVENUE READS A S UNDER :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN DIRECTING NOT TO TREAT THE STCG BUSINESS INCOME AND DIRECTED TO ASSESS THE SAME A S SHORT TERM CAPITAL GAIN. 3 . BOTH THE PARTIES AGREED BEFORE US THAT THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) HAS REVERSED T HE ORDER OF THE LEARNED ASSESSING OFFICER AND DIRECTED HIM TO T REAT THE INCOME DERIVED FROM SHARE TRANSACTION BY THE ASSESSEE AS S HORT TERM CAPITAL GAIN IN PLACE BUSINESS INCOME TREATED BY TH E LEARNED - 2 - ASSESSING OFFICER. BOTH THE PARTIES FURTHER SUBMIT TED THAT IT WILL BE SEEN FROM THE COMPUTATION OF INCOME THAT THE TOTAL TAX PAYABLE DETERMINED BY THE ASSESSEE WAS `.7 30 804/- AND THE TOTAL TAX PAYABLE DETERMINED BY THE LEARNED ASSESSING OFFICER WAS `.9 06 935/-. THUS BY ALLOWING THE CLAIM OF THE AS SESSEE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO TRE AT THE PROFIT ON SHARE TRANSACTION AS SHORT TERM CAPITAL GAIN AS AGAINST BUSINESS INCOME TREATED BY THE LEARNED ASSESSING OFFICER THE TAX EFFECT IS `.1 76 131/-. AS THE TAX EFFECT IN THIS APPEAL IS BELOW RS.2 00 000/- IN VIEW OF THE CBDT INSTRUCTION NO.2/2005 DATED 24- 10-2005 THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 4. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT V. CONCORD PHARMACEUTICALS REPORTED IN (2009) 317 ITR 395 (GUJ) HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASE S. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 20. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL A CIRCULAR IS NOT IN FORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS APPEAL IN S UCH CASES THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE A PPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD. (2008) 214 CTR 389 (BOM) THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTR UCTIONS. IN CIT V. PITHWA ENGINEERING WORKS 276 ITR 519 (BOM) THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIA L NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LIT IGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CI RCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDE D. THE DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL IRRES PECTIVE OF THEIR DATE OF FILING. 21. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLV ED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE - 3 - QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT O R SUPREME COURT THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS AND IN TERMS OF THE LAW DECLARED BY THE SUPREME COU RT OR BY THE TERRITORIAL HIGH COURT. HOWEVER ON THIS GROUN D THE MATTERS CANNOT BE REMANDED TO THE TRIBUNAL DIRECTIN G THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIO NS ARE RAISED BY THE DEPARTMENTAL REPRESENTATIVE AT THE TI ME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEING AN EXCEPTION THE DEPARTMENT HA S MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER IN MATTERS WHERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEAL ING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES THE DEPARTMENT IS PERMITTED TO MO VE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DEC IDING THE APPEAL ON MERITS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIR CULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERIT S. DUE WEIGHTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNA L TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE THE NEWLY INSERTED PROVISIONS CONTAINED IN SECTION 268A(4) MA KE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCUL AR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS A RE INTERNAL MATTERS OF THE DEPARTMENT AND ASSESSEE CAN NOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APPEAL IS A STATUTORY RIG HT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS INSTRUCTIONS OR CIRCULARS. THIS WOULD NOT AMOUNT T O TAKING AWAY THE RIGHT OF FILING OF APPEAL OR THAT SUCH RIG HT IS PROHIBITED BY EXECUTIVE INSTRUCTIONS. SECTION 268A (1) OF THE ACT NOW RECOGNIZES SUCH RIGHT OF THE BOARD TO REGUL ATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPRE ME COURT OR THE TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION IT IS NOT OPEN TO THE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCRIBING THE MONETA RY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT THE DECISION OF H ONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT. IT IS HOWEVER EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OBJECT ION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. 23. CONSIDERING ALL THE AFORESAID ISSUES WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE T HE APPEAL - 4 - ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE T HE TRIBUNAL EITHER IN THE APPEAL MEMO OR AT THE TIME O F HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PART ICULAR APPEAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFEC T. IT IS EXPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING THE RELEVANT CIRCULAR TO THE FATS OF THE CASE AT THE TIME OF DECIDING APPEALS. 5. AT THE TIME OF HEARING BEFORE US THE LD. DEPAR TMENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDE D IN BOARDS INSTRUCTION NO.2/2005 DATED 24-10-2005 THE SUBJECT -MATTER OF THE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURIS DICTIONAL HIGH COURT OR OF SUPREME COURT ANY SUBSTANTIAL QUESTION OF LAW IS INVOLVED OR NOT. THE LD. DR STATED THAT IN THIS AP PEAL THE ISSUES ARE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTI ONS AS PROVIDED BY BOARDS INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEU TICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN BOARDS INST RUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT: (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED B THE DEPARTMENT (II) WHERE THE BOARDS ORDER NOTIFICATION INSTRUC TION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER. (III) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATE D AGAINST THE ASSESSEE. (IV) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SIONS OF THE ACT ARE UNDER CHALLENGE. 6. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFF ECT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS SUPRA). RESPECTFULLY FOLLOW ING CONCORD PHARMACEUTICALS (SUPRA) WE DISMISS THIS APPEAL OF THE REVENUE. 7. IN THE RESULT REVENUES APPEAL IS DISMISSED. - 5 - ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 25 TH DAY OF FEBRUARY 2011. SD/- SD/- (T. K. SHARMA) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 25 TH DAY OF FEBRUARY 2011. PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 25-2-2011 ---------------- -- 2. DRAFT PLACED BEFORE AUTHORITY 25-2-2011 ------ ------------- 3. DRAFT PROPOSED & PLACED 25-2-2011 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 25-2-2011 ----------- -------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 25-2-2011 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 25-2-2011 ---------- ---------- 7. FILE SENT TO THE BENCH CLERK 25-2-2011 ------- ------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------