ALPANA M MOTLA, MUMBAI v. DCIT 12(3), MUMBAI

ITA 1937/MUM/2013 | 2008-2009
Pronouncement Date: 19-10-2016 | Result: Allowed

Appeal Details

RSA Number 193719914 RSA 2013
Assessee PAN AAHMP7319P
Bench Mumbai
Appeal Number ITA 1937/MUM/2013
Duration Of Justice 3 year(s) 7 month(s) 8 day(s)
Appellant ALPANA M MOTLA, MUMBAI
Respondent DCIT 12(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 19-10-2016
Date Of Final Hearing 10-06-2015
Next Hearing Date 10-06-2015
Assessment Year 2008-2009
Appeal Filed On 11-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE SRI MAHAVIR SINGH J M AND SRI RAMIT KOCHAR AM ITA NO . 19 37 /MUM/2013 (A.Y: 2008 - 09 ) SMT. ALPANA M MOTLA C/O. ROOPKALA 89 M. K. MARG QUEENS CHAMBERS MUMBAI 400 020 PAN:AAHMP 7319P VS. THE D Y. COMMISSIONER OF INCOME TAX - 12(3) MUMBAI APPELLANT .. RESPONDENT APPELLANT BY .. SHRI K. SHIVARAM AR RESPONDENT BY .. SHRI A. K. DHONDIAL SR. DR DATE OF HEARING .. 1 9 - 10 - 2016 DATE OF PRONOUNCEMENT .. 19 - 10 - 2016 O R D E R PER MAHAVIR SINGH JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF THE CIT (A PPEALS ) - 2 4 MUMBAI IN APPEAL NO. CIT (A) - 2 4 / DCIT - 12 ( 3 ) /IT - 105/ 11 - 12 DATE D 03 - 12 - 2012 . ASSESSMENT WAS FRAMED BY THE DC I T - 12(3) MUMBAI FOR THE ASSESSMENT YEAR 2008 - 09 VIDE HIS OR DER DATED 14 - 12 - 2010 U/S 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) . 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE CIT (A) IN CONFIRMING THE ACTION OF THE A O IN TREATING THE EXCESS ARISING OUT OF SALE OF SH ARES AS BUSINESS INCOME INSTEAD OF TREATING THE SAME AS SHORT TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS DERIVING INCOME FROM FU TURES AND OPTIONS I.E. DERIVATIVES FROM LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN FROM SALE OF SHARES INCOME FROM OTHER SOURCES AND ALSO PROFIT FROM SPECULATION BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY INCOME FROM SHORT TERM CAPITAL GAIN SHOULD NOT BE TREA TED AS INCOME FROM BUSINESS. THE ASSESSEE F I LED EXPLANATION BEFORE THE AO BUT THE AO NOTED THAT THE ASSESSEE IS ENGAGED IN SYSTEMATIC ACTIVITIES OF SALE AND PURCHASE OF SHARES AND THE SHARES ARE SOLD WITHIN A PERIOD OF ONE DAY TO 200 DAYS AND HENCE T HE SA ME PARTAKES THE CHARACTER OF SHARE TRADING. HENCE HE TREATED THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AMOUNTING TO RS.50 35 193/ - AS BUSINESS INCOME. AGGRIEVED THE ASSESSEE PREFERRED APPEAL ITA NO. 19 37 /MUM/20 1 3 2 BEFORE THE CIT (A) WHO ALSO CONFIRMED THE ACTION OF THE A O. AGGRIEVED NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS AN INVESTOR IN SHAR E S FOR LAST SO MANY YEARS AND FO R AND FROM ASSESSMENT YEAR 1999 - 2000 TILL ASSESSMENT YEAR 2013 - 14. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE ASSESSEE IS ALSO IN THE FU TURE S AND OPTION TRANSACTIONS AND PROFIT ARISING FROM THE SAME IS DISCLOSED AS BUSINESS INCOME. HE EXPLAINED THAT AS REGARDS TO THE TRANSACTIONS WHI CH ARE DELIVERY BASED AND KEPT IN INVESTMENT PORTFOLIO IN ASSESSEES BOOKS OF ACCOUNT IS TAKEN AS SHORT TERM OR LONG TERM CAPITAL GAIN I.E. PROFIT ARISING OUT OF THE SAME. THE LEARNED COUNSEL FOR THE ASS ESSEE EXPLAINED THAT THE ASSESSEE IS MAINLY AN INVESTOR SINCE LAST SEVERAL YEARS AND THE REVENUE ALL ALONG HAS BEEN ACCEPTING THE SAME AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE FI LED COPIES OF ASSESSMENT ORDERS PASSED U/S 143(3) OF THE ACT FOR ASSESSMENT YEAR 1999 - 2000 2004 - 05 2006 - 07 AND OTHER ASSESSMENT YEARS TO PROVE HIS POINT. IN THE REST OF THE YEARS ASSESSMENTS WERE NOT FRAMED AND THE RETURNS WERE PROCESSED U/S 143(1) OR U /S 143 (1A) OF THE ACT ACCEPTING THE CLAIM OF THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT THE ASSESS EE HAS EARNED DIVIDEND INCOME ON SIZEABLE SHARES AMOUNTING TO RS.4 53 147/ - WHICH WOULD NOT HAVE BEEN POSSIBLE UNLESS THE SHARES ARE HELD AS INVESTMENT FOR LONGER PERIOD. THE ASSESSEE CONTENDED THAT PROFIT MOTIVE IS INHERITANTLY EMBEDDED IN THE TRANSACTION OF PURCHASE AND SALE OF SHARES BUT THE ASSESSEE WAS HOLDING THE SHARES FOR FUTURE GAINS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO EXPLAINED FROM THE CAP ITAL ACCOUNT OF THE ASSESSEE AS ON 31 - 03 - 2008 THAT THERE IS CAPITAL OF RS.6 05 20 280/ - WHICH IS MORE THAN RSD.4 30 09 420/ - AND THEREFORE IT COULD EASILY BE PRESUMED THAT BORROWED MONEY WAS NOT UTILIZED FOR THE PURPOSE OF SHARES KEPT IN INVESTMENT. HE F URTHER EXPLAINED THAT THE ENTIRE BORROWED MONEY WAS UTILIZED ONLY FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF FU TURES AND OPTIONS. 5. AFTER HEARING BOTH THE SIDES WE FIND THAT THE REVENUE COULD NOT CONTROVERT THE ARGUMENTS OF THE ASSESSEE AND THE FAC T THAT THE ASSESSEE IS ITA NO. 19 37 /MUM/20 1 3 3 CONSISTENTLY DECLARING HOLDING OF THESE SHARES AS INVESTMENT IN HER BALANCE SHEET AND THE REVENUE IS ACCEPTING THE SAME AS IT IS. EVEN IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT THE REVENUE IS ACCEPTING THE EXCESS ARISING OUT O F SALE OF SHARES KEPT AS INVESTMENT AS LONG TERM OR SHORT TERM CAPITAL GAIN. FOR THIS YEAR THE REVENUE HAS NOT DISPUTED THE ISSUE OF LONG TERM CAPITAL GAIN. THEY HAVE ONLY CHANGED THE HEAD OF INCOME OF SHORT TERM CAPITAL TO THE HEAD OF BUSINESS INCOME. IN THIS CASE WE FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GOPAL PUROHIT (2011) 336 ITR 287 IT WAS HELD AS UNDER THAT: - WHILE DEALING WITH THE SIMILAR ISSUE THAT IT WAS OPEN TO THE ASSESSEE TO MAINTAIN TWO SEPARATE P ORTFOLIOS ONE RELATING TO INVESTMENT IN SHARES AND ANOTHER RELATING TO BUSINESS OF DEALING IN SHARES. IT WAS ALSO HELD THAT THERE SHOULD BE UNIFORMITY IN TREATMENT GIVEN TO SUCH TRANSACTIONS IN SHARES AND THE RULE OF CONSISTENCY SHOULD BE FOLLOWED WHEN FA CTS AND CIRCUMSTANCES FOR DIFFERENT YEARS ARE IDENTICAL PARTICULARLY IN THE CASE OF SAME ASSESSEE . RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE BOMBAY HIGH COURT AND THE FACTS OF THE PRESENT CASE WE REVERSE THE ORDERS OF THE LOWER AUTHORITI ES AND ALLOW THIS ISSUE OF THE ASSESSEES APPEAL. 6 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 - 10 - 2016 . SD/ - (RAMIT KOCHAR ) ACCONTANT MEMBER MUMBAI DATED: 19 - 10 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER ITA NO. 19 37 /MUM/20 1 3 4 BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI SR. NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 19 / 1 0/16 LK DEKA JM 2 DRAF T PLACED BEFORE AUTHOR 20 /10/16 / 26/10/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//