ATUL MADHURSINH RAMAIYA, MUMBAI v. ASST CIT RG 24(1), MUMBAI

ITA 2305/MUM/2014 | 2010-2011
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 230519914 RSA 2014
Assessee PAN AAAPR8012P
Bench Mumbai
Appeal Number ITA 2305/MUM/2014
Duration Of Justice 3 year(s) 7 month(s) 23 day(s)
Appellant ATUL MADHURSINH RAMAIYA, MUMBAI
Respondent ASST CIT RG 24(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-11-2017
Assessment Year 2010-2011
Appeal Filed On 07-04-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI D.T. GARASIA JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER ITA NO.2305/M/2014 ASSESSMENT YEAR: 2010-11 M/S. ATUL MADHURSINH RAMAIYA 403 SANJAR ENCLAVE OPPOSITE MILAP CINEMA SWAMI VIVEKANAND ROAD KANDIVALI (WEST) MUMBAI 400 067 PAN: AAAPR 8012P VS. ASST. COMMISSIONER OF I. TAX RANGE 24(1) PRATYAKSHA KAR BHAVAN BANDRA KURLA COMPLEX BANDRA (EAST) MUMBAI 400 051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.V. JHAVERI A.R. REVENUE BY : SHRI SAURABH DESHPANDE D.R. DATE OF HEARING : 13.10.2017 DATE OF PRONOUNCEMENT : 30.11.2017 O R D E R PER D.T. GARASIA JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 26.02.2014 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE EFFECTIVE GROUNDS IN THIS APPEAL ARE AS UNDE R: 1. THE COMMISSIONER (APPEALS) ERRED IN UPHOLDING T HE ASSESSING OFFICERS VIEW OF TREATING SHORT TERM CAPITAL GAIN ON SALE OF INVESTMENT IN SHARES AMOUNTING TO RS.1 55 16 538/- AS BUSINESS INCOME. ITA NO.2305/M/2014 M/S. ATUL MADHURSINH RAMAIYA 2 2. THE COMMISSIONER (APPEALS) FAILED TO CONSIDER TH E FACT THAT THERE WERE ONLY 11 SCRIPS IN WHICH THE ASSESSEE HAD INVES TED AND THE FREQUENCY OF PURCHASE AND SALE WAS NOT BEYOND TWO T RANSACTIONS IN 8 SCRIPS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN BUSINESS OF TRADING OF SHARES AND ALSO MADE INVESTM ENT IN SHARES AND SECURITIES PRIOR TO 2001. THE ASSESSEE HAD FILED T HE RETURN FOR A.Y. 2010-11 DECLARING TOTAL INCOME OF RS.61 20 500/- CO MPRISING OF (I) BUSINESS INCOME OF RS.64 35 087/- (II) STCG FROM SE CURITIES (STT PAID) OF RS.1 55 16 538/- AND (III) INCOME FROM OTH ER SOURCES OF RS.9 11 765/- AGGREGATING TO RS.2 28 63 390/- AGAIN ST WHICH BROUGHT FORWARD LOSSES OF RS.1 66 42 871/- WERE ADJUSTED. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) TREATED SHORT TERM CAPITAL GAIN ON SALE OF SHARES AGGREGATING TO RS.1 55 16 53 8/- REFLECTED BY ASSESSEE AS BUSINESS INCOME ON THE GROUND THAT VALU E OF TRANSACTION IS VERY HIGH AND HOLDING PERIOD WAS LOW. FURTHER THE ASSESSEE WAS A TRADER AND DEALERS IN SHARES THEREFORE AO TREATED THIS INCOME AS BUSINESS INCOME. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEAL. AGGRIEVED THE ASSESSEE IS I N FURTHER APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING THE LD. A.R. HAS D RAWN OUR ATTENTION TO THE TRANSACTION CHART WHICH CONTAINED VARIOUS DETAILS VIZ. FREQUENCY OF PURCHASES AND SALES OF SHARES ON INVES TMENT ACCOUNT AND ALSO GIVES THE DETAILS OF PERIOD OF HOLDING OF THESE SHARES WHICH ITA NO.2305/M/2014 M/S. ATUL MADHURSINH RAMAIYA 3 WERE HELD ON INVESTMENT ACCOUNT. THE LD. A.R. SUBM ITTED THAT THE ASSESSEE DEALT IN 11 SCRIPS ONLY. THESE SHARES WER E HELD AS INVESTMENT AND HOLDING PERIOD WAS MORE THAN ONE MON TH. THE ASSESSEE HAS MADE INVESTMENT IN SHARES BY USING CAP ITAL OF MEMBERS OF HIS FAMILY AND ASSESSEE HAS NOT PAID ANY INTERES T ON CAPITAL AGAINST THE SAME. ASSESSEE HAS EARNED MAJOR PROFIT FROM RE LIANCE INDUSTRIES AND ASSESSEE HAD 12000 SHARES OF RELIANCE INDUSTRIE S ON WHICH 12000 BONUS SHARES WERE ISSUED ON 26.11.09 WHICH WE RE SOLD BY THE ASSESSEE. THE LD. A.R. ALSO RELIED UPON THE DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 IN ITA NO.5 081/M/09 DATED 23.09.2012 WHEREIN THE TRIBUNAL HAS ACCEPTED THAT A SSESSEES INCOME ON SHARES UNDER THE HEAD CAPITAL GAINS. SIMILARL Y IN A.Y. 2008-09 THE TRIBUNAL IN ITA NO.3053/MUM/12 DATED 28.10.15 H AS TAKEN THE SAME STAND. MOREOVER IN A.Y. 2009-10 THE ASSESSE E SUBMITTED SHORT TERM CAPITAL LOSS ON INVESTMENT IN SHARES WHI CH WAS ACCEPTED BY REVENUE IS AN ASSESSMENT U/S 143(3). 6. ON THE OTHER HAND THE LD. D.R. RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E WE FIND THAT ASSESSEE HAS GIVEN THE CHART OF SHARES WHICH HE HEL D AS INVESTMENT ACCOUNT WHICH READS AS UNDER: SR. NO. NAME NO. OF SHARES PURCHASED ON NO. OF SHARES SOLD ON HOLDING PERIOD MONTH- DAYS FREQUENCY OF PURCHASE FREQUENCY OF SALE ITA NO.2305/M/2014 M/S. ATUL MADHURSINH RAMAIYA 4 1. BHARTI AIRTEL LTD. 13750 1250 28.01.09 18.03.09 13750 22.04.09 2M- 24DAYS 1 M- 4DAYS 2 1 30254 9746 19.05.09 20.05.09 30254 9746 15.02.10 15.02.10 8M- 26DAYS 8M-25 DAYS 2 2 2 HDFC LTD. 5000 18.03 .09 5000 23.04.09 1 M 04 DAYS 1 1 4000 14600 20.05.09 07.10.09 4000 14600 01.07.09 {15.02.10 {16.02.10 1 RN11 DAYS 4M O7DAYS 2 2 3 ABB LTD. 1660 3340 13.03.09 18.03.09 1660} 34401 23.04.09 2M O8DAYS 1 RN-04 DAYS 2 2 4 BHARTI HEAVY ELECTRICAL LTD. 5000 19.03.09 5000 23.04.09 1 M-04 DAYS 1 1 600 6000 14000 21.05.09 17.07.09 17.07.09 600 6000 14000 29.09.09 29.09.09 06.10.09 4M O7DAYS 2 M - 11 DAYS 2M L9DAYS 2 2 5 HERO HONDA MOTORS LIMITED 1623 377 19.05.09 21.05.09 1623} 377} 17.07.09 1 M-28 DAYS 1 M26 DAYS 2 1 6 TATA POWER LTD. 5000 30.06.09 5000 31.07.09 1 M 02 DAY 1 1 7 INFOSYS TECHNOLOGIES LTD. 50 8000 23.07.09 23.07.09 50 8000 26.08.09 29.09.09 1 RN 02 DAYS 2 RN - 05 DAYS 1 2 8 ICICI BANK LTD. 8000 26.08.09 8000 29.09.09 1 M - 02 DAYS 1 9 IDFC LIMITED 22250 01.07.09 22250 01.10.09 3M O DAY 1 1 10 STATE BANK OF INDIA 18500 07.10.09 18500 {04.01.10 {08.01.10 2M- 27DAYS 3 M - 0 DAY 1 2 11 RELIANCE INDUSTRIES LTD. 12000 12000 30.11.07 12000 12000 15.02.10 15.02.10 2 YRS 3M 2RN 18 1 1 ITA NO.2305/M/2014 M/S. ATUL MADHURSINH RAMAIYA 5 DAYS 8. WE FIND THAT ASSESSEE AT THE TIME OF PURCHASE OF THESE SHARES KEPT THEM IN AN INVESTMENT PORTFOLIO. WE FIND THAT AS PER CIRCULAR NO.4/2007 BY CBDT ASSESSEE IS AT LIBERTY TO MAINTAI N TWO PORTFOLIOS VIZ. ONE AS TRADING PORTFOLIO AND ANOTHER AS AN INV ESTMENT PORTFOLIO. WE FIND THAT THE SHARES WERE TREATED AS INVESTMENT IN 2006-07 BY THE TRIBUNAL AND ALSO IN 2008-09 THE TRIBUNAL HAS TREAT ED ASSESSEES 12 SCRIPS AS INVESTMENT BY OBSERVING AS UNDER: 'WE HAVE PERUSED ORDERS PASSED BY THE AUTHORITIES B ELOW THE PAPER BOOK FILED BY THE ASSESSEE. IT IS OBSERVED THAT DURING THE YEAR UNDER CONSIDERA TION THE ASSESSEE HAD TRADED IN SHARES AS WELL AS MADE INVESTMENTS IN CERTAIN SHARES. THE ASSESSEE HAS BEEN SHOWING THE TRANSACTIONS IN S HARES UNDER TWO HEADS (I) SHARES HELD AS INVESTMENTS UNDER THE HEAD 'INVESTMENTS' SHOWN IN THE BALANCE SHEET AND (II) SHARES IN WHICH TRADING IS CONDUCTED FOR THE PURPOSE OF EARNING INCOME AS BUSINESS INCOM E SHOWN IN THE PROFIT & LOSS ACCOUNT. THE APPELLANT IS A DEALER IN SHARES AND ALSO INVESTOR IN SHARES ONCE SUCH SHARES HELD AS INVESTMENTS ARE SEP ARATELY IDENTIFIABLE WHICH TREATMENT HAS BEEN ACCEPTED IN THE PAST THEN THE CLAIM MADE BY THE APPELLANT BE ACCEPTED AS SUCH. TH E ID. CIT(A) IN HIS ORDER AT PAGE 2 LISTS DOWN THE SCRIPS PURCHASED AND HELD AS INVESTMENT BY THE ASSESSEE. THE ID. CIT(A) RECORDS THAT IN RESPECT OF 12 SCRIPS THE FREQUENCY OF SALE AND PURCHASE DOES NOT EXCEED MORE THAN 2 TIMES. HE THEREFORE CONCLUDED THAT THESE 12 SCRIPS HAS BEEN HELD AS INVESTMENT BY THE ASSESSEE AND ANY GAIN OR LOSS ARISI NG FROM THE SALE OF THESE SCRIPS MUST BE CONSIDERED UNDER THE HEAD INCOM E FROM CAPITAL GAINS. WE DO NOT FIND ANY INFIRMITY WITH THE FINDINGS OF THE LD .CIT(A) IN THIS RESPECT. THEREFORE THE GROUND RAISED BY THE REVENUE STANDS DISMISSED.' 9. RESPECTFULLY FOLLOWING THE SAME WE ARE OF THE V IEW THAT RESULTANT GAIN BEING ARISEN OUT OF INVESTMENT PORT FOLIO IS LIABLE TO BE TREATED AS CAPITAL GAINS. RESULTANTLY WE ALLOW TH E APPEAL OF THE ASSESSEE. ITA NO.2305/M/2014 M/S. ATUL MADHURSINH RAMAIYA 6 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 30.11.2017. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.