Shri Ashish Mulchandbhai Amin, Surat v. The ACIT.,Circle-3,, Surat

ITA 3182/AHD/2010 | 2007-2008
Pronouncement Date: 09-02-2012 | Result: Allowed

Appeal Details

RSA Number 318220514 RSA 2010
Assessee PAN ABEPA6663Q
Bench Ahmedabad
Appeal Number ITA 3182/AHD/2010
Duration Of Justice 1 year(s) 2 month(s) 8 day(s)
Appellant Shri Ashish Mulchandbhai Amin, Surat
Respondent The ACIT.,Circle-3,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 09-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-02-2012
Date Of Final Hearing 04-01-2012
Next Hearing Date 04-01-2012
Assessment Year 2007-2008
Appeal Filed On 01-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.3171/AHD/2009 & 3182 / AHD/2010 (ASSESSMENT YEAR 2006-07 2007-08) SHRI ASHISH MULCHANDBHAI AMIN PLOT NO.11 BLOCK 22 M G ROAD NO.11 UDHNA SURAT PAN/GIR NO. : ABEPA6663Q VS. DCIT CC-1 SURAT I.T.A.NO. 3216/AHD/2010 (ASSESSMENT YEAR 2007-08) ACIT CIRCLE 3 VS. SH RI ASHISH MULCHANDBHAI AMIN SURAT A-503 MEGHDHANUSH APARTMENT SARELWADI GHOD DOD ROAD SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI HARDIK VORA AR RESPONDENT BY: SHRI C K MISHRA SR. DR DATE OF HEARING: 04.01.2012 DATE OF PRONOUNCEMENT: 09.02.2012 O R D E R PER SHRI A. K. GARODIA AM:- OUT OF THESE THREE APPEALS ONE APPEAL IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 WHICH IS DIRECTED AGAIN ST THE ORDER OF CIT(A) SURAT DATED 12.11.2009 AND THE REMAINING TW O APPEALS ARE CROSS APPEALS FIELD BY THE ASSESSEE AND THE REVENUE FOR T HE ASSESSMENT YEAR 2007-08 WHICH ARE DIRECTED AGAINST THE ORDER OF CIT (A) - II SURAT DATED 16.09.2010 FOR THE ASSESSMENT YEAR 2007-08. SINCE THE ISSUE INVOLVED IS I.T.A.NO.3171/AHD/2009 I.T.A.NO. 3216 3182/AHD/2010 2 COMMON IN ALL THESE APPEALS ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE IN I.T.A.NO. 3171/AHD/2009 FOR THE ASSESSMENT YEAR 2006-07 ARE AS UNDER: 1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRM ING THE ACTION OF THE A.O. MAKING THE ADDITION OF RS.47 74 996/- BY T REATING INCOME OF SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION MADE BY THE A.O. AND CONFIR MED BY THE CIT(A) MAY PLEASE BE DELETED. 3. SIMILARLY THE GROUNDS RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2007-08 IN I.T.A.NO. 3182/AHD/2010 ARE AS UNDER: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN PARTLY CONFIRM ING THE ACTION OF THE A.O. IN TREATING THE CAPITAL GAINS INCOME ARISI NG ON SALE OF SHARES AS BUSINESS INCOME IN RESPECT OF SHARES WHER E HOLDING PERIOD IS LESS THAN ONE MONTH. THE LD. CIT(A) OUGH T TO HAVE TREATED ENTIRE GAIN ARISING ON SALE OF SHARES AS CA PITAL GAINS. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION MADE BY TH E A.O. AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. 4. GROUNDS RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 IN I.T.A.NO. 3216/AHD/2010 ARE AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO TEAT THE PROFIT /GAINS EARNED FORM THE TRANSACTION OF PURCHASE AND SALE OF SHARES/SECURITIES HELD ABOVE ONE MONTH AS SHORT TER M CAPITAL GAIN AS AGAINST BUSINESS INCOMES TREATED BY THE A.O . 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS THERE FORE PRAYED THAT THE ORDER OF THE CIT (A) MAY BE SET ASIDE AND THAT OF A.O. MAY BE RESTORED TO THE A BOVE EXTENT. I.T.A.NO.3171/AHD/2009 I.T.A.NO. 3216 3182/AHD/2010 3 5. THE BRIEF FACTS FOR THE ASSESSMENT YEAR 2006-07 ARE THAT IT IS NOTED BY THE A.O. IN PARA 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAD BEEN PAYING TAX ON THE TRANSACTION IN SECURITIES AT SHOR T TERM CAPITAL GAIN RATE. THE A.O. ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE A SKING HIM TO SHOW CAUSE AS TO WHY THE AMOUNT OF INCOME DECLARED BY TH E ASSESSEE AS SHORT TERM CAPITAL GAIN SHOULD NOT BE TREATED AS BUSINES S INCOME. IN REPLY VARIOUS SUBMISSIONS WERE MADE BY THE ASSESSEE BEFOR E THE A.O. BUT THE A.O. WAS NOT SATISFIED. THE A.O. PLACED RELIANCE O N THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS REWASHANKAR A. KOTHARI AS REPORTED IN 283 ITR 338 (GUJ.) AND OB SERVED THAT IF ONLY SINGLE CRITERIA IS CONSIDERED THEN IT WILL RESULT I NTO A DISTORTED PICTURE AND THEREFORE OVERALL PICTURE EMERGING FROM VARIOUS TE STS WILL GIVE THE TRUE PICTURE AS TO WHETHER THE ASSESSEE IS A TRADER OR I NVESTOR AND THE A.O. CAME TO THE CONCLUSION THAT IF ALL THE CRITERIA AND TESTS ARE APPLIED THEN THE ASSESSEE IS A TRADER AND ON THIS BASIS HE TREATED THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NO W THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IN ASSESSMENT YEAR 2007-08 ALSO THE A.O. TREATE D THE AMOUNT OF CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS I NCOME ON THE BASIS OF BOARDS CIRCULAR NO.4 OF 2007 DATED 15.6.2007 ISSUE D BY CBDT. IN THIS YEAR ALSO THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) WHO HAS HELD THAT WHERE THE SHARES ARE HELD FOR MOR E THAN A MONTH THEY SHOULD BE TREATED AS INVESTMENT AND THE PROFIT ON S ALE OF THE SAME SHOULD BE TAXED UNDER THE HEAD SHORT TERM CAPITAL GAIN BUT WHERE THE SHARES ARE HELD FOR LESS THAN A MONTH PROFITS ON SALE OF SUCH SHARES SHOULD BE TREATED AS PROFIT FROM BUSINESS. NOW THE REVENUE AND ASSE SSEE ARE BOTH IN APPEAL BEFORE US AGAINST THIS ORDER OF LD. CIT(A) IN ASSES SMENT YEAR 2007-08. I.T.A.NO.3171/AHD/2009 I.T.A.NO. 3216 3182/AHD/2010 4 7. IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY TWO TRIBUNAL DECISIONS RE NDERED IN THE CASE OF SHRI MULCHANDBHAI S AMIN VS ACIT IN I.T.A.NO. 2076 & 2118/AHD/2009 DATED 09.09.2011 COPY OF WHICH IS AVA ILABLE ON PAGES 81- 104 OF THE PAPER BOOK. IT IS SUBMITTED THAT THIS T RIBUNAL ORDER IS IN RESPECT OF ASSESSMENT YEAR 2006-07 AND THE SECOND ORDER OF THE TRIBUNAL IS IN THE SAME CASE FOR THE ASSESSMENT YEAR 2005-06 IN I.T.A. NO. 127/AHD/2009 DATED 13.05.2011 COPY OF WHICH IS AVAILABLE ON PAG ES 105-113 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE TRIBUNAL ORDER DATED 13.05.2011 FOR ASSESSMENT YEAR 2005-06 WAS FOLLOWED IN ASSESSM ENT YEAR 2006-07 IN THE CASE OF SHRI MULCHANDBHAI S AMIN (SUPRA). HE A LSO SUBMITTED THAT IN ASSESSMENT YEAR 2005-06 THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS NIRAJ AMIDHAR SURTI AS REPORTED IN (2011) 238 CTR 294 (GU J.). IT WAS ALSO HIS SUBMISSION THAT IN THE LIGHT OF THESE TWO TRIBUNAL DECISIONS WHICH ARE ON THE BASIS OF THE JUDGMENT OF HONBLE GUJARAT HIGH C OURT THE ISSUE INVOLVED IN THE PRESENT APPEAL SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. HE ALSO SUBMITTED THAT THESE TRIBUNAL OR DERS ARE IN THE CASE OF SHRI MULCHANDBHAI S AMIN WHO IS FATHER OF THE PRES ENT ASSESSEE AND THE FACTS ARE IDENTICAL. LD. D.R. OF THE REVENUE SUPPO RTED THE ASSESSMENT ORDER IN BOTH THE YEARS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN THE CASE OF SHRI MULCHANDBHAI S AMIN (SUPR A) FATHER OF THE ASSESSEE IN ASSESSMENT YEAR 2005-06 AND 2006-07 SI MILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE B Y FOLLOWING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SHRI NEERAJ AMIDHAR SURTI (SUPRA). LD. D.R. OF THE REVE NUE COULD NOT POINT I.T.A.NO.3171/AHD/2009 I.T.A.NO. 3216 3182/AHD/2010 5 OUT ANY DIFFERENCE IN THE FACTS OF THE PRESENT CASE AND THE CASE OF THE ASSESSEES FATHER SHRI MULCHANDBHAI S AMIN (SUPRA). WE ALSO FIND THAT ON PAGE 17 OF THE PAPER BOOK THE ASSESSEE HAS GIVE N YEAR WISE CHART FROM THE ASSESSMENT YEAR 2003-04 TO 2009-2010 AND AS PER THIS CHART REVENUE HAS ACCEPTED IN ALL YEARS THE CLAIM OF THE ASSESSEE REGARDING SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN ON SALE OF SHARES EXCEPT IN THESE TWO YEARS. IN ASSESSMENT YEAR 2003-04 2005-06 AND 2009-2010 THE ASSESSMENT WAS COMPLETED BY THE A.O. U/S 143(3) AND THE INCOME/LOSS DECLARED UNDER THE HEAD CAPITAL GAIN WAS ACCEPTED B Y THE A.O. SINCE LD. D.R. OF THE REVENUE COULD NOT POINT OUT ANY DIFFERE NCE IN FACTS IN THE PRESENT CASE AND IN THE CASE OF THE ASSESSEES FATH ER SHRI MULCHANDBHAI S AMIN WE ARE OF THE CONSIDERED OPINION THAT THERE I S NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE OF THE ASSESSEE A ND HENCE BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION IN THE CASE OF ASSESSEES FATHER IN THE PRESENT CASE ALSO WE HOLD THAT THE INCOME ON SALE OF SHARES IS TO BE ASSESSED AS SHORT TERM CAPITAL GAIN IN BOT H THE YEARS. 9. REGARDING THIS ASPECT THAT THE PROFITS ON SALE O F SHARES IS MANY TIMES MORE THAN THE AMOUNT OF DIVIDEND INCOME AND T HEREFORE THIS IS A BUSINESS TRANSACTION WE ARE OF THE CONSIDERED OPIN ION THAT THIS BASIS IS FALLACIOUS. IN A GIVEN CASE THERE MAY BE NO INC OME AT ALL ON HOLDING OF AN ASSET AND THERE MAY BE SUBSTANTIAL INCOME ON THE SALE OF THE SAME AND THEN IT CANNOT BE SAID THAT SUCH ASSET WAS HELD FOR BUSINESS PURPOSE ONLY BECAUSE OF THIS REASON THAT PROFIT ON SALE IS MANY TIMES MORE THAN THE REGULAR INCOME DURING HOLDING PERIOD OF SUCH ASSET. IF A PERSON IS HOLDING A LAND AS INVESTMENT THERE MAY BE NO INCOME DURING THE HOLDING PERIOD OF LAND OR A MEAGER INCOME DURING THIS HOLDING PERI OD AND THERE MAY BE SUBSTANTIAL INCOME ON ITS SALE BUT THIS FACTOR ALON E CANNOT DETERMINE THE NATURE OF TRANSACTION. THE 2 ND ARGUMENT OF THE REVENUE IS REGARDING I.T.A.NO.3171/AHD/2009 I.T.A.NO. 3216 3182/AHD/2010 6 VOLUME AND FREQUENCY OF TRANSACTION. ON THIS ASPEC T THERE IS ALREADY A TRIBUNAL DECISION RENDERED IN THE CASE OF JANAK RAN GWALLA VS ACIT AS REPORTED IN 11 SOT 627 (BOM.). IN THAT CASE IT WA S HELD BY THE TRIBUNAL THAT MERELY HIGH VOLUME OF TRANSACTIONS TRANSACTED BY THE ASSESSEE WOULD NOT ALTER THE NATURE OF TRANSACTION. CONSIDERING A LL THESE FACTS AND THE LEGAL POSITION WE FEEL THAT IN THE FACTS OF THE PR ESENT CASE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN BOTH THE Y EARS IS TO BE ACCEPTED AS SUCH AND IT CANNOT BE ASSESSED AS BUSINESS INCOME. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED WHEREAS BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 6/2. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7/2.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.8/2 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 9/2 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.9/2 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/02/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .