DCIT 4(1), MUMBAI v. TAPAN J MEHTA, MUMBAI

ITA 3189/MUM/2013 | 2009-2010
Pronouncement Date: 25-10-2016

Appeal Details

RSA Number 318919914 RSA 2013
Assessee PAN AEHPM2396E
Bench Mumbai
Appeal Number ITA 3189/MUM/2013
Duration Of Justice 3 year(s) 6 month(s)
Appellant DCIT 4(1), MUMBAI
Respondent TAPAN J MEHTA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2016
Appeal Filed By Department
Bench Allotted E
Tribunal Order Date 25-10-2016
Date Of Final Hearing 04-08-2015
Next Hearing Date 04-08-2015
Assessment Year 2009-2010
Appeal Filed On 25-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER I.T.A. NO.3189/M/2013 (ASSESSMENT YEAR: 2009 - 2010 ) DCIT - 4(1) 6 TH FLOOR R.NO.640 AAYAKAR BHAVAN MUMBAI 20. / VS. SHRI TAPAN J MEHTA E - 305 3 RD FLOOR SIMLA HOUSE 51 NEPEANSEA ROAD MUMBAI. ./ PAN : AEHPM2396E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI JAYESH DADIA / RESPONDENT BY : SHRI NITIN WAGHMODE DR / DATE OF HEARING : 25 .10.2016 / DATE OF PRONOUNCEMENT : 25 .10.2016 / O R D E R PER D. KARUNAKARA RAO AM: THIS APPEAL FILED BY THE REVENUE ON 25.4.2013 IS AGAINST THE ORDER OF THE CIT (A) - 8 MUMBAI DATED 22.2.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 60 57 182/ - TREATING BUSINESS LOSS AS SHORT TERM CAPITAL LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER OF THE LD CIT (A) IS CONTRARY TO LAW AND CONSEQUENTLY MERITS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO DELETION OF ADDITION OF RS. 60 57 182/ - TREATING THE BUSINESS LOSS AS SHORT TERM CAPITAL LOSS. BRIEFING THE RE LEVANT FACTS LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FOR THE FIRST TIME ENTERED INTO TRANSACTIONS RELATING TO PURCHASE AND SALE OF SHARES AND THEY WERE SHOWN AS STOCK - IN - TRADE IN THE BOOKS OF ACCOUNTS. IN THE PROCESS ASSESSEE EARNED LO SS AND THE SAME WAS SHOWN AS BUSINESS LOSS. IN THE ASSESSMENT AO TREATED THE SAME AS SHORT TERM CAPITAL LOSS. HOWEVER IN THE FIRST APPELLATE PROCEEDINGS CIT (A) CONSIDERED THE FACTS OF THE CASE THE ENTRIES IN THE BOOKS OF ACCOUNT THE CIRCULAR 2 NO.4 O F 2007 OF CBDT AND ALSO APPRECIATED THE OTHER ASPECTS OF HOLDING PERIOD NUMBER OF TRANSACTIONS ETC AND GRANTED RELIEF TO THE ASSESSEE. CIT (A) RELIED HEAVILY ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. HARSHA N. MEHTA VS. DCIT (2011) 43 SOT 332 (MUM BAI) FOR THE PROPOSITION THAT THE FREQUENCY HOLDING PERIOD / NUMBER OF SCRIPS VOLUME BEING LESS CANNOT BE TREATED AS SHORT TERM CAPITAL GAINS. PARAS 2.3(C) TO 2.3(E) OF THE CIT (A) ARE RELEVANT IN THIS REGARD. ACCORDINGLY CIT (A) GRANTED RELIEF TO TH E ASSESSEE. 3. BEFORE US LD DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO AND MENTIONED THAT THE ORDER OF THE CIT (A) REQUIRES REVERSAL. 4. ON THE OTHER HAND LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE REFERRED FACTS OF THE CASE NUMBER OF TRANSACTIONS VOLUME TURNOVER NUMBER OF SCRIPS HOLDING PERIOD ETC AND DEMONSTRATED THAT THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. HE ALSO SUBMITTED THAT IN THE SUBSEQUENT ASSESSMENT YEARS THERE IS NO CHANGE IN THE CLAIM OF THE ASSESSEE AND THE AO ACCEPTED THE CLAIM WITHOUT ANY ADDITIONS. FURTHER BRINGING OUR ATTENTION TO THE BOARD CIRCULAR NO.6 OF 2016 DATED 29.2.2016 LD COUNSEL FOR THE ASSESSEE DEMONSTRATED AS PER THE PARA 3(A) OF THE SAID CIRCULAR AO IS NOT PERMITTED TO CHANGE THE HEAD OF INCOME FROM BUSINESS INCOME TO THE CAPITAL GAINS UNLESS THERE IS ANY MATERIAL TO CONTRIBUTE AGAINST THE CLAIM OF THE ASSESSEE. ACCORDING TO PARA 4 OF THE SAID CIRCULAR ONLY BOGUS CLAIMS OR SHAM TRANSACTIONS ALONE ARE EXEMPTED FROM THE RULE MENTIONED IN PARA 3(A) OF THE SAID CIRCULAR 6/2016 (SUPRA). 5. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARA 2.3 OF HIS ORDER IN PARTICULAR WE FIND THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. FOR THE SAKE COMPLETENESS OF THIS ORDER THE SAID PARA 2.3(E) IS EXTRACTED AS UNDER: - 2.3(E) THEREFORE IN THE PRESENT CASE THE APPELLANT HAS SHOWN SHARE TRANSACTION AS BUSINES S AND ALSO CLAIMED THE LOSS INCURRED IN SHARE TRADING TRANSACTIONS AS BUSINESS LOSS. THE AO IS NOT CORRECT IN COMING TO A CONCLUSION THAT LOSS OF RS. 60 57 182/ - IS SHORT TERM CAPITAL LOSS AND NOT BUSINESS LOSS PARTICULARLY WHEN HIGH FREQUENCY AND VOLUMINO US TRANSACTIONS WITH LOW HOLDING PERIOD IS THERE. IN VIEW OF THIS THE ADDITION MADE BY THE AO IS ACCORDINGLY DELETED. 6. IN OUR VIEW THE CIT (A) CAME TO THE ABOVE CONCLUSION RELYING ON THE COORDINATE BENCH DECISION IN THE CASE OF SMT. HARSHA N. MEHTA (SUPRA). FURTHER WE 3 HAVE PERUSED THE PARA 3(A) OF THE BOARD CIRCULAR NO.6/2016 (SUPRA) AND FIND THE RELEVANT LINES READ AS UNDER: - 3(A) WHERE THE ASSESSEE ITSELF IRRESPECTIVE OF THE PERIOD OF HOLDING THE LISTED SHARES AND SECURITIES OPTS TO TREAT THEM AS STOCK - IN - TRADE THE INCOME ARISING FROM TRANSFER OF SUCH SHARES / SECURITIES WOULD BE TREATED AS ITS BUSINESS INCOME. 7. FROM THE ABOVE IT IS EVIDENT THAT IN CASE WHERE THE ASSESSEE OPTS CERTAIN TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN THE BOOKS OF ACCOUNT AS STOCK - IN - TRADE BUSINESS INCOME CONSTITUTES APPROPRIATE HEAD OF INCOME IN SUCH CASES. AO IS NOT ACCEPTED TO CHANGE THE HEAD OF INCOME FROM FROM BUSINESS INCOME TO THE CAPITAL GAINS UNLESS THE CONDITIONS SPECIFIED IN PARA 4 OF THE SAID CIRCULAR (SUPRA) IE BOGUS CLAIMS OR SHAM TRANSACTIONS / QUESTIONABLE TRANSACTIONS ARE INVOLVED. CONSIDERING THE ABOVE WE A RE OF THE OPINION THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH OCTOBER 2016. S D / - S D / - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 25 .10.2016 . . ./ OKK SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . //TRUE COPY// 4 / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI