ACIT 20(1), MUMBAI v. ANAND R. BH AL, MUMBAI

ITA 379/MUM/2010 | 2006-2007
Pronouncement Date: 17-11-2011

Appeal Details

RSA Number 37919914 RSA 2010
Assessee PAN AEBPB7854G
Bench Mumbai
Appeal Number ITA 379/MUM/2010
Duration Of Justice 1 year(s) 10 month(s) 2 day(s)
Appellant ACIT 20(1), MUMBAI
Respondent ANAND R. BH AL, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-11-2011
Appeal Filed By Department
Bench Allotted A
Date Of Final Hearing 08-08-2011
Next Hearing Date 08-08-2011
Assessment Year 2006-2007
Appeal Filed On 15-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A BEFORE SHRI D. MANMOHAN (VP) & SHRI B. RAMAKOTAIAH (AM) I.T.A.NO. 93/MUM/2010 (ASSESSMENT YEAR : 2006-07) SHRI ANAND R. BAHL SAKET PLOT NO. 84 MIDC 15 TH ROAD ANDHERI EAST MUMBAI-400 093. PAN/GIR NO. : AEBPB7854G VS. ADDL. CIT RANGE 20(1) PIRAMAL CHAMBERS 6 TH FLOOR ROOM NO. 603 LALBAUG PAREL MUMBAI-400 012. I.T.A.NO. 379/MUM/2010 (ASSESSMENT YEAR : 2006-07) ASST. CIT RANGE 20(1) PIRAMAL CHAMBERS 6 TH FLOOR ROOM NO. 603 LALBAUG PAREL MUMBAI-400 012. VS. SHRI ANAND R. BAHL SAKET PLOT NO. 84 MIDC 15 TH ROAD ANDHERI EAST MUMBAI-400 093. PAN/GIR NO. : AEBPB7854G I.T.A.NO. 92/MUM/2010 (ASSESSMENT YEAR : 2006-07) SHRI KARAN R. BAHL SAKET 15 TH ROAD MIDC PLOT NO. 84 ANDHERI EAST MUMBAI-400 093. PAN/GIR NO. : AGPPB9301E VS. ADDL. CIT RANGE 20(1) PIRAMAL CHAMBERS 6 TH FLOOR ROOM NO. 603 LALBAUG PAREL MUMBAI-400 012. I.T.A.NO. 380/MUM/2010 (ASSESSMENT YEAR : 2006-07) ADDL. CIT RANGE 20(1) PIRAMAL CHAMBERS 6 TH FLOOR ROOM NO. 603 LALBAUG PAREL MUMBAI-400 012. VS. SHRI KARAN R. BAHL SAKET G-2 MIDC MAROL INDUSTRIAL AREA MAHAKALI CAVES ROAD MUMBAI-400 093. PAN/GIR NO. : AGPPB9301E ASSESSEE BY : SHRI BIRON GABHAWALA DEPARTMENT BY : SHRI P.K.B MENEN DATE OF HEARING : 17.10.2011 DATE OF PRONOUNCEMENT : 17.10.2011 ORDER PER D. MANMOHAN (VP) :- THESE CROSS APPEALS FILED BY TWO ASSESSEES ARE DIR ECTED AGAINST THE ORDERS PASSED BY LEARNED CIT(A)-31 MUMBAI AND THEY PERTAIN TO A.Y. SHRI ANAND R. BAHL SHRI KARAN R. BAHL 2 2006-07. ISSUES BEING IDENTICAL IN BOTH THESE SET O F APPEALS WE PROCEED TO DISPOSE OF THE APPEALS BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WHETHER INCOME DERIVED BY THE ASSESSEES FROM THE TRANSACTION IN SHARE MARKET HAS TO BE TREATED AS CAPITAL GAIN OR BUSINESS INCOME IS A SUBJECT MATTER OF DISPUTE BEFORE US. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE INCOME DERIVED BY THE ASSESSEE FRO M SALE OF SHARE HAS TO BE TREATED AS BUSINESS INCOME WHEREAS LEARNED CIT(A ) AFTER ANALYSING TRANSACTIONS TREATED PARTLY AS BUSINESS INCOME A ND PARTLY AS CAPITAL GAIN. THIS GAVE RISE TO CROSS APPEALS IN RESPECT O F BOTH THE ASSESSEES. 3. AT THE TIME OF HEARING LEARNED DEPARTMENTAL REPR ESENTATIVE AS WELL AS LEARNED COUNSEL FOR THE ASSESSEE ADMITTED T HAT IDENTICAL ISSUE HAS COME UP IN THE CASE OF CONNECTED ASSESSEE I.E. SHRI RAJAN R. BAHL WHEREIN ITAT D BENCH MUMBAI SET ASIDE THE ISSUE T O THE FILE OF THE ASSESSING OFFICER WITH FOLLOWING DIRECTIONS :- 9. WE ALSO FIND THAT THE ASSESSEE HAS NOT PLACED O N RECORD ITS COMPUTATION OF INCOME NOR PLACED THE NATURE OF INCO ME EARNED ON F&O TRANSACTIONS. A GOOD INDICATOR TO KNOW WHETHER ASSESSEE IS INDULGING IN SHARE TRANSACTIONS AS BUSINESS OR AS I NVESTMENT IS TO CORRELATE WITH REFERENCE TO THE F&O DEALINGS. IF AS SESSEE IS INDULGING IN SAME SHARES BOTH IN PHYSICAL DELIVERY AS WELL AS IN F&O ON THE SAME DAY THIS MAY INDICATE THAT THE NATU RE OF TRANSACTION IS THAT OF BUSINESS AS AN ADVENTURE. IN VESTMENT IN A PARTICULAR SCRIP BOTH IN PHYSICAL DELIVERY AND IN S PECULATION TRANSACTION OF F&O CANNOT BE CONSIDERED DIFFERENT W HEN UNDERTAKEN AT THE SAME TIME AND SAME NATURE OF TRAN SACTION ON THE SAME DAY. THEREFORE ONE WAY OF ANALYSING THE INTENT ION OF THE ASSESSEE OF TRADING OR INVESTMENT IN A PARTICULAR S CRIP IS TO CORRELATE WITH THE F&O TRANSACTIONS. AS NOTICED EARLIER THE P ROFIT IN F&O TRANSACTIONS IS 5 TIMES THE GAINS EARNED IN SHARE T RANSACTIONS. THEREFORE IN THE INTEREST OF JUSTICE SINCE COMPLET E DETAILS ARE NOT PLACED ON RECORD TO ANALYSE WHETHER THE ASSESSEES SHARE TRANSACTIONS ARE IN THE NATURE OF BUSINESS TRANSACT ION OR INVESTMENT TRANSACTION WE ARE OF THE OPINION THAT THE MATTER CAN BE RESTORED BACK TO THE FILE OF THE A.O. TO EXAMINE THE FACTS A ND ANALYSE THE INTENTION. 10. THE FREQUENCY OF TRANSACTIONS VOLUME OF TRANSA CTIONS HOLDING PERIOD OF SHARES ARE ONLY INDICATIVE IN NATURE TO A NALYSE WHETHER SHRI ANAND R. BAHL SHRI KARAN R. BAHL 3 ASSESSEE IS TRADING OR INVESTING. NO SINGLE PARAMET ER CAN BE CONSIDERED TO DETERMINE ONE WAY OR THE OTHER. THERE ARE VARIOUS ORDERS OF THE ITAT BOTH IN FAVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE DEPENDING ON THE FACTS OF EACH CASE. THERE FORE RELYING ALONE ON JUDICIAL PRINCIPLES IS NOT A HEALTHY PRACT ICE TO ANALYSE THE INTENTION OF THE ASSESSEE OF KNOWING WHETHER THE TR ANSACTIONS ARE TRADING IN NATURE OR INVESTMENT IN NATURE. NOT ONLY THAT THE A.O. GIVES A FINDING THAT ASSESSEE HAS NO OTHER WORK EXC EPT SHARE RELATED TRANSACTIONS WHEREAS BEFORE THE CIT(A) IT W AS CONTENDED THAT ASSESSEES MAIN ACTIVITY IS THAT OF MANUFACTUR ING AND EXPORT OF GARMENTS IN WHICH HE IS ASSOCIATED AS DIRECTOR/PART NER IN VARIOUS CONCERNS AND ONLY IN THIS YEAR SHARE MARKET TRANSAC TIONS ARE MORE COMPARED TO EARLIER YEARS. SINCE THESE FACTS ARE NO T EXAMINED BY THE A.O. IN ITS CORRECT PERSPECTIVE WE ARE OF THE OPINION THAT THE A.O. SHOULD ANALYSE THE TRANSACTIONS AFRESH VIS--V IS THE INCOME EARNED IN F&O SECTION. NOT ONLY THAT AS SEEN FROM THE STATEMENT OF INCOME IN EARLIER YEARS THERE WERE ALSO SPECULATION TRANSACTIONS. IF ASSESSEE IS HAVING SPECULATION TRANSACTIONS IN SHAR E MARKET (OTHER THAN F&O) THAT CAN BE AN INDICATION OF INDULGING IN BUSINESS TRANSACTIONS. THE A.O. IS DIRECTED TO KEEP IN MIND THE FACTS OF THE CASE ANALYSE THE ISSUE EXAMINE THE SOURCE OF INCO ME VIS--VIS THE RECORD OF THE ASSESSEE IN EARLIER AND LATER YEARS A ND ALSO THE TRANSACTIONS UNDERTAKEN IN SPECULATION AND F&O TRAD ING SO AS TO COME TO A CONCLUSION WHETHER ASSESSEE IS AN INVESTO R OR A TRADER. IN CASE ASSESSEE IS BOTH AN INVESTOR AND A TRADER THE EXTENT OF TRANSACTIONS CAN BE ANALYSED DEPENDING ON THE FACTS . WITH THESE DIRECTIONS THE ORDERS OF THE CIT(A) AND ARE SET ASI DE AND THE ISSUE OF TREATMENT OF GAINS ON SHARE TRANSACTIONS AS BUSI NESS INCOME OR CAPITAL GAINS IS RESTORED TO THE FILE OF THE A.O. T O DECIDE IT AFRESH. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN AN OP PORTUNITY AND A.O. IS DIRECTED TO KEEP VARIOUS LEGAL PRINCIPLES O N THIS ISSUE WHILE DECIDING THE MATTER. 4. FACTS AND CIRCUMSTANCES BEING IDENTICAL WE SET A SIDE THE ORDERS PASSED BY THE ASSESSING OFFICER AND LEARNED CIT(A) IN THESE CASES ALSO WITH THE DIRECTION TO THE ASSESSING OFFICER TO DECI DE THE ISSUE AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD. HAVING REGARD TO THE OBSERVATIONS OF THE BENCH IN THE AFOREMENTIONED CASE WE MAY ALSO CLARIFY THAT IF AN ASSESSEE IS FOUND INDULGING IN REPETITIVE TRANSACTI ONS FROM YEAR TO YEAR MERELY BECAUSE FEW OF THE TRANSACTIONS OUT OF THE S AME ARE OF ONE TIME PURCHASE AND SALE SUCH TRANSACTIONS CANNOT BE COMPA RTMENTALIZED TO TREAT THEM AS INVESTMENTS SINCE HOST OF OTHER FACT ORS HAVE TO BE ANALYSED TO ASCERTAIN AS TO WHETHER ASSESSEE IS A T RADER OR INVESTOR AS STATED IN THE AFOREMENTIONED ORDER. WITH THESE OBSE RVATIONS WE SET ASIDE SHRI ANAND R. BAHL SHRI KARAN R. BAHL 4 THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO D ECIDE IT AFRESH. PRONOUNCED ACCORDINGLY IN THE OPEN COURT. 5. IN THE RESULT APPEALS FILED BY THE ASSESSEES AS WELL AS REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (D.MANMOHAN) VICE-PRESIDENT DATED : 17 TH OCTOBER 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS