Ms. Seema Aggarwal, New Delhi v. Addl. CIT, New Delhi

ITA 395/DEL/2011 | 2006-2007
Pronouncement Date: 31-03-2011 | Result: Allowed

Appeal Details

RSA Number 39520114 RSA 2011
Assessee PAN AAGPG5823K
Bench Delhi
Appeal Number ITA 395/DEL/2011
Duration Of Justice 2 month(s) 10 day(s)
Appellant Ms. Seema Aggarwal, New Delhi
Respondent Addl. CIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 31-03-2011
Date Of Final Hearing 24-03-2011
Next Hearing Date 24-03-2011
Assessment Year 2006-2007
Appeal Filed On 21-01-2011
Judgment Text
ITA NOS. 233&395/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 233/DEL/2011 A.Y. : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-30(1) ROOM NO. 106 DRUM SHAPE BLDG. NEW DELHI - 110 002 VS. MS. SEEMA AGGARWAL 4859/24 DARYA GANJ NEW DELHI (PAN/GIR NO. : AAGPG5823K) AND ITA NO. 395/DEL/2011 A.Y. 2006-07 MS. SEEMA AGGARWAL 4859/24 DARYA GANJ NEW DELHI (PAN/GIR NO. : AAGPG5823K) VS. ADDL. COMMISSIONER OF INCOME TAX RANGE-30 NEW DELHI (APPELLANT (APPELLANT (APPELLANT (APPELLANT S SS S ) )) ) (RESPONDENT (RESPONDENT (RESPONDENT (RESPONDENT S SS S ) )) ) ASSEESSEE BY : SH. GURMEET SINGH GREWAL CA DEPARTMENT BY : SH. KISHORE B. (D.R.) ORDER ORDER ORDER ORDER PER PER PER PER SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM THESE CROSS APPEALS BY THE REVENUE AND BY THE AS SESSEE EMANATE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 03.11.2010 PERTAINING TO ASSESSMENT YEAR 2006-07. ITA NOS. 233&395/DEL/2011 2 REVENUES APPEAL REVENUES APPEAL REVENUES APPEAL REVENUES APPEAL (ITA NO. 233/D/2011) (ITA NO. 233/D/2011) (ITA NO. 233/D/2011) (ITA NO. 233/D/2011) 2. THE GROUNDS READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 415392/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UNEXPLAINED CASH CREDITS. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN AL LOWING EXEMPTION U/S 10(38) ON SALE OF RELIANCE MUTUAL FUND S UNITS. SINCE THE ASSESSEE HAS CONVERTED HERE INVESTMENT IN STOCK IN TRADE IN THE BEGINNING OF THE YEAR THEREFORE T HE PROFIT EARNED ON THE SALE OF UNITS WAS TAXABLE UNDER THE H EAD PROFIT AND GAINS FROM BUSINESS AND PROFESSIONS. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 6 31 242/- BEING THE PROFIT ON S ALE OF RELIANCE MUTUAL FUND UNITS. IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING TO TREAT THE SPECULATION LOSS OF ` 8 37 4 47/- FOR THE PERIOD FROM 1.4.2005 TO 25.1.2006 I.E. BEFORE THE APPLICABILITY OF NOTIFICATION NO. 2/2006 AS NON S PECULATION LOSS AND TO ALLOW SET OFF AGAINST OTHER BUSINESS I NCOME. V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS IN CONSEQU ENCE ITA NOS. 233&395/DEL/2011 3 OF ALLOWING SET OFF OF SPECULATION LOSS ERRED IN D ELETING THE ADDITION OF ` 5 04 288/-. ASSESSEES APPEAL (ITA NO. 395/DEL/2011) ASSESSEES APPEAL (ITA NO. 395/DEL/2011) ASSESSEES APPEAL (ITA NO. 395/DEL/2011) ASSESSEES APPEAL (ITA NO. 395/DEL/2011) 3. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) HAS WRONGLY CHARGED TO TAX ` 1 59 887/- B EING LONG TERM CAPITAL GAIN ON SALE OF MUTUAL FUND WHICH IS EXEMPT UNDER SECTION 10(38) OF THE INCOME TAX ACT 1961. 4. APROPOS THE FIRST ISSUE OF UNEXPLAINED CASH CRE DITS OF ` 4 15 392/- IN REVENUES APPEAL. ASSESSING OFFICER NOTED THA T IN THE ANNEXURE TO CAPITAL ACCOUNT THE OPENING BALANCE TAKEN AT ` 3 6 08.912/- AND NET PROFIT OF PREVIOUS YEAR OF PRAKASH SONS HAS BEEN SH OWN AT ` 4 15 392/- ASSESSING OFFICER OBSERVED THAT ASSESSEE IN HER BA LANCE SHEET FOR THE FINANCIAL YEAR ENDING 31.3.2005 HAS ALREADY TAKEN PROFIT OF ` 2 36 137/- FROM PRAKASH SONS FOR THE PREVIOUS YEAR. THUS ASSESSING OFFICER HELD THAT THE AMOUNT OF 4 15 392/- REMAINS U NEXPLAINED. THUS HE MADE THE ADDITION OF THE SAME. 5. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) THE NECESSARY EXPLANATION AND THE DETAILS WERE SUBMITTED . IT WAS EXPLAINED THAT THE AMOUNT OF ` 4 15 392/- CONSISTED OF ` 2 36 137/- FROM THE PROFIT OF M/S PRAKASH SONS (PROPRIETORSHIP FIRM OF THE ASSESSEE DOING BUSINESS OF BOOKS) AND THE BALANCE AMOUNT OF ` 1 79 254/- WAS INCOME FROM SHARES TRADING BUSINESS. CONSIDERING THE SAME LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSER VED THAT THE SAME IS EXPLAINED AND HE DELETED THE ADDITION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TA X (APPEALS) HAS ITA NOS. 233&395/DEL/2011 4 GIVEN A FINDING THAT ADDITION OF 4 15 392/- AS UNEX PLAINED CASH CREDIT IS NOT WARRANTED. ASSESSEE HAS FURNISHED THE NECESSARY DETAILS PERTAINING TO THE FIGURE OF ` 4 51 392/-. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) AND HENCE WE UPHOLD THE SAME. 7. AS REGARDS THE ISSUE OF ADDITION OF ` 6 31 242/- . THE AO HAS DISCUSSED THE ISSUE IN PARA 12 OF THE ORDER. THE A SSESSEE HAD PURCHASED THE RELIANCE MUTUAL FUND UNIT OF ` 9 50 0 00/- ON 23.2.2004 AND THE SAME WAS SOLD ON 29.3.2004. THE ASSESSEE H AD INCURRED THE LOSS OF ` 4 71 354/- WHICH WAS CLAIMED AS A LOSS IN A.Y. 2004-05. THE ASSESSEE WAS ALLOTTED BONUS UNITS @ 1:1 ON 23.2.200 4 WHICH WAS THE RECORD DATE FOR THE RECEIPT/ ENTITLEMENT OF BONUS U NITS. THE SAME BONUS UNITS OF THE MUTUAL FUND WERE REDEEMED /SOL D ON 1.4.2005 AT A VALUE OF ` 6 31 242/- AND CLAIMED THE INCOME AMOUNT AS EXEMPT U/S 10(38). THE BONUS UNITS WERE NOT HAVING ANY COST O F ACQUISITION SO IT WAS NOT APPEARING IN THE BALANCE SHEET OF A.Y. 2004 -05. SINCE THE TRANSACTION OF PURCHASE AND SALE OF MUTUAL FUNDS WA S SQUARED OFF IN THE FY 2003-04 ITSELF IT DID NOT GET REFLECTED IN THE BALANCE SHEET OF A.Y. 2004-05. THE ASSESSEE HAS TREATED THE INVESTME NT IN SHARES AS INVESTMENT UPTO A.Y.2005-06 AND THE SAME HAS BEEN CO NVERTED INTO BUSINESS W.E.F. A.Y. 2006-07. THE INVESTMENT IN UN LISTED COMPANIES HAS BEEN KEPT AS INVESTMENT. AS THE ASSESSEE HAS C ONVERTED HER INVESTMENTS INTO STOCK IN TRADE/ BUSINESS THE ASSE SSING OFFICER HAS TREATED THE PROFIT ON SALE OF MUTUAL FUND UNITS AS BUSINESS INCOME AND MADE THE ADDITION OF ` 6 31 242/-. 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE AND CONC LUDED AS UNDER:- ITA NOS. 233&395/DEL/2011 5 THE ASSESSEE HAS PURCHASED THE MUTUAL FUND UNITS O N THE RECORD DATE I.E. 23.2.2004 KNOWING FULLY THAT THE ASSESSEE WOULD BE RECEIVING BONUS UNITS WHICH THE ASSESSEE RECEIVED. THE ASSESSEE ALSO SOLD THE MUTUAL FUND UNITS IMMEDIATEL Y THEREAFTER ON 29.3.2004. SO THE TRANSACTION OF THE ASSESSEE A TTRACTS THE PROVISIONS BONUS STRIPPING U/S 94(8). ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO DISALLOW THE LOSS OF ` 4 7 1 354/- IN THE A.Y. 2004-05. AS PER THE PROVISIONS OF THIS SECTION T HE COST OF ACQUISITION OF THE BONUS UNITS WILL BE DEEMED TO BE ` 4 71 354/- AND THE SELL VALUE OF THE BONUS UNITS IS ALREADY KN OWN AT ` 6 31 241/-. SO THERE WILL BE THE INCOME OF ` 1 59 887/- (` 6 31 241 (-) ` 4 71 354/- = ` 1 59 887/-) AND SUBJE CT TO THE ABOVE DIRECTION THE ADDITION TO THE EXTENT OF ` 1 59 887 /- IS CONFIRMED AND THE BALANCE AMOUNT OF ` 4 71 354/- IS DELETED. 9. AGAINST THIS ORDER THE REVENUE AND ASSESSEE ARE IN APPEAL BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CORRECT THAT THE PROVISIONS OF BONUS STRIPPING U/S 94(8) ARE ATTRACTED IN THE CASE AS THE ASSESSEE HAS SOLD THE MUTUAL FUND U NITS IMMEDIATELY. THE SECTION READS AS UNDER:- WHERE (A) ANY PERSON BUYS OR ACQUIRES ANY UNITS WITHIN A PE RIOD OF THREE MONTHS PRIOR TO THE RECORD DATE; (B) SUCH PERSON IS ALLOTTED ADDITIONAL UNITS WITHOUT ANY PAYMENT ON THE BASIS OF HOLDING OF SUCH UNITS ON SUCH DATE; ITA NOS. 233&395/DEL/2011 6 (C) SUCH PERSON SELLS OR TRANSFERS ALL OR ANY OF THE U NITS REFERRED TO IN CLAUSE (A) WITHIN A PERIOD OF NINE MONTHS AFTER SUCH DATE WHILE CONTINUING TO HOLD ALL OR ANY OF THE ADDITIONAL UNI TS REFERRED TO IN CLAUSE (B) THEN THE LOSS IF ANY ARISING TO HIM ON ACCOUNT OF SU CH PURCHASE AND SALE OF ALL OR ANY OF SUCH UNITS SHALL BE IGNORED FOR T HE PURPOSES OF COMPUTING HIS INCOME CHARGEABLE TO TAX AND NOTWITHSTA NDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT THE AMO UNT OF LOSS SO IGNORED SHALL BE DEEMED TO BE THE COST OF PURCHASE OR ACQUISITION OF SUCH ADDITIONAL UNITS REFERRED TO IN CLAUSE (B) AS ARE HELD BY HIM ON THE DATE OF SUCH SALE OR TRANSFER. 10.1 FROM THE READING OF ABOVE IT IS CLEAR THAT THE COST OF BONUS SHARES IN THIS CASE WILL BE ` 471354/-. UNDER THE C IRCUMSTANCES WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ORDE R AS TO THE COST OF THESE BONUS SHARES IS CORRECT. HOWEVER SINCE THEY WERE LONG TERM CAPITAL ASSET ASSESSEES PLEA IS CORRECT THAT THE G AIN OF ` 159887/- SHOULD EXEMPT U/S 10(38) OF THE ACT.. 11. APROPOS TO GROUND NO. (IV) AND (V) IN REVENUE S APPEAL THE ASSESSEE HAS SHOWN THE DERIVATIVE/F&O TRADING LOSS OF ` 7 16 219/- WHICH CONSISTED OF LOSS OF ` 8 37 447/- FOR THE PER IOD 1.4.2005 TO 24.1.2006 AND PROFIT OF ` 1 21 228/- FOR THE PERIOD 25.1.2006 TO 31.3.2006. ASSESSING OFFICER TREATED THE LOSS OF ` 8 37 447/- AS SPECULATIVE LOSS AND DID NOT ALLOW THE SET OFF AGAI NST THE PROFIT OF ` 1 21 228/- WHICH THE ASSESSING OFFICER TREATED A S BUSINESS INCOME. IN THE TAKING THIS DECISION ASSESSING OFFICER RELI ED UPON THE BOARDS NOTIFICATION NO. 2/2006 DATED 25.1.2006 WHICH IS EF FECTIVE FROM ITA NOS. 233&395/DEL/2011 7 25.1.2006 ONLY WHICH MEANS THAT BEFORE THIS DATE AL L THE TRANSACTIONS OF F&O TRADING LOSS IS A SPECULATION LOSS AND THE T RANSACTIONS AFTER 25.1.2006 ARE BUSINESS INCOME/LOSS. THE SPECULATIO N LOSS OF THE PRE- NOTIFICATION PERIOD CANNOT BE SET OFF AGAINST THE I NCOME OF THE POST NOTIFICATION PERIOD I.E. 25.1.2006. 12. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE AND HELD AS UNDER:- I HAVE CONSIDERED THE ADDITION OF THE ASSESSING OF FICER REMAND REPORT OF THE AO AND THE SUBMISSION OF THE ASSESSEE IT IS SEEN THAT THE ASSESSEE HAS SUBMITTED THE NECESSARY DETAI LS BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS CLAIMED THAT TH E BUSINESS LOSS AS PER THE AMENDED PROVISIONS OF SECTION 43(5)( D) WHICH IS EFFECTIVE FROM A.Y. 2006-07 AND THE CASE OF THE ASSE SSEE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF G.K. ANAND BROTHERS (SUPRA) AND THE CASE OF KOLKATA ITAT SPECIAL BENCH OF SHREE CAPITAL SERVICES LTD. (SUPRA). AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE ORDERS OF THE HONBLE TRIBUNAL I AM OF THE VIEW THAT THE ASSE SSING OFFICER IS NOT JUSTIFIED TO DISALLOW THE CLAIM OF THE ASSESS EE SINCE THE ITA NOS. 233&395/DEL/2011 8 ASSESSEE HAS CLAIMED THE SAME AS PER LAW AND ACCORDI NGLY THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 13. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS. IT WILL BE GAINFUL TO REFER TO THE PROVI SION OF SECTION 43(5)(D) WHICH READS AS UNDER:- 43(5)(D) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING IN D ERIVATIVES REFERRED TO IN CLAUSE P(AC)] OF SECTION 2 OF THE SE CURITIES CONTRACTS (REGULATION) ACT 1956 (42 OF 1956) CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE;] SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTIO N. 14.1 WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RELIED UPON THE DECISION OF THE THIS TRIBUNAL IN TH E CASE OF G.K. ANAND BROTHERS BUILDWELL PVT. LTD. 34 SOT 439 FOR THE PRO POSITION THAT THERE WILL BE NO DISTINCTION BETWEEN PRE NOTIFICATION PER IOD AND POST NOTIFICATION PERIOD. AS THE PROVISIONS OF SECTION 43(5)(D) IS EFFECTIVE FROM ASSESSMENT YEAR 2006-07. UNDER THE CIRCUMSTANC ES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HENCE WE UPHOLD THE SAME. ITA NOS. 233&395/DEL/2011 9 15. IN THE RESULT REVENUES APPEAL STANDS DISMISSE D AND ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/03/2011. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTA ACCOUNTA ACCOUNTA ACCOUNTANT MEMBER NT MEMBER NT MEMBER NT MEMBER DATE 31/03/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES