VIJAY KUMAR SOORENJI, MUMBAI v. ACIT 12(1), MUMBAI

ITA 5039/MUM/2012 | 2008-2009
Pronouncement Date: 31-07-2015 | Result: Allowed

Appeal Details

RSA Number 503919914 RSA 2012
Assessee PAN AAGPS7829F
Bench Mumbai
Appeal Number ITA 5039/MUM/2012
Duration Of Justice 2 year(s) 11 month(s) 23 day(s)
Appellant VIJAY KUMAR SOORENJI, MUMBAI
Respondent ACIT 12(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 31-07-2015
Date Of Final Hearing 18-11-2014
Next Hearing Date 18-11-2014
Assessment Year 2008-2009
Appeal Filed On 07-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI BEFORE MS. SUSHMA CH O WLA JUDICIAL MEMBER AND SHRI N.K . BILLAIYA A CCOUNTANT M EMBER / I .T.A. NO . 5039/MUM/2012 ( / ASSESSMENT YEAR : 2008 - 09 SHRI VIJAY KUMAR SOORENJI 1 ST FLOOR SEA QUEEN APARTMENTS H.K. BHABHA ROAD BANDRA BANDSTAND BANDRA(W) MUMBAI - 400 050 / VS. THE ACIT - 12(1) AAYAKAR BHAVAN MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAGPS 7829F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI V.V. BHAGWAT / RESPONDENT BY : SHRI A.K. DHONDIAL / DATE OF HEARING : 22 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 31 .0 7 .2015 / O R D E R PER N.K. BILLAIYA AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A) - 23 MUMBAI DT. 1 0 . 05 .2012 PERTAINING TO ASSESSMENT YEAR 2008 - 09. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN UPHOLDING THAT THE ASSESSEE IS A TRADER IN SHARES. ITA. NO . 5039/MUM/2012 2 3. BRIEFLY STATED TH E FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 29.4.2009 DECLARING TOTAL INCOME AT RS. 23 51 560/ - . THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. WHILE SCR UTINIZING THE RETURN OF INCOME THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DECLARED INCOME FROM BUSINESS CAPITAL GAINS AND OTHER SOURCES. THE AO FURTHER FOUND THAT THE ASSESSEE HAS DISCLOSED INCOME FROM SHORT TERM CAPITAL GAINS AT RS. 17 78 043/ - . THE AO FORMED A BELIEF THAT THE ASSESSEE IS DEALING IN SHARES AS A TRADER AND THEREFORE THE PROFIT EARNED ON SHARE TRADING HAS TO BE TAXED UNDER THE HEAD BUSINESS INCOME. THE INCOME FROM SHORT TERM CAPITAL GAINS WAS TAXE D AS INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE ASSESSEE HAS ONLY DONE 63 TRANSACTIONS IN ABOUT 31 SCRIPS. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAS USED HIS OWN FUNDS. THE SUBMISSIONS AND OBJECTIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE LD. CIT(A) WHO CONFIRMED THE ASSESSMENT ORDER. 5. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 7. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ITA. NO . 5039/MUM/2012 3 HAS ENTERED INTO 63 TRANSACTIONS WHICH MEANS ONE TRANSACTION IN EVERY 6 DAYS OR ABOUT 5 TRANSACTIONS PER MONTH. BY ANY STRETCH OF IMAGINATION THIS CANNOT BE CONSIDERED TO BE THAT THE ASSESSEE WAS ENGAGED IN HIGH FREQUENCY TRANSACTIONS. FURTHER IT IS NOT THE CA SE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS CHURNING THE SHARES BUYING AND SELLING THE SAME SHARES AGAIN AND AGAIN. IN CIT V/S MADAN GOPAL RADHEY LAL [1969] 73 ITR 652 (SC) THE HON' BLE SUPREME COURT HAS DEALT WITH THE ISSUE AND DISCUSSED THE QUESTION: - 'A TRADER MAY ACQUIRE A COMMODITY IN WHICH HE IS DEALING FOR HIS OWN PURPOSES AND HOLD IT APART FROM THE STOCK - IN - TRADE OF HIS BUSINESS. THERE IS NO PRESUMPTION THAT SUCH AN .ACQUISITION EVEN IF IT IS AN ACCRETION TO THE STOCK - IN - TRADE OF THE BUSINESS IS AN ACQUISITION FOR THE PURPOSE OF HIS BUSINESS: IN EACH CASE THE QUESTION IS ONE OF INTENTION TO BE GATHERED FROM THE EVIDENCE OF CONDUCT AND DEALINGS BY THE ACQUIRER WITH THE COMMODITY. ' 8.1. IN CIT VS ASSOCIATED INDUSTRIAL DEVELOPMENT CO. (P) LTD. 82 ITR 586 THE SUPREME COURT OBSERVED AS FOLLOWS: - ' .... IT WAS OPEN TO THE ASSESSEE TO CONTEND THAT EVEN ON THE ASSUMPTION THAT IT HAD BECOME A DEALER AND WAS NO LONGER - AN INVESTOR IN SHARES THE PARTICULAR HOLDINGS WHICH HAD BEEN CLEARED AND THE SALES OF WHICH HAD RESULTED IN THE PROFIT IN QUESTION HAD ALWAYS BEEN TREATED BY IT AS AN INVESTMENT. IT CAN HARDLY BE DISPUTED THAT THERE WAS NO BAR TO A DEALER INVESTING IN SHARES. BUT THEN THE MATTER DOES NOT REST PURELY ON THE TECHNICAL QUESTION OF ON US WHICH UNDOUBTEDLY IS INITIALLY ON THE REVENUE TO PROVE THAT A PARTICULAR ITEM OF RECEIPT IS TAXABLE. WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR FORMS PART OF THE STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSE SSEE WHO HOLDS THE SHARES AND IT SHOULD IN NORMAL CIRCUMSTANCES BE IN A POSITION TO PRODUCE EVIDENCE FROM ITS RECORDS AS TO WHETHER IT HAS MAINTAINED ANY DISTINCTION BETWEEN THOSE SHARES WHICH ARE ITS STOCK - IN - TRADE AND THOSE WHICH ARE HELD BY WAY OF INV ESTMENT. ' 8. 2. THE HON'BLE SUPREME COURT IN ANOTHER CASE IN P.M. MOHAMMED MEERAKHAN (P.M.) V/S CIT [1969] 073 ITR 735 (SC) REITERATED THAT IT ITA. NO . 5039/MUM/2012 4 WAS NOT POSSIBLE TO EVOLVE ANY SINGLE TEST OR FORMULA WHICH COULD BE APPLIED IN DETERMINING THE TRANSACTION AS ADVENTURE IN NATURE OF TRADE OR NOT. THE DISTINCTION BETWEEN THE TWO TYPES OF TRANSACTION IS NOT ALWAYS EASY TO MAKE. WHETHER THE TRANSACTION IS OF ONE KIND OR THE OTHER DEPENDS ON THE QUESTION WHETHER THE EXCESS IS AN ENHANCEMENT OF THE VALUE BY REALIZ ING THE SECURITY OR A GAIN IN AN OPERATION OF PROFIT MAKING. THE ASSESSEE MIGHT HAVE INVESTED CAPITAL IN SHARES WITH AN INTENTION TO RESALE THESE IF IN FUTURE THEIR SALE BRINGS IN A HIGHER PRICE. SUCH AN INVESTMENT THOUGH MOTIVATED BY A POSSIBILITY OF ENHA NCEMENT VALUE DID NOT NECESSARILY RENDER THE INVESTMENT A TRANSACTION IN THE NATURE OF TRADE. 9. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT USED ANY BORROWED FUNDS FOR THE PURPOSE OF BUYING THE SHARES. IT IS ALSO AN A DMITTED FACT THAT IN EARLIER ASSESSMENT YEARS AND IN SUBSEQUENT ASSESSMENT YEARS THE ASSESSEE HAS BEEN ACCEPTED AS AN INVESTOR. CONSIDERING THE AFOREMENTIONED FACTS IN TOTALITY IN THE LIGHT OF THE DECISION REFERRED TO HEREINABOVE WE SET ASIDE THE ORDER O F THE LD. CIT(A) AND DIRECT THE AO TO TREAT THE ASSESSEE AS AN INVESTOR IN SHARES AND TAX ANY GAINS/LOSSES ARISING OUT OF THE TRANSACTION IN SHARES UNDER THE HEAD CAPITAL GAINS. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 31 ST JU LY 2015 SD/ - SD/ - ( SUSHMA CH O WLA ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 31 ST JU LY 2015 . . ./ RJ SR. PS ITA. NO . 5039/MUM/2012 5 / 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 . / BY ORDER //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI