ITO 21(2)(2), MUMBAI v. SHEKHAR J KOTHARI, MUMBAI

ITA 6408/MUM/2013 | 2010-2011
Pronouncement Date: 18-10-2016 | Result: Dismissed

Appeal Details

RSA Number 640819914 RSA 2013
Assessee PAN AAEPK3150D
Bench Mumbai
Appeal Number ITA 6408/MUM/2013
Duration Of Justice 2 year(s) 11 month(s) 17 day(s)
Appellant ITO 21(2)(2), MUMBAI
Respondent SHEKHAR J KOTHARI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 18-10-2016
Date Of Final Hearing 12-01-2016
Next Hearing Date 12-01-2016
Assessment Year 2010-2011
Appeal Filed On 31-10-2013
Judgment Text
INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI . . BEFORE S/SHRI RAJENDRA ACCOUNTANT MEMBER AND C. N. PRASAD JUDICIAL MEMBER ./ITA/6408/MUM/2013 /ASSESSMENT YEARS: 2010-11 INCOME TAX OFFICER WD-21(2)(2) C-10/ROOM NO.507 5 TH FLOOR BANDRA KURLA COMPLEX BANDRA MUMBAI-400 051. VS. SHRI SHEKHAR JEETENDRA KOTHARI 199/2 LEELANIVAS GROUND FLOOR GUJARAT SOCIETY SION(W) MUMBAI-22. PAN:AAEPK 3150 D ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI SATHYA MOORTHY-DR ASSESSEE B Y: SHRI BHUPENDRA SHAH / DATE OF HEARING: 19.07.2016 / DATE OF PRONOUNCEMENT: 18.10.2016 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER RAJENDRA AM - CHALLENGING THE ORDER DATED 02/08/2013 OF THE CIT ( A)-32 MUMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL. ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 29/07/2010 DECLARING TOTAL INCOME AT RS. 5 00 5 07/-.THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT ON 21/11/ 2012 DET ERMINING HIS INCOME AT RS.68.08 LAKHS. 2. THE SOLITARY GROUND OF APPEAL IS ABOUT TREATING THE INCOME FROM SHARE TRADING BUSINESS AS SHORT-TERM CAPITAL GAINS (STCG) AND NOT UNDER THE H EAD INCOME FROM BUSINESS.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSES SEE HAD DECLARED INCOME FROM STCG AT RS. 62.36 LAKHS AND LTCG AT RS. 1.23 LAKHS. HE CALL ED FOR THE DETAILS OF THE CAPITAL GAINS EARNED BY THE ASSESSEE. AFTER CONSIDERING THE DATA SUBMITTED BY THE ASSESSEE SHE HELD THAT INCOME EARNED BY THE ASSESSEE WAS FROM BUSINESS AND NOT FROM THE CAPITAL GAINS THAT ASSESSEE TREATMENT TO THE SHARES WAS TO BE CONSIDERED FOR DE CIDING THE ISSUE THAT HE HAD NOT HELD THE SHARES AS AN ASSET.APPLYING THE VARIOUS PARAMETERS SHE HELD THAT ASSESSEE WAS HOLDING THE SHARES AS STOCK IN TRADE THAT 31 WERE BOUGHT AND S OLD DURING THE YEAR UNDER APPEAL THAT HE HAD BOUGHT SHARES AMOUNTING TO RS. 5.11 CRORES AND HAD SOLD THE SHARES OF RS. 4.52 CRORES THAT HE HAD EARNED DIVIDEND INCOME OF RS. 2.35 LAKH S THAT HE HAD AN INITIAL CAPITAL OF RS. 94.90 LAKHS THAT THE MAJOR SOURCE OF INCOME FOR TH E ASSESSEE WAS FROM PURCHASE AND SALE OF SHARES. FINALLY SHE MADE AN ADDITION OF RS. 62.60 LAKHS TOWARDS THE INCOME AND BY THE ASSESSEE FROM PURCHASE AND SALE OF THE EQUITY SHARE S. 6408/M/13-SHEKHAR KOTHARI 2 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM IT WAS ARGUED THAT THE AO HAD OWED THE DETAILED SUBMISSION MADE BY HIM AND THE CASES RELIED UPON T HAT ALL THE SHARES DEALT IN BY THE ASSESSEE WERE LISTED ON THE STOCK EXCHANGE AND STT HAD BEEN PAID THAT ONCE STT WAS PAID THE SAME WAS COVERED BY CONCESSIONAL RATE OF 15% UNDER SECTI ON 115A OF THE ACT THAT DEALING WITH 79 SCRIPS DURING THE HOLY COULD NOT BE THE BASIS FOR T AKING THE SAME AS BUSINESS INCOME THAT THERE WAS NO BAR FOR BUYING THE SHARES AGAIN AFTER SELLING THAT THERE WAS NO RESTRICTION ON FREQUENCY OF TRANSACTION THAT SHARE SALE FROM ONE MONTH TO ONE YEAR EQUALLY QUALIFIED FOR BEING STCG THAT THE ASSESSEE COULD HAVE BOTH ACTIV ITIES I.E INVESTMENT AS WELL AS SPECULATION THAT THE AO HAD DISREGARDED THE DEMAT STATEMENT AND PHOTO COPIES OF THE BANK ACCOUNTS THAT IN THE EARLIER YEAR STCG ON THE SIMI LAR FACTS WAS ACCEPTED BY THE THEN AO. THE ASSESSEE RELIED UPON SEVERAL CASE LAWS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER THE FAA HELD THAT WHILE DECIDING THE HEAD OF INCOME WITH REGARD TO SH ARE TRANSACTIONS SEVERAL PARAMETERS HAD TO BE LOOKED INTO I.E. MOTIVE OF THE INVESTOR DELIVER Y OF SHARES FREQUENCY OF TRANSACTIONS COMPOSITION OF PORTFOLIOS AND HOLDING PERIOD OF THE SHARES THAT ASSESSEE HAD NOT BORROWED ANY FUNDS WERE UTILISED THE SAME FOR PURCHASING THE SHARES THAT IN HIS BOOKS OF ACCOUNTS HE HAD REFLECTED THE TRANSACTION IS INVESTMENT AND NOT AS STOCK IN TRADE THAT THE ASSESSEE HAD NO SEPARATE SETUP/ADMITTED OF OFFICE FOR DEALING INTO SHARES THAT HE WAS INVOLVED INTO JEWELLERY MAKING BUSINESS THAT FOR THE ASSESSMENT YEAR 2009 10 THE INCOME OF THE ASSESSEE WAS ASSESSED UNDER SECTION 143 (3) THAT IN THAT YEAR S TCL DECLARED BY THE ASSESSEE HAD BEEN ALLOWED TO BE CARRY -FORWARD FOR THE SUBSEQUENT YEA RS THAT THE RULES OF CONSISTENCY AS PRONOUNCED BY THE HONORABLE BOMBAY HIGH COURT IN TH E CASE OF GOPAL PUROHIT (228 CTR 522) WERE SQUARELY APPLICABLE TO THE FACTS OF THE C ASE. FINALLY HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. DURING THE COURSE OF HEARING BEFORE US THE DEPARTM ENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE (AR) RELIED UPON THE UPON THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS FOUND TH AT ASSESSEE HAD NOT BORROWED ANY MONEY FOR MAKING INVESTMENT IN SHARES THAT HIS OWN CAPITA L FOR THE YEAR UNDER CONSIDERATION WAS MORE THAN 90 LAKHS THAT IN THE EARLIER YEARS SHARE TRADING ACTIVITY WAS CONSIDERED BY THE THEN AO UNDER THE HEAD CAPITAL GAINS THAT FOR THE YEAR UNDER CONSIDERATION THE FACTS WERE THE 6408/M/13-SHEKHAR KOTHARI 3 SAME THAT THE AO DID NOT BRING OUT ANY DIFFERENCE I N THE FACTS OF THE EARLIER YEARS AS COMPARED WITH THE FACTS FOR THE YEAR UNDER APPEAL.THE RULE O F CONSISTENCY STIPULATES THAT THE AO SHOULD NOT DEVIATE FROM THE PATH ADAPTED BY HIS PREDECESSO R IF THE FACTS ARE SIMILAR IN THE SUBSEQUENT YEARS. IN THE CASE UNDER CONSIDERATION AFTER DELIB ERATING UPON THE VARIOUS PARAMETERS THE FAA HAD ARRIVED AT THE CONCLUSION THAT ACTIVITIES C ARRIED OUT BY THE ASSESSEE WOULD NOT FALL IN THE CATEGORY OF BUSINESS. IN OUR OPINION THE ORDER OF THE AO DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. THEREFORE UPHOLDING HIS ORDER W E DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER 2016. 18 2016 SD/- SD/ ( . . / C.N. PRASAD ) ( ! / RAJENDRA ) '' #' / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18.10.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 5. DR E BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR /ITAT MUMBAI.