FARIDA ANIL KHANNA, MUMBAI v. DCIT 6(2), MUMBAI

ITA 6660/MUM/2013 | 2010-2011
Pronouncement Date: 22-04-2014 | Result: Allowed

Appeal Details

RSA Number 666019914 RSA 2013
Assessee PAN AADPK5602K
Bench Mumbai
Appeal Number ITA 6660/MUM/2013
Duration Of Justice 5 month(s) 7 day(s)
Appellant FARIDA ANIL KHANNA, MUMBAI
Respondent DCIT 6(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 22-04-2014
Assessment Year 2010-2011
Appeal Filed On 14-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI R.C SHARMA ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN JUDICIAL MEMBER ITA NO. 6660/MUM/2013 ASSESSMENT YEAR: 2010-11 SMT. FARIDA ANIL KHANNA 50 A BARODA STREET CARNAC BUNDER MUMBAI-400 009 VS. DCIT 6(2) MUMBAI (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :-AADPK 5602 K ASSESSEE BY : SHRI D.V. LAKHANI REVENUE BY : SHRI M. L. PERUMAL DATE OF HEARING : 12.03.2014 DATE OF PRONOUNCEMENT : 22.04.2014 O R D E R PER DR. S.T.M. PAVALAN JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-12 MUMBAI DATED 01.10.2013 FOR THE ASSES SMENT YEAR 2010-11. 2. IN THIS APPEAL THE ASSESSEE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN CONFIRMING THE DECISION OF THE AO TREATING A SUM OF RS.75 20 228/- EARNED BY THE ASSESSEE ON ACCOUNT OF SALE AND PURCHASE OF SHARES UNDER THE HEAD BUSINESS INCOME AS AGAINST THE ASSESSEE CLAIMING THE SAME U NDER THE HEAD SHORT TERM CAPITAL GAINS. 3. BRIEFLY STATED THE ASSESSEE AN INDIVIDUAL IN THE RETURN OF INCOME HAD OFFERED AN INCOME OF RS.75 20 228/- UNDER THE HEAD SHORT T ERM CAPITAL GAINS ON ACCOUNT OF PROFITS EARNED IN THE TRANSACTIONS OF SALE AND PURC HASE OF SHARES. HOWEVER IN THE ASSESSMENT FRAMED U/S 143(3) THE AO TREATED THE SA ID INCOME AS BUSINESS INCOME AND ACCORDINGLY TAXED. ACCORDING TO THE AO THE FRE QUENCY OF THE TRANSACTION AND VOLUME OF TRANSACTION OF PURCHASE AND SALE OF SHARE S AND SECURITIES WERE HIGH AND ACCORDINGLY CAME TO THE CONCLUSION THAT THE INTENTI ON OF THE ASSESSEE WAS TO EARN PROFIT IN SHORT SPAN OF HOLDING AND HELD THAT THE A SSESSEE WAS A TRADER AND NOT AN INVESTOR. ON APPEAL THE LD.CIT(A) CONFIRMED THE AC TION OF THE AO ON THE GROUND ITA NO. 6660/MUM/2013 SMT. FARIDA ANIL KHANNA ASSESSMENT YEAR: 2010-11 2 THAT THE ASSESSEE HAD CARRIED OUT THE TRANSACTIONS WITHIN A PERIOD OF 6 MONTHS AND SUBSTANTIAL TRANSACTIONS CARRIED OUT DURING THE PER IOD OF 0-30 DAYS WHICH GENERATED GAINS OF RS 20 82 315/-. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD THE ONLY ISSUE TO BE DECIDED IN THE PRESENT APPEAL IS WHETHE R THE ASSESSEE IS AN INVESTOR OR TRADER IN SHARES. IN THIS CONNECTION IT IS RELEVAN T TO STATE THAT THE ISSUE WHETHER THE SHARE TRANSACTIONS IN A PARTICULAR CASE SHOULD BE T REATED AS INVESTMENT ACTIVITY OR TRADING ACTIVITY DEPENDS ON VARIOUS FACTORS SUCH AS FREQUENCY VOLUME ENTRY IN THE BOOKS OF ACCOUNTS NATURE OF FUNDS USED HOLDING PE RIOD ETC. WHICH ARE RELEVANT IN DECIDING THE TRUE NATURE OF TRANSACTIONS AND NO SIN GLE FACTOR IS CONCLUSIVE. AN INVESTOR MAKES PURCHASES WITH LONG TERM GOAL OF EAR NING INCOME FROM THE INVESTMENT AND HE IS NOT TEMPTED TO SELL THE SHARES ON EVERY RISE AND FALL IN THE MARKET WHICH IS THE ATTRIBUTES OF A TRADER. IN CASE IF THE INCOME FROM INVESTMENT IN SHARES WHICH IS IN THE FORM OF DIVIDEND IS RECEIVED ANNUALLY NORMALLY AN INVESTOR IS EXPECTED TO HOLD THE SHARES FOR MORE THAN A YEAR. H OWEVER THERE MAY BE SITUATIONS WHEN THE INVESTOR MAY ALSO SELL THE SHARES AFTER SH ORT HOLDING IN ORDER TO RESHUFFLE PORTFOLIO WHEN PRICES ARE FALLING OR TO ENCASH INVE STMENT IN CASE OF EXCEPTIONAL GAIN OR FOR SOME PERSONAL EXIGENCIES. EACH CASE IS REQUI RED TO BE EXAMINED CAREFULLY TO ASCERTAIN THE TRUE NATURE OF TRANSACTIONS. WITH THI S BACKGROUND THE SUMMARY OF THE DETAILS IN RESPECT OF SHORT TERM CAPITAL GAINS CLAI MED BY THE ASSESSEE IS EXTRACTED AS HEREUNDER: PERIOD OF HOLDING (DAYS) COST (RS.) SALE VALUE (RS.) STCG (RS.) 0-30 21030270 23112585 2082315 31-60 15017566 16598788 1581223 60-90 6794371 8848816 2054445 91-180 19863086 21665331 1802245 181-365 0 0 0 TOTAL 62705293 70225520 7520228 FROM THE ABOVE SUMMARY THE LD.CIT(A) AMONG OTHER THINGS HAS OBSERVED THAT THE ASSESSEE HAS CARRIED OUT THE TRANSACTIONS WITHIN A PERIOD OF 6 MONTHS AND ITA NO. 6660/MUM/2013 SMT. FARIDA ANIL KHANNA ASSESSMENT YEAR: 2010-11 3 SUBSTANTIAL TRANSACTIONS CARRIED OUT DURING THE PER IOD OF 0-30 DAYS WHICH GENERATED GAINS OF RS 20 82 315/-. HOWEVER IT IS THE CONTENT ION OF THE ASSESSEE THAT THE ACTIVITY OF INVESTMENT HAS BEEN CARRIED OUT IN EARL IER YEARS AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS AS SUCH . IT IS OBSERVED THAT THE DEPARTMENT U/S 143(3) HAS ACCEPTED THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE FOR THE AY 2008-09. THE PERUSAL OF THE REC ORD INDICATES THAT THE ASSESSEE HAS PURCHASED CERTAIN SHARES IN EARLIER YEARS AND T REATED THE SAME AS CAPITAL ASSETS IN EARLIER YEARS AND THOSE SHARES HAVE BEEN SOLD IN THE INSTANT YEAR. ALL THE SHARE TRANSACTIONS ARE DELIVERY-BASED AND APPEARING IN DE MAT ACCOUNT. IT HAS FURTHER BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAS NOT BORROWE D ANY MONEY FOR CARRYING OUT THE ACTIVITY. ALSO THE ASSESSEE HAS TREATED THE IN VESTMENT IN SHARES AS CAPITAL ASSET AND THE SAME HAVE BEEN DULY REFLECTED AS INVESTMEN TS IN BOOKS OF ACCOUNTS AND EVERY TRANSACTION IS REPRESENTED BY CONTRACT NOTES ISSUED BY BROKERS AND SUPPORTED BY DELIVERY THROUGH DEMAT ACCOUNT. FURTHER THE SEC URITY TRANSACTION TAX (STT) HAS BEEN PAID ON EACH TRANSACTION AND THE PAYMENTS HAVE BEEN MADE OR RECEIVED FOR EACH TRANSACTIONS AND NO ACCOUNT OF RECEIVABLE OR P AYABLE IS SQUARED OFF BY BOOK ENTRIES. THE PERUSAL OF THE SCRIP WISE DETAILS SUBM ITTED BY THE ASSESSEE INDICATES THAT THERE IS NO REPETITIVE TRANSACTION EXCEPT IN V ERY FEW SCRIPS OUT OF THE TOTAL TRANSACTIONS MADE IN 20 SCRIPS. THE REPETITIVE TRAN SACTIONS IN FEW SCRIPS RESULTED IN A NET GAIN OF RS.1 35 217 ONLY. MOREOVER IN THE EARL IER YEARS THE DEPARTMENT HAS ACCEPTED THE ASSESSEE AS AN INVESTOR. CONSIDERING T HE FACTS IN TOTO WE ARE OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW ARE N OT JUSTIFIED IN TREATING THE SUM OF RS.75 20 228/- EARNED BY THE ASSESSEE ON ACCOUNT OF SALE AND PURCHASE OF SHARES UNDER THE HEAD BUSINESS INCOME. THEREFORE WE DIR ECT THE AO TO TREAT THE SAID AMOUNT UNDER THE HEAD SHORT TERM CAPITAL GAINS AS DECLARED BY THE ASSESSEE. WE DIRECT AND ORDER ACCORDINGLY. 4. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF APRIL 2014. SD/- SD/- (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 22.04.2014. *SRIVASTAVA ITA NO. 6660/MUM/2013 SMT. FARIDA ANIL KHANNA ASSESSMENT YEAR: 2010-11 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.