DCIT 22(3), NAVI MUMBAI v. RAMA MOHANLAL DAGA, NAVI MUMBAI

ITA 769/MUM/2010 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 76919914 RSA 2010
Assessee PAN AEYPD2708N
Bench Mumbai
Appeal Number ITA 769/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 27 day(s)
Appellant DCIT 22(3), NAVI MUMBAI
Respondent RAMA MOHANLAL DAGA, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 29-07-2011
Date Of Final Hearing 04-05-2011
Next Hearing Date 04-05-2011
Assessment Year 2006-2007
Appeal Filed On 01-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D : MUMBAI BEFORE SHRI R.V. EASWAR (PRESIDENT) AND SHRI RAJENDRA SINGH (ACCOUNTANT MEMBER) ITA NO.769/MUM/2010 ASSESSMENT YEAR :2006-07 DY. COMMISSIONER OF INCOME TAX -22(3) 3 RD FLOOR TOWER NO.6 VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI. ..( APPELLANT ) VS. M/S. RAMA MOHANLAL DAGA D-02 PLOT NO.137/146 SECTOR-21 NERUL NAVI MUMBAI. ..( RESPONDENT ) P.A. NO. (AEYPD 2708 N) APPELLANT BY : SHRI C.G.K. NAIR RESPONDENT BY : MS. LA TA PARULEKAR O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.11.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2006- 07. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING T REATMENT OF INCOME FROM SHARE TRANSACTIONS AS SHORT TERM CAPITAL GAIN BY CI T(A) AGAINST THE BUSINESS INCOME ASSESSED BY THE ASSESSING OFFICER. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE FOR THE RELEVANT YEAR HAD DECLARED INCOME OF RS.28 99 997/- AS SHORT TERM CAPITAL GAIN. THE ASSESSEE EXPLAINED THAT HE WAS ENGAGED IN THE INVES TMENT ACTIVITIES AND INCOME FROM SALE OF SHARE WAS CAPITAL GAIN. THE AS SESSING OFFICER HOWEVER ITA NO.769/M/10 A.Y:06-07: 2 REJECTED THE CLAIM OF THE ASSESSEE AND ASSESSED INC OME AS INCOME FROM BUSINESS ON THE FOLLOWING GROUNDS. I) MONEY HAS BEEN BORROWED FOR BUYING AND SELLING SHAR ES II) REPEATED AND FREQUENT BUYING AND SELLING SHARES III) EARLIER YEARS TREATMENT OF THIS INCOME IV) SUBMISSION OF A TAX AUDIT REPORT CERTIFYING ACTIVIT Y V) ADMISSION OF CONDUCTING TRADING ACTIVITY VI) OTHER MEMBERS OF THE FAMILY ALSO HAVING SIMILAR INC OMES AND ACTIVITIES VII) NON-SUBMISSION OF EXPLANATION FOR REFUTING THE TREA TMENT AS BUSINESS INCOME VIII) NO LONG TERM HOLDING IN ANY SCRIPT IX) COUPLED WITH THE SALE OF BUSINESS ASSETS DURING THE YEAR IN QUESTION 2.1 IN APPEAL THE ASSESSEE SUBMITTED THAT HE WAS EN GAGED IN INVESTMENT ACTIVITY AND HAD DERIVED INCOME BOTH AS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN. THE SHARES HAD BEEN SHOWN AS INV ESTMENT IN THE BOOKS OF ACCOUNT WHICH SHOWED THE INTENTION OF THE ASSESSEE. THERE WAS NOTHING ON RECORD TO SHOW THAT THE SHARES HAD BEEN CONVERTED I NTO STOCK-IN-TRADE. IT WAS ALSO SUBMITTED THAT REPEATED AND FREQUENT BUYIN G AND SELLING OF SHARES WAS NOT CONCLUSIVE IN DECIDING THE TRUE NATURE OF T RANSACTIONS. THE ASSESSEE HAD ALSO DECLARED LONG TERM CAPITAL GAINS WHICH SHO WED THAT SHARES IN MANY CASES HAD BEEN SOLD AFTER ONE YEAR. THE ASSESSEE H AD ALSO EARNED DIVIDEND FROM THE SHARE INVESTMENT. THE CIT(A) WAS SATISFIE D BY THE EXPLANATION GIVEN. IT WAS OBSERVED BY HIM THAT THE CASE OF THE ASSESSEE WAS SIMILAR TO CASE OF GOPAL PUROHIT VS. JCIT AS REPORTED IN 20 D TR (MUM.) (TRIB.)99. HE THEREFORE DIRECTED THE ASSESSING OFFICER TO ACCEPT THE INCOME DECLARED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN. AGGRIEVED BY SAID DECISION REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.769/M/10 A.Y:06-07: 3 3. BEFORE US THE LD. AR FOR THE ASSESSEE AT THE VER Y OUT SET POINTED OUT THAT THE IDENTICAL CASES HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN CASE OF OTHER MEMBERS OF THE FAMILY I.E. SMT. GAYATRIDEVI M . DAGA (ITA NO.766/M/10 ORDER DATED 20.4.11 FOR ASSESSMENT YEAR 06-07) AND IN CASE OF SHRI MOHANLAL DAGA(HUF) AND MOHANLAL DAGA AND SMT. NIRMALA M. DAGA IN (ITA NO.767/M/10; 768/M/10 AND 770/M/10 RESPECTIVELY). IN THESE DECISIONS THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. IT WAS ACCORDINGLY URGED THAT THIS A PPEAL MAY ALSO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS COVERED BY THE DECISIONS OF THE TRIBUNAL CITED AND THE FACTS IN CASE OF THE ASSESSEE WERE SIMILAR. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE ASSESSEE HAD RECEIVED INCOME FROM P URCHASE AND SALE OF SHARES. THE DISPUTE IS REGARDING NATURE OF INCOME. THE ASSESSEE HAD DECLARED INCOME AS CAPITAL GAIN WHEREAS THE ASSESSI NG OFFICER TREATED THE SAME AS BUSINESS INCOME. WE FIND THAT THE SAME ISS UE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN CASE OF OTHER MEMBERS OF THE GROUP I.E. SMT. GAYATRIDEVI M. DAGA (ITA NO.766/M/10 ORDER DATED 20 .4.11 FOR ASSESSMENT YEAR 06-07) AND IN CASE OF SHRI MOHANLAL DAGA(HUF) A ND MOHANLAL DAGA AND SMT. NIRMALA M. DAGA IN (ITA NO.767/M/10; 768/M/10 AND 770/M/10 RESPECTIVELY VIDE ORDER DATED 11.5.2011 FOR ASSESSM ENT YEAR 2006-07). THE FACTS ADMITTEDLY ARE IDENTICAL. IN THOSE CASES ALSO THE ASSESSING OFFICER HAD TREATED THE INCOME FROM SHARE TRANSACTION AS BUSINE SS INCOME ON THE SAME GROUNDS AS MENTIONED IN CASE OF THE ASSESSEE AS REP RODUCED IN PARA-2 ITA NO.769/M/10 A.Y:06-07: 4 EARLIER. THE CIT(A) HAD DELETED THE ADDITIONS MADE BY ASSESSING OFFICER. HOWEVER IN FURTHER APPEAL THE TRIBUNAL SET ASIDE TH E ORDER OF CIT(A) AND RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN CASE OF OTHER MEMBERS OF THE GROUP (SUPRA) WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER TO THE ASSESSING OFFICER A FOR PASSING FRESH ORDER AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.7.2011. SD/- SD/- (R.V. EASWAR) (RAJENDRA SINGH ) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 29.7.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.