RAMILABEN D. JAIN, MUMBAI v. ACIT 14(2), MUMBAI

ITA 9083/MUM/2010 | 2007-2008
Pronouncement Date: 27-04-2015 | Result: Dismissed

Appeal Details

RSA Number 908319914 RSA 2010
Assessee PAN AAWPJ4876B
Bench Mumbai
Appeal Number ITA 9083/MUM/2010
Duration Of Justice 4 year(s) 3 month(s) 30 day(s)
Appellant RAMILABEN D. JAIN, MUMBAI
Respondent ACIT 14(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 27-04-2015
Date Of Final Hearing 27-04-2015
Next Hearing Date 27-04-2015
Assessment Year 2007-2008
Appeal Filed On 28-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.C. SHARMA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 9083/M/2010 ASSESSMENT YEAR: 2007 - 08 SMT. RAMILABEN D. JAIN 294 - A GOVINDWADI 2 ND FLOOR KALBADE VI ROAD MUMBAI 400 002 PAN: AAWPJ4876B VS. ACIT 14 ( 2 ) EARNEST HOUSE NARIMAN POINT MUMBAI 40002 1 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SMT. S.U. CHHABRIA A.R. REVENUE BY : SHRI LOVE KUMAR D.R. DATE OF HEARING : 2 7 .04. 201 5 DATE OF PRONOUNCEMENT : 27.04.2015 O R D E R PER VIJAY PAL RAO JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 0 6 . 1 0 .2010 OF CIT(A) FOR THE ASSESSMENT YEAR 20 07 - 08. THE ASSESSEE H AS FILED THE FOLLOWING REVISED GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 25 MUMBAI (HEREINAFTER REFERRED TO AS THE LEARNED COMMISSIONER) E RRED IN LAW IN TREATING THE INCOME FROM SALE OF SHARES AS BUSINESS INCOME AND NOT INCOME FROM SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THE LEARNED COMMISSIONER ERRED IN LAW IN N OT FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN CASE OF CIT V/S GOPAL PUROHIT 336 ITR 287? 2. THE ASSESSEE CLAIMED SHORT TERM CAPITAL GAIN ON SALE AND PURCHASE OF SHARES AS WELL AS SPECULATION INCOME FROM TRADING OF SHARES. THE ASSESSING OFFICER ( AO) WAS OF THE VIEW THAT THE ASSESSEE INVOLVED IN COMPREHENSIVE ITA NO.9083/M/2010 SMT. RAMILABEN D. JAIN 2 INTEGRATED AND SYSTEMATIC ACTIVITY OF TRADING IN SHARES WITH APPARENT BUSINESS MOTIVE. THE AO EXAMINED ALL THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES INCLUDING THE SPECULATIVE AND HELD THAT THE ASSESSEE IS ENGAGED IN THE TRADING ACTIVITY OF SALE AND PURCHASE OF SHARES AND TREATED THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE AS BUSINESS INCOME. THE ASSESSEE CHALLENGE THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED AS THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 3. BEFORE US THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT SINCE THE ASSESSMENT YEAR 2000 - 01 THE ASSESSEE HAS BEEN SHOWING THE PROFIT ON SALE AND PURCHASE OF SHARES AS SHORT TERM CAPITAL GAIN WHI CH WAS ACCEPTED BY THE AO AND THEREFORE FOR THE YEAR UNDER CONSIDERATION THE AO IS NOT ALLOWED TO TAKE A DIFFERENT VIEW. THE LD. A.R. HAS FURTHER CONTENDED THAT ONLY BECAUSE THE ASSESSEE IS HAVING THE SPECULATIVE TRANSACTION IN THE TRADING OF SHARES THE I NVESTMENT OF THE ASSESSEE CANNOT BE TREATED AS TRADING ACTIVITY AND THEREFORE THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE CANNOT BE TREATED AS BUSINESS INCOME. THE LD. A.R. HAS REFERRED THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT 336 ITR 287 AND SUBMITTED THAT IT WAS OPEN TO THE ASSESSEE TO MAINTAIN TWO SEPARATE PORTFOLIOS ONE RELATING TO INVESTMENT AND ANOTHER RELATING TO TRADING OF SHARES. THERE SHOULD BE UNIFORMITY IN THE TREATMENT AND CONSISTENC Y WHEN THE FACTS AND CIRCUMSTANCES FOR DIFFERENT YEARS WERE IDENTICAL PARTICULARLY IN THE CASE OF THE SAME ASSESSEE. WHEN THE AO HAS ACCEPTED THE SHORT TERM CAPITAL GAIN OWNED BY THE ASSESSEE IN THE EARLIER YEAR BY MAINTAINING THE RULE OF CONSISTENCY THE AO CANNOT DISALLOW THE CLAIM OF THE ASSESSEE. THE LD. A.R. HAS FURTHER CONTENDED THAT THE CAPITAL GAIN FROM THE SHARES ALLOTTED TO THE ASSESSEE IN PUBLIC ISSUE CANNOT BE CLASSIFIED AS STOCK IN TRADE WHEN THE ASSESSEE IS HOLDING AS INVESTMENT. MERELY BECA USE OF THE VOLUME AND MAGNITUDE OF TRANSACTION THE AO CANNOT DENY THE NATURE OF TRANSACTIONS WHICH ARE BEING ASSESSED AS INCOME FROM CAPITAL GAIN IN ITA NO.9083/M/2010 SMT. RAMILABEN D. JAIN 3 THE PAST THREE YEARS. THUS THE LD. A.R. HAS CONTENDED THAT THE ACTION OF THE AUTHORITIES BELOW IS NOT SUS TAINABLE IN VIEW OF THE VARIOUS JUDGMENTS OF THE HONBLE HIGH COURT AS WELL AS THIS TRIBUNAL. SHE HAS RELIED UPON THE FOLLOWING DECISIONS: 1. SHANTILAL M. JAIN VS. ACIT (2011) 132 ITD 466 (MUM.) 2. UNREPORTED JUDGMENTS BOMBAY HIGH COURT VIDE ITS ORDER DATED 20.06.2012 IN ITA NO.1974 OF 2011 IN CASE OF CIT VS. SURESH R. SHAH. 3. SUNIL KUMAR GANERIWAL VS. DY. CIT (2012 ) 13 4 ITD 179 (MUM.) 4. JANAK S. RANGWALLA VS. ACIT (2007) 11 SOT 627 (MUM.) 4. ON THE OTHER HAND THE LD. D.R. HAS SUBMITTED THAT THE AO HAS DECIDED THE ISSUE BY CONSIDERING THE PECULIAR FACTS OF THE CASE OF THE ASSESSEE AND THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION THEREFORE ON THE ISSUE OF THE NATURE OF TRANSACTION NO PRECEDENT CAN BE APPLIED AS IT IS A FACTUAL ISSUE AND HAS TO BE DECIDED ON THE PECULIAR FACTS OF EACH CASE. THE LD. D.R. HAS FURTHER POINTED OUT THAT THERE IS NO CONSISTENCY EVEN IN THE TREATMENT OF THESE ACTIVITIES BY THE ASSESSEE ITSELF BECAUSE FOR THE A.Y. 2006 - 07 THE ASSESSEE ITSE LF HAS OFFERED THE PROFIT FROM SALE AND PURCHASE OF SHARES AS BUSINESS INCOME WHICH WAS ACCEPTED BY THE AO WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) VIDE ORDER DATED 17.07.08. THUS THE LD. D.R. HAS SUBMITTED THAT THE RULE OF CONSISTENCY IF APPLIED WILL GO AGAINST THE ASSESSEE BECAUSE IN THE IMMEDIATE PRECEDING YEAR THE ASSESSEE ITSELF HAS OFFERED THE PROFIT ARISING FROM SALE AND PURCHASE OF SHARES AS BUSINESS INCOME. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CO NSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. FROM THE DETAILS OF THE SALE AND PURCHASE OF SHARES DURING THE YEAR WE FIND THAT EXCEPT ONE TRANSACTION ALL OTHER TRANSACTIONS ARE IN THE NATURE OF SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE. APART FROM THE SHORT TERM CAPITAL GAIN THE ASSESSEE HAS ALSO CARRIED OUT THESE SPECULATIVE ITA NO.9083/M/2010 SMT. RAMILABEN D. JAIN 4 TRANSACTIONS AND SHOWN THE SPECULATE PROFIT TO THE EXTENT OF RS. 18 039/ - FROM SIX TRANSACTIONS . IN THE CATEGORY OF SHORT TERM CAPITAL GAIN THE ASS ESSEE HAS SHOWN 73 TRANSACTIONS AND ONLY ONE TRANSACTION IS SHOWN IN THE LONG TERM CAPITAL GAIN THEREFORE EXCEPT ONE TRANSACTION ALL OTHER TRANSACTIONS ARE THE SALE AND PURCHASE OF SHARES DURING THE YEAR ITSELF. WE FURTHER NOTE THAT OUT OF 73 TRANSACTION S SHOWING THE SHORT TERM CAPITAL GAIN ONLY IN THE CASE OF 10 TRANSACTIONS THE HOLDING PERIOD IS MORE THAN ONE MONTH. IN THE MAJORITY OF THE TRANSACTIONS THE PERIOD IS EVEN LESS THAN ONE WEEK RANGING FROM ONE DAY TO SEVEN DAYS. THUS IT IS CLEAR THAT THE ASSESSEE HAS SOLD THE SHARES WITHIN THE PERIOD OF ONE WEEK FROM THE DATE OF PURCHASE IN MORE THAN 80% OF THE CASES. THE ASSESSEE HAS ALSO CONTENDED THAT IN NUMBER OF CASES THE ASSESSEE HAS ACQUIRED SHARES IN IPO HOWEVER EVEN IN THE CASE OF ALLOTMENT OF THE SHARES IN THE IPO THE SAME WERE SOLD ON THE DATE OF LISTING ITSELF EXCEPT ON ABOUT FIVE OCCASIONS WHEN THE ASSESSEE SOLD THE SHARES AFTER ONE MONTH OF THE LISTING. THUS THERE IS NO QUARREL ON THE FACT THAT THE INTENTION OF THE ASSESSEE IN CARRYING OU T THE TRANSACTION OF SALE AND PURCHASE OF SHARES IS TO EARN THE PROFIT AT THE EARLIEST POSSIBLE OCCASION AS AND WHEN THERE IS A RISE IN THE PRICE. THE ASSESSEE IS MOVING AS PER THE MOVEMENT IN THE STOCK MARKET AND AT THE FIRST AVAILABLE OPPORTUNITY THE A SSESSEE IS SELLING THE SHARES WITHOUT HOLDING THE SHARES FOR ANY LONGER TIME. THIS TYPE OF ACTIVITY OF SALE AND PURCHASE CANNOT BE REGARDED AS INVESTMENT BUT THE SO LE PURPOSE AND MOTIVE OF SALE AND PURCHASE OF SHARES IS REFLECTED AS TO EARN THE PROFIT AT THE EARLIEST OCCASION. AS REGARDS THE RULE OF CONSISTENCY THERE IS NO DISPUTE THAT FOR THE ASSESSMENT YEAR 2006 - 07 WHICH IS THE IMMEDIATE PRECEDING YEAR THE ASSESSEE HIMSELF HAS OFFERED THE PROFIT FROM SALE AND PURCHASE OF SHARES AS BUSINESS INCOME THERE FORE THE ASSESSEE CANNOT TAKE A PLEA THAT THE AO SHOULD MAINTAIN THE RULE OF CONSISTENCY BY IGNORING THE ASSESSMENT YEAR 2006 - 07. WHEN THE ASSESSEE ITSELF IS SHIFTING HIS STAND AND OFFERING THE PROFIT ARISING FROM SALE AND PURCHASE OF SHARES AS ITA NO.9083/M/2010 SMT. RAMILABEN D. JAIN 5 BUSINESS I NCOME AND SUBSEQUENTLY AS A SHORT TERM CAPITAL GAIN THEN THE RULE OF CONSISTENCY WILL ALSO BE APPLICABLE ON THE ASSESSEE AND NOT ON THE AO ALONE. IN VIEW OF THE FACT THAT ALL THE TRANSACTIONS OF SALE AND PURCHASE ARE CARRIED OUT IN SUCH A FASHION THAT IT CANNOT BE REGARDED THAT THE ASSESSEE PURCHASED THE SHARES WITH THE INTENTION TO RETAIN AND HOLD THE SAME FOR A LONGER PERIOD AND FOR APPRECIATION OF VALUE BUT THE SALE OF THE SHARES WITHIN A SHORT PERIOD OF TIME AND WITHIN A PERIOD OF ONE WEEK IN THE MOST OF THE CASES CLEARLY MANIFEST THE INTENTION OF THE ASSESSEE THAT THE TRANSACTIONS WERE NOT UNDERTAKEN BY THE ASSESSEE WITH A VIEW TO KEEP THE SAME AS INVESTMENT. ACCORDINGLY WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27. 04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 27. 04.2015 . * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT ( A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.