Jagruti Rajiv Dutia, Mumbai vs Department Of Income Tax
- CitationI.T.A. No.6588/ Mum/2013
Ratio decidendi
The rule this decision rests on
The character of gain arising from the sale of shares, whether as capital gain or as business income, is to be determined by considering the various relevant factors, in particular the intention of the assessee at the time of acquiring the shares; the mere volume or turnover of share transactions is not by itself a determinative factor in deciding whether the assessee acted as an investor or as a trader. Where the assessee's declaration of capital gain from share transactions has been consistently accepted by the Assessing Officer in earlier assessments under section 143(3), that consistent treatment is a relevant circumstance in deciding whether the assessee is to be regarded as an investor, and an Assessing Officer departing from it in a single year must justify the departure on the facts of that year.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.6588/ Mum/2013 ( नधा रण वष / Assessment Year: 2010-2011
DCIT - 17(2, बनाम/ Smt. Jagruti Rajiv R. No. 217, 2 n d floor, Dutia, Vs. Piramal Chambers, A-73, Neperol Tower, Mumbai - 400 012. Opp. Gyaneshwar Vidyalaya, R.A. Kidwai Road, Wadala, Mumbai - 400 031. थायी ले खा सं . /PAN : AAQPD2072H (अपीलाथ /Appellant) .. ( यथ / Respondent)
Appellant by Shri Pawan Kumar Birla Respondent by : Shri Nitesh Joshi
ु वाई क तार ख / Date of Hearing सन : 18-06-2015 घोषणा क तार ख /Date of Pronouncement : 18-06-2015 [
आदे श / O R D E R PER B.R. BASKARAN, A.M.
The Revenue has filed this appeal challenging the order dated 27-08-2013 passed by the ld. CIT(A) - 29, Mumbai and it relates to A.Y. 2010-
11.
2. The Revenue is aggrieved by the decision of the ld. CIT(A) in holding that the short term capital gain arising out of sale of shares is assessable as capital gain instead of business income.
2 ITA 6588/M/13
3. We have heard the parties and perused the record. The facts relating to the issue under consideration are that the assessee is an individual and she filed her return of income for the year under consideration declaring a total income of Rs. 1.86 crores, which included short term capital gain of Rs. 74.84 lacs and long term capital gain of Rs. 12.11 lacs. He further noticed that the assessee has sold 3.78 lacs of shares and total turnover was Rs. 5.36 crores. The average holding period was seen at 22.5 days. Accordingly, the A.O. took the view that the assessee has dealt in purchase and sale of shares as a trader. Hence, the A.O. held that short term capital gain should be assessed as business income and accordingly assessed the same. The ld. CIT(A), however, set aside the order of the A.O. and directed the A.O. to assess the profit on short term capital gain only. Aggrieved by this, the Revenue has filed this appeal before the Tribunal.
4. We have carefully perused the order passed by the ld. CIT(A). We notice that the assessee has been consistently declaring the profit arising out of purchase and sale of shares as capital gain only and the same has been accepted by the A.O. in the assessment orders passed u/s 143(3) of the Act for assessment years 2005-06, 2006-07, 2007-08, 2008-09 and 2012-13. It is a well settled proposition that the question of assessing the gain arising on sale of shares either as capital gain or business income would depend upon various factors that are required to be considered, more particularly the intention of the party at the time of purchasing shares.
5. In the instant case, the ld. CIT(A) has noticed that the assessee has entered into only 22 transactions during the year under consideration. A perusal of the details furnished in the order of Ld CIT(A), we notice that there was no repetition of purchase and sales except in one case. Further, the ld. CIT(A) has noticed that the assessee has held scrips for a period ranging from 5 days to 4 months. Further, a perusal of the capital account of the assessee 3 ITA 6588/M/13
shows that the assessee has not incurred any interest expenditure and the ld. CIT(A) has given a finding that the capital of the assessee is much more than the investment made in the shares and there was no use of any borrowed funds in share transactions. The A.O. had observed that the assessee has not shown any dividend income and the same has been found to be false by the ld. CIT(A) and he has noted that the assessee has declared dividend income of Rs. 5 lacs in her personal account. Hence the Ld CIT(A) has directed the A.O. to assess the gain arising on sale of short term capital gain.
6. The ld. D.R. could not controvert the various facts and finding given by the ld. CIT(A) and he placed strong reliance on the order of the A.O.
7. We noticed that the ld. CIT(A) has analysed the facts prevailing in the instant case in perspective and accordingly came to the conclusion that the assessee has acted as 'investor' only in shares. We notice that the AO has given much importance to the amount of turnover of transactions. However, the volume and turnover of shares would depend upon the funds available with an assessee and the quantum of investment he intends to make. In the instant case, the assessee has dealt in only 22 scrips in high quantities and hence the amount of turnover was high. Hence, the volume of transactions alone cannot be determining factor in deciding the nature of investments made by the assessee. Except high volume, in our view, there are no other factor to show that the assessee has not acted as an 'investor' in indulging in shares. Further, the very fact that the assessee's declaration of capital gain has been accepted by the A.O. in the 143(3) assessment passed for assessment years 2005-06, 2006-07, 2007-08, 2008-09 and 2012-13 would show that the A.O. has also consistently treating the assessee as an investor. Under the set of facts, we are in agreement with the ld. CIT(A) that the A.O. was not justified in treating the assessee as 'trader', that too only in this year and accordingly assessing the capital gain as business income. Accordingly, 4 ITA 6588/M/13
we are of the view that the Ld CIT(A) was justified in holding that the assessee was an investor only and accordingly directing the AO to assess the gains as short term capital gains.
8. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 18th June, 2015.
आदे श क घोषणा खल ु े #यायालय म% &दनांकः 18-06-2015 को क गई ।
Sd/- sd/- (I.P. BANSAL) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; &दनांक Dated 18-06-2015 [
व.=न.स./ RK , Sr. PS
आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु>त(अपील) / The CIT (A)29, Mumbai
4. आयकर आयु>त / CIT -17,Mumbai
5. Aवभागीय =त=नCध, आयकर अपील य अCधकरण, मुंबई / DR, ITAT, Mumbai J Bench
6. गाडG फाईल / Guard file.
ु ार/ BY ORDER, आदे शानस
स याAपत =त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai
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