Satishchandra S Doshi, Mumbai vs Assessee

ी जो ग दर संह, या यक सद य एवं ी संजय अरोड़ा, लेखा सद य के सम ।

BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARORA, AM

आयकर अपील सं./I.T.A. No. 5572/Mum/2013 ( नधारण वष / Assessment Year: 2009-10)

Dy. CIT, Circle-21(3), Satishchandra S. Doshi Room No. 501, Bldg., 5th Floor, बनाम/ Eternia-A/1602, C-11, Pratyaksh Kar Bhavan, BKC, Vs. Hiranandani Gardens, Main Street, Bandra (E), Mumbai-51 Powai, Mumbai-400 076 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AACPD 7600 F (अपीलाथ /Appellant) : ( यथ / Respondent)

या ेप सं./Cross objection No. 251/Mum/2014 (Arising out of ITA No.5572/Mum/2013) ( नधारण वष / Assessment Year: 2009-10)

Satishchandra S. Doshi Dy. CIT, Circle-21(3), Eternia-A/1602, बनाम/ Room No. 501, Bldg., 5th Floor, Hiranandani Gardens, Main Street, Vs. C-11, Pratyaksh Kar Bhavan, BKC, Powai, Mumbai-400 076 Bandra (E), Mumbai-51 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AACPD 7600 F ( या ेपक/ Cross objector) : ( यथ / Respondent)

राज व क ओर से / Revenue by : Shri Neil Philip

नधा रती क ओर से/Assessee by : Shri Deepak Shah & Shri Tej Shah

सनु वाई क तार ख / : 05.01.2015 Date of Hearing घोषणा क तार ख / : 08.01.2015 Date of Pronouncement 2 ITA No. 5572/M/13 & CO No.251/M/14 (A.Y. 2009-10) Satishchandra S. Doshi

आदे श / O R D E R Per Sanjay Arora, A. M.:

These are cross appeals, i.e., by the Revenue and the Assessee, arising out of the Order by the Commissioner of Income Tax (Appeals)-22, Mumbai ('CIT(A)' for short) dated 03.06.2013, allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2009-10 vide order dated 26.12.2011.

Revenue's Appeal (in ITA No. 5572/Mum/2013)

2. The issue arising in the instant case is the validity or otherwise in law, and in the facts and circumstances of the case, of the direction qua the loss and gain at Rs.33,15,383/- and Rs.77,56,256/-, returned by the assessee as short term capital loss (STCL) and long term capital gain (LTCG) respectively, on the purchase and sale of shares, for being accepted as such, as against business income by the assessing authority. The assessee, also engaged in dealing of futures and options in shares, i.e., trading in derivatives, maintains separate books of accounts of his said business activity, the results of which were returned and assessed under the head 'profits and gains of business or profession'. However, notwithstanding the shares being reflected as an investment in his accounts, the same were considered as a part of the assessee's trading stock, so that the entire income, whether speculative or delivery based, considered as part of the assessee's business income from trading in shares by the Assessing Officer (A.O.).

In appeal, the ld. CIT(A) noted that both in the case of the assessee as well as his son, Shri Hitesh Satishchandra Doshi, the Tribunal had for earlier years, being A.Y's 2003-04, 2004-05 and 2006-07, held that the shares were held by them as investments, even as reflected by them in their respective accounts and, therefore, the same cannot be treated as business income. The A.O. having not brought out any change in the facts and circumstances of the case, he was bound by the order of the tribunal and, therefore, directed for the profit or loss, as the case may be, on the sale of the shares, to be assessed u/s.45 under the head 'capital gains'.

3 ITA No. 5572/M/13 & CO No.251/M/14 (A.Y. 2009-10) Satishchandra S. Doshi

3. Before us, the ld. Authorized Representative (AR) would take us through the relevant part of the order by the tribunal in the assessee's own case for earlier years, i.e., for A.Ys. 2004-05 and 2006-07 (in ITA Nos. 6496, 6604/Mum/2009 and Others dated 30.03.2012/PB pgs. 47-61). The tribunal had in fact followed the decision by the tribunal in the case of the assessee's son in-as-much as the same is pari materia, discussing the matter at considerable length. The first appellate authority, accepting the assessee's case in principle, however, held that the gain arising on the shares sold within a period of 30 days would be business income. The same did not find favour with the tribunal, which removed this artificial barrier of 30 days, so that the entire gain, whether arising within a period of 12 months or thereafter, would be capital gains. No difference in the facts and circumstances of the case having been brought out, the A.O. was bound to follow the order by the tribunal, and the plea that the Revenue had appealed against the same before the hon'ble jurisdictional high court could not be a ground for making the assessment in the manner done.

The ld. Departmental Representative (DR) would, on the other hand, rely on the assessment order. As clarified therein, relying on the decision by the tribunal in the case of Star India Ltd. (in ITA No. 7476/Mum/2007 and 3201/Mum/2010 dated 30.11.2011), the Revenue, where it had appealed against the order by the tribunal before the hon'ble jurisdictional high court, could continue to frame assessments in conformity with its stand, notwithstanding the order by the tribunal to the contrary. This would in fact be necessary for it to keep the matter alive. However, on merits, the STCG and LTCG arising on a total of 26 transactions only, he could not however render any satisfactory explanation on being questioned in the matter by the Bench.

4. We have heard the parties, and perused the material on record.

We are, to begin with, appreciative of the Revenue's concern to keep an issue, decided against it by the tribunal, alive, having appealed against the same before the hon'ble jurisdictional high court. That, however, even as observed by the Bench during 4 ITA No. 5572/M/13 & CO No.251/M/14 (A.Y. 2009-10) Satishchandra S. Doshi

hearing, cannot be a ground for sustaining its action by the first appellate authority, or by the tribunal for that matter, which could only be on the basis of the decision by a higher appellate forum, i.e., the hon'ble high court or the hon'ble supreme court. Accordingly, we see no reason for not following the order by the tribunal in the assessee's case for earlier years in the absence of any difference in the facts and circumstances of the case with reference to the previous years, for which the tribunal has held in assessee's favour. Further, the very fact that there have been only 36 transactions during the whole year would itself weigh considerably in favour of the said decision, i.e., for treating the gain as arising on investments. No doubt, as clarified by the tribunal in the case of Asst. CIT vs. V. Nagesh (in ITA No.5410/Mum/2008 dated 24.09.2009), that the treatment by the assessee in its books is not determinative of the matter, but then it is incumbent on the Revenue to show as to how the said treatment in the books is not proper or reflective of the correct and true state of affairs, and which it has failed to in the instant case. We decide accordingly.

Assessee's CO No. 251/Mum/2014 We having upheld the impugned order on merits, do not therefore consider it necessary to decide the assessee's Cross Objection (C.O.) challenging the maintainability of the Revenue's appeal in view of Instruction No.3 of 2011 dated 09.12.2011 issued u/s.268A of the Act. Needless to add though, if and where, our order being appealable and, therefore, liable to be reversed, in full or in part in appeal, the assessee shall in that case be at liberty to seek restitution and adjudication of it's C.O., thus precluding any prejudice being caused to it. The assessee's C.O. is accordingly dismissed as infructuous.

5. In the result, both the Revenue's appeal and the assessee's C.O. are dismissed.

Order pronounced in the open court on January 08, 2015

Sd/- Sd/-

(Joginder Singh) (Sanjay Arora) या यक सद य / Judicial Member लेखा सद य / Accountant Member मुंबई Mumbai; दनांक Dated : 08.01.2015 5 ITA No. 5572/M/13 & CO No.251/M/14 (A.Y. 2009-10) Satishchandra S. Doshi

व. न.स./Roshani, 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) 4. आयकर आयु त / CIT - concerned 5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई / DR, ITAT, Mumbai 6. गाड फाईल / Guard File आदे शानस ु ार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai