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M/s. Dreamland Buildtech Pvt. Ltd. 910, Ansal Bhawan, Kasturba Gandhi Marg New Delhi. Vs. ACIT Circle-10(1) New Delhi.
August, 18th 2015
                        DELHI BENCHES : "B" NEW DELHI

                   SHRI C.M. GARG, JUDICIAL MEMBER

                                  ITA No: 5675/Del/2011
                                    Asstt. year 2007-08

                M/s. Dreamland Buildtech Pvt. Ltd.     vs. ACIT
                910, Ansal Bhawan,                         Circle-10(1)
                Kasturba Gandhi Marg                       New Delhi.
                New Delhi.

                (PAN AACCD0809M)
                (Appellant)                     (Respondent)

                       Appellant by  : Shri Santosh K Aggarwal, Advocate
                       Respondent by :Smt. Parvinder Kaur, Sr. DR
                     Date of Hearing  :17.8.2015
               Date of pronouncement :17.8.2015



      This is an appeal filed by the assessee against the order of Ld. CIT(A) dated

13.10.2011. The assessee has taken 13 grounds of appeal. However the crux of the

appeal is the grievance of assessee by the order of Ld. CIT(A) by which he had

upheld penalty imposed by AO u/s 271 (1)(c) of the Act. At the outset Ld. AR invited

our attention to an order of Tribunal dated 12th December, 2014 and submitted that

the issue on which penalty was imposed has already been decided by the Hon'ble

Tribunal in favour of assessee and in this respect he invited our attention to para 8.3
                                                         ITA No. 5675/Del/2011
                                                Dreamland Buildtech Pvt. Ltd. vs ACIT

of the said order. Further explaining the facts the Ld. AR submitted that Ld. CIT(A)

had upheld the penalty u/s 271(1)(c) of the Act as a part of capital gain income

declared by assessee was treated as business income which the Hon'ble Tribunal

had decided in its favour and therefore the penalty does not survive. The Ld. DR

though supported the order of Ld. CIT(A) but submitted that she will go through the

orders of Hon'ble Tribunal.

2.   We have heard rival submissions and have gone through the material available

on record. We find that the penalty was imposed as the AO treated as            part of

income from sale of shares as business income and in this respect the facts noted in

penalty order are reproduced below :-

             "I accordingly, hold that gain of Rs. 2,53,84,621/- earned by the
             company on sale of shares within a period of 30 days was I the nature
             of business income. Accordingly, I accept the contention of the
             appellant to the extent of short term capital gain of Rs. 3,35,01,577/-
             as short term capital gain, Rs. 7,24,61,100/- and I also hold that
             amount of Rs. 2,53,84,621/- is in the nature of business income. AO is
             directed to treat Rs. 3,35,01,577/- as short term capital gain, Rs.
             7,24,61,100/- as long term capital gain and Rs. 2,53,84,621/- as
             business income. This ground is partly allowed."
3.      We find that the Hon'ble Tribunal vide its order dated 12th December, 2014

has disposed of cross appeals for assessment years 2006-07 and 2007-08. In the

assessee's appeals for the assessment years 2006-07 and 2007-08 one of the issues

is regarding treatment of capital gain as business income. The Hon'ble Tribunal vide

para 8.3 and 8.4 has held income from shares held for less than 30 days in the

present case cannot be treated as business income. The relevant para 8.3 and 8.4 is

reproduced below:-

                                                          ITA No. 5675/Del/2011
                                                 Dreamland Buildtech Pvt. Ltd. vs ACIT

      "8.3      We now consider the findings of the Ld. CIT(A) wherein he has held

      that the gains received on shares which were held for a period of less than

      30 days should be assessed as income from business. The Mumbai H Bench

      of the Tribunal in the case of Mr. Hitesh Satishchandra Doshi Etemia vs. JCIT

      in ITA No. 6497/Mum/2009 and ITA 148/Mum/2010 for the assessment year

      2003-04 and other appeals had after considering a number of decisions at

      page 15 held as follows.

      "Therefore, the bifurcation of the short term capital gain and treating the
      transaction as investment in the cases where the holding period of more than
      30 days and as business transaction in the case where the holding period is
      less than 30 day, in our considered opinion, is not justified on the part of the
      CIT(A). Since there cannot be a single criteria for judging the transaction as
      capital asset or trading asset, the CIT(A) adopted only holding period as a
      sole criteria for bifurcating the transactions relating to the short term capital
      gain, which is neither proper and nor justified."
      8.4       Respectfully following the same we have to necessarily dislodge this

      direction of the Ld. CIT(Appeals). We hold that the entire profits from the

      purchase and sale of shares have to be assessed under the head "capital


4.    The Hon'ble Tribunal in the same order has allowed relief to the assesee in

assessment year 2007-08 by following the order for assessment year 2006-07. The

ground No.2 in asstt. year 2007-08 reads as under:

      "That the CIT(A) erred in holding that the gain of Rs. 25384621/- out of the
      total short term capital gain from sale of shares was business profit."
5.    The Hon'ble Tribunal has disposed of this issue vide para 12 and 12.1. The

same is reproduced below :-

        12. Ground Nos. 2 and 3 are identical to ground Nos. 2 and 3 of the
        assessee's appeal for the assessment year 2006-07. In this assessment year

                                                          ITA No. 5675/Del/2011
                                                 Dreamland Buildtech Pvt. Ltd. vs ACIT

        the factual position of period of holding is brought out by the Ld. CIT(A) at
        page 42 of his order as follows :

        "I have also called for bifurcation of profit relating to shares declared as
        investment in the past and transaction carried out in the year under
        reference on the basis of period of holding. The relevant bifurcation is as
        under :-

      1. Capital gain on shares sold of investment of preceding years which were
         disclosed in the balance sheet as investment ­

                                  (ST) Rs. 1,95,06,51/- and
                                  (LT) Rs. 7,24,61,100/-

      2. Short term capital gain on investment relating to holding period of 6
         months and above          Rs. 2,39,07,368/-

      3. Short term capital gain oninvestment relating to holding period of 5-6
         months                     Rs. 68,24,511/-

      4. Short term capital gain on investment relating to holding period of 4-5
         months                      Rs. 62,90,269/-

      5. Short term capital gain on investment relating to holding period of 3-4
         months                       Rs.47,05,291/-

      6. Short term capital gain on investment relating to holding period of 2-3
         months.                       Rs. 12,82,245/-

      7. Short term capital gain on investment relating to holding period of 1-2
         months                        Rs. 29,04,972/-

      8. Short term capital gain on investment relating to holding period upto 1
         month                          Rs. 2,53,84,621/-

      12.1 As the factual position of this year is identical to the factual position of
      the P.Y. We allow these grounds of the assessee for the same reasons that
      were cited by us while disposing of the case for the assessment year 2006-

6.     From the above findings of Hon'ble Tribunal, we find that the assessee has

been granted relief in this respect and therefore the penalty upheld by the Ld.

CIT(A) on account of this addition does not sustain. In view of the above the appeal

of the assessee is allowed.

                                                                  ITA No. 5675/Del/2011
                                                         Dreamland Buildtech Pvt. Ltd. vs ACIT

7.        In the result the appeal of the assessee is allowed.

          Order pronounced in the open court on              17th August, 2015.

                   sd/-                                    sd/-

              (C.M. GARG)                            (T.S. KAPOOR)
            JUDICIAL MEMBER                        ACCOUNTANT MEMBER

Dated: the      17th August, 2015

Copy of the Order forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
6.    Guard File                              By order
                                                         Dy. Registrar

Sl.                    Description                        Date

 1.   Date of dictation by the Author                17.8..2015

 2.   Draft placed before the Dictating Member        17.8.2015

 3.   Draft placed before the Second Member

 4.   Draft approved by the Second Member

 5.   Date of approved order comes to the Sr. PS

 6.   Date of pronouncement of order

 7.   Date of file sent to the Bench Clerk

 8.   Date on which file goes to the Head Clerk

 9.   Date of dispatch of order

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