1 ITA 3284/AHD/2010
IN THE INCOME TAX APPELLATE TRIBUNAL " B " BENCH, AHMEDABAD
(BEFORE SHRI D. K. TYAGI, J.M. & SHRI ANIL CHATURVEDI, A.M.)
I.T. A. No. 3284 /AHD/2010
Mrs. Perin F. Lalkaka V/S D.C.I.T Circle-7,
"Thumbelina", Opp. Ahmedabad
Appellant by : Ms. Urvashi Shodhan
Respondent by : Shri P.L. Kureel, Sr. D.R.
Date of hearing : 30-10-2013
Date of Pronouncement : 01-11-2013
PER SHRI ANIL CHATURVEDI,A.M.
1. This appeal is filed by the Assessee against the order of CIT(A)-XIV,
Ahmedabad dated 27.10.2010 for A.Y. 2006-07.
2. The fact as culled out from the material on record are as under.
3. Assessee is an individual having income from business, capital gains and
interest income. Assessee filed her return of income for A.Y. 06-07 on
2 ITA 3284/AHD/2010
29.12.2006 declaring total income of Rs. 43,74,639/-. The case was
selected for scrutiny and thereafter the Assessment was framed under
section 143(3) vide order dated 19.12.2008 and the total income was
determined at Rs. 43,74,639/-. While framing the assessment A.O.
considered the short term capital gain of Rs. 5,55,334/- shown by
Assessee as business income of the Assessee. Aggrieved by the order of
A.O., Assessee carried the matter before CIT(A). CIT(A) vide order
dated 27.10.2010 dismissed the appeal of the Assessee. Aggrieved by the
aforesaid order of CIT(A) , the Assessee is now in appeal before us and
has raised the following effective ground:-
1. The learned CIT(A) has erred in law and on facts in confirming the treatment of
the short-term capital gain of Rs. 5,53,334/- as business income.
4. During the course of assessment proceedings, A.O. noticed that Assessee
had shown income of Rs. 5,55,334/- as short term capital gains earned on
shares. He further noticed that Assessee had entered into 60 transactions
of purchase and sales and the value of purchase was to the tune of Rs.
63,11,345/- and that of sale was Rs. 68,66,679/-. He also noticed that the
holding period ranged from 1 to 6 months and the number of companies
in which the assessee had traded were around 60 companies. A.O.
therefore concluded that Assessee was indulging in frequent buying and
selling of shares on a very large scale continuously during the year. He
was of the view that had the intention of the Assessee been to purchase
the shares for the purpose of investments then the Assessee would have
only got shares and sold them only on emergency and not frequently as
done at present by the Assessee. He thus relying on the decision of
Ahmedabad Bench in the case of Poornima Shah (ITA No.
3 ITA 3284/AHD/2010
3154/AHD/2002) held the profit earned from buying and selling of shares
to be "income from business" and accordingly the short term capital gain
was treated as business income. Aggrieved by the order of A.O.
Assessee carried the matter before CIT(A). CIT(A) vide order dated
27.10.2010 dismissed the appeal of the Assessee by holding as under:-
5.2 Before commenting on the merits of AR's submission, it is to be seen that
although the AO has mentioned the no. of transactions, it's value of purchase and
sale, No. of transactions and investment on a particular, day, but he has not given
any chart or break up of the shares purchased and sold in a proper manner i.e. date
of purchase and sale, rate of purchase and sale, number of shares purchased and
sold, number of shares of company-wise, purchase amount of shares, rate of sale,
date of sale, number of shares sold, number of shares sold company-wise, net capital
gain/ net capital loss and so on. Similarly the AR has also rebutted the AO's plea in a
general manner but is not supported by documentary evidence i.e. copy of balance
sheet and copy of the P&L A/c. to show the closing stock in a particular year and the
expenses incurred for the purpose of purchase and sale of shares, no break- up of the
money available with the appellant at the time of purchase of shares, no break up of
money borrowed by the appellant before the' purchase of shares/investment in shares.
Further there is no chart or break up of the details already mentioned in the above
para. The AR has only replied in theory and in a general manner citing some
decisions in his favour and rebutted the decision relied by the AO. In absence of the
details of the transactions of shares/investment for retaining period, number of-
shares, name of the company and rate of purchase and sale and other things, it is not
possible to decide as to whether the transaction is a short term capital gain/
investment or meant for a business activity. Thus, I have no alternative but to confirm
the order of the AO on this issue. Therefore, the AO's treatment of Short Term Capital
Gain of Rs.5,55,334/- as business income is confirmed and the appeal is dismissed.
5. Aggrieved by the order of CIT(A), the Assessee is now in appeal before
4 ITA 3284/AHD/2010
6. Before us, the ld. A.R. submitted that Assessee is the Senior Citizen and
her taxable income was over 25 lacs for the last few years. She had
substantial surplus fund which had been invested in various investments.
It was further stated that Assessee did not borrow any money to make
investments, Assessee had taken the delivery of the shares and had not
entered into the transactions of sale without taking delivery. It was
further submitted that no F & O activity was carried out by the Assessee.
The ld. A.R. further pointed to the statement of capital gains earned
during the year and also submitted share-wise ledger account and the
copy of which were placed in paper book. She further submitted the copy
of the pass book of the Assessee to demonstrate that the Assessee had
used her own funds and no borrowed funds were used for making
investments. She further submitted that the intention of the Assessee was
to hold the shares as investment. She also placed on record, the chart
showing the capital gains earned by the Assessee in 3 years prior and 3
years after A.Y. 06-07 and from it demonstrated the capital gains earned
by the Assessee in various years. She further submitted that the loss
incurred by the Assessee in A.Y. 08-09 & 09-10 have been carried
forward and not adjusted against the taxable income which proves her
intention that the investments were not business activity of the Assessee.
She further placed reliance on the decision of Ahmedabad Tribunal in the
case of Kalpesh C. Shah ITA No. 2818/Ahd/2011 order dated 31.10.2012
apart from various other decisions in her support. The ld. D.R. on the
other hand supported the order of A.O. and CIT(A).
5 ITA 3284/AHD/2010
7. We have heard the rival submissions and perused the material on record.
It is an undisputed fact that Assessee had earned profit on sale of shares
amounting to Rs. 5,55,334/- which has been treated by Assessee as short
term capital gains but on the other hand the A.O. has treated into as
"business income" and which has also been confirmed by CIT(A). From
the order of CIT(A), we find that the reason for confirming the order of
A.O. interalia was that the Assessee had not given any chart or break up
of the shares purchase and sold containing the details of date of purchase
and sale, rate of purchase and sale, number of shares purchase and sold,
number of shares company wise, purchase amount of shares, net capital
gain loss etc. He has further noted that the Assessee has also not filed
any copy of balance sheet or Profit and Loss account to prove the
availability of own funds with the Assessee and further substantiate her
stand that no borrowed funds have been used by the Assessee. In the
absence of aforesaid details, according to CIT(A), the matter could not be
decided as to whether the transactions entered by the Assessee were in
the nature of short term capital gain or the transactions were meant for
8. Before us in the paper book the Assessee has filed the details and
working of the capital gains earned giving various details therein. She has
also filed the copy of the bank book of the Assessee in support of her
contention that she was having own funds and further her own funds have
been used for the purpose of making investments. She has also filed copy
of balance sheet. In view of the aforesaid submissions and details filed
by the Assessee, we feel that the matter needs to be reexamined at the
end of CIT(A). We therefore feel that to meet the ends of justice and fair
6 ITA 3284/AHD/2010
play the matter needs re-examination by CIT(A) and we therefore restore
the issue to the file of CIT(A) for him to decide the issue after
considering the submissions of the Assessee, the case laws relied by the
Assessee and other supportings and details placed by the Assessee and
thereafter decide the issue after giving a reasonable opportunity of
hearing to the Assessee. The Assessee is also directed to cooperate by
submitting the necessary details called for by CIT(A).
9. In the result, the appeal of the Assessee is allowed for statistical
Order pronounced in Open Court on 01- 11 - 2013.
(D.K. TYAGI) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad. TRUE COPY
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals)
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.