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TMI Blog2015 (1) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... t worthy, the assessee retained 41% of the total sales acquired during the year and sold in subsequent years and the capital gains earned there from has been accepted as capital gains by the Assessing Officer in scrutiny assessment. So far as, manner of accounting is concerned, it has been shown as investment (page-13 of the paper book) in his financial statement and consistently followed in all the years and accepted by the Department. So far as, method of valuation is concerned, the assessee valued at “cost” and not at “cost are market price whichever is less”. Therefore, the assessee is having merit in its contention. - Decided in favour of assessee. Exemption available u/s 17(2)(vi) restricted while calculating income under the head “income from salary” - reimbursement of medical expenses - Held that:- The assessee was admitted in the hospital to carry out angioplasty (angiography). The assessee also submitted the bills of hospital in support of its claim. The expenses were first incurred by the assessee for treatment of Coronary Angiography cost in ₹ 90,090/- and claimed as medical reimbursement as per the provision of section 17(2), while computing the salary income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of just two scrips, acquired in secondary market, and thus the sale transaction of the shares are only two. So far as, earning of long term capital gains of ₹ 15,52,023/-, is concerned, it was argued to be accepted by the Assessing Officer. On the issue of consistency, it was argued that the assessee had been offering gains from investment under the head capital gains which has been accepted by the Department, thus, in the absence of the contrary facts, no U turn is permitted/expected from the Department. The ld. counsel placed reliance on the decision in the case of Gopal Purohit 228 CTR 582 (Bom) against which SLP was also dismissed (334 ITR (ST) 308). Plea was also raised that no borrowed funds were used for making the investment and own funds were used. On the issue of frequency, it was contended that average holding period of shares held for short term is 34 days for shares acquired by IPO and 36 days for shares acquired in secondary market. A strong plea was raised that the assessee has not carried out any speculative, derived it as well as repetitive transactions. It was also pleaded that identically in the case of Smt. Seema R. Bajaj (wife of the assessee) the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 25,36,635 No 143(3) 17-18 2) 2006-07 36 11 47 56,44,269 No 143(3) r.w.s 153A 21-23 3) 2007-08 14 - 14 28,15,011 No 143(3) r.w.s 153A 26-28 4) 2008-09 34 2 36 1,53,35,274 No Year under consideration - 5) 2009-10 7 4 11 2,79,159 Yes 143(3) r.w.s. 153A 29-32 6) 2010-11 15 6 21 2,73,77,413 Yes 143(3) r.w.s. 153A 33-36 7) 2011-12 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. After detail discussion, he treated the income from short term capital gain at ₹ 2,74,187 as business income. 3. The learned Commissioner (Appeals) has confirmed the finding of the Assessing Officer mainly on the ground that the magnitude and the frequency of the transaction is quite high and there is a very low holding period i.e., they are less than 20 days which reflects intention of the assessee that it was not for the purpose of investment but for getting indulged in the adventure of trade. 4. Before us, the learned Counsel, Mr. Vijay Mehta, on behalf of the assessee, submitted that first of all, the assessee had purchased shares of 32 companies in the IPO out of 34 scrips. Other than the IPO only two sale transactions were through secondary market. In the IPO, only serious investors will make investment, because this is the best possible mode of acquiring shares at a lowest price and sold the same at an initially listing period which gives the best possibility of getting good sale price. All throughout the various assessment years, the assessee has been mostly engaged in making investment in IPO shares only and surplus arising out of sale of such IPO shares hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allotted and that too the quantity of shares is not certain. It is only when the shares are allotted, they are listed in Stock Exchange and wherever there is some rise in value of the shares, the assessee immediately used to sell the same to book the gain. This practice of investment in IPO has been consistent since last several years and also in the subsequent years, wherein the income has been offered as capital gain and the same has been accepted by the Department under scrutiny proceedings under section 143(3). Further, the investments have been made through own funds and no borrowed funds have been utilized. Thus, the intention of the assessee was only for the investment and not for trading of shares. Moreover, there is no repetitive transaction and all are delivery based, hence, any gain arising out of such transaction is to be assessed as capital gain. On the other hand, Revenue s case is that the period of holdings is quite less and number of transactions is also huge, therefore, it should be assessed as business income. While adjudicating such kind of cases, the primary parameter is to gauge the intention of the assessee. The period of holding may not be all relevant in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not worthy that the Department itself in earlier and assessment years as is evident from the paper book (summarized in the aforesaid table) had been accepting the claim of the assessee as short term capital gain, while framing the assessment u/s 143(3) of the Act, thus, for the sake of consistency also, the assessee is having a good case in his favour. The totality of facts, indicates that the intention of the assessee was making the investment, thus gains arising out of sale of shares should be assessed as capital gain and not business income as has been canvassed by the ld. CIT-DR. Admittedly, no borrowed funds were utilized for making the investment, frequency of transactions, intention of the assessee making investments main through IPOs, being best possible mode of acquiring shares at lowest price and sold the same at initial period, being the best possible opportunity to sell at the pick price, as is evident from page 67 of the paper book, wherein, we find that the assessee held the investment till the accounting period i.e. 31/03/2008 and sold the shares at prevailing price as on that date earning short term capital gain of ₹ 50,73,057, which is at the rate of 13.71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Agrawal Warehousing Leasing Limited (257 ITR 235)(MP) wherein it was held as under :- The orders passed by the Tribunal are binding on all the revenue authorities functioning under the jurisdiction of the Tribunal. The principle of judicial discipline require that the order of the higher authorities should be followed unreservedly by the subordinate authorities......... Therefore, from this angle also, the assessee is having merit in its contention, in view of these facts and judicial pronouncements discussed hereinabove, this ground of the assessee is allowed. 2.5. The next ground pertains to disallowance of expenses of ₹ 33,367/- while calculating income under the head income from other source . This ground was not pressed by the ld. counsel for the assessee, therefore dismissed as not pressed. 2.6. The last ground pertains to restricting the exemption available u/s 17(2)(vi) of the Act amounting to ₹ 15,000/- in place of actual expenses incurred at ₹ 90,090/-, while calculating income under the head income from salary . The ld. Assessing Officer head dealt with this issue at para 5 (page-16) of the assessment order. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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