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TMI Blog2017 (2) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer to treat amount for the Assessment Year 2008-09 as short term capital gain and consequently to levy the tax under Section 111A of the Act. - TAX APPEAL NO. 35 of 2017 With TAX APPEAL NO. 34 of 2017 - - - Dated:- 2-2-2017 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : MR SUDHIR M MEHTA, ADVOCATE FOR THE OPPONENT : MR SN SOPARKAR, SENIOR ADVOCATE with MR B S SOPARKAR, CAVEATOR ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] As common question of law and facts arise in both these Appeals and as such are with respect to the same assessee but with respect to different Assessment Years, both these Appeals are decided and disposed of by this common judgment and order. [2.0] Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad C Bench (hereinafter referred to as the learned tribunal ) in IT(SS) Nos.531 532/Ahd/2011 for the Assessment Years 2008-09 to 2009-10 by which the learned tribunal has dismissed the said Appeals preferred by the revenue and has confirmed the order passed by the learned CIT(A) directing the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as business income and directed the Assessing Officer to determine the tax under Section 111A of the Act by directing the Assessing Officer to treat the same as short term capital gain. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in directing the Assessing Officer to treat the amount of ₹ 2,59,43,473/- as short term capital gain and consequently to levy tax under Section 111A of the Act, revenue preferred Appeal before the learned tribunal. By the impugned judgment and order, the learned tribunal has dismissed the said Appeal and has confirmed the order passed by the learned CIT(A). Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned tribunal for the Assessment Year 2008-09, revenue has preferred Tax Appeal No.35/2017 with the aforesaid proposed questions of law. [3.1] Similar order came to be passed by the learned CIT(A) confirmed by the learned tribunal for the Assessment Year 2009-10, which is subject matter of Tax Appeal No.34/2017. [4.0] Shri Sudhir Mehta, learned Counsel has appeared on behalf of the revenue and Shri S.N. Soparkar, learned Senior Counsel has appeared on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gain, the learned tribunal has not properly appreciated and considered the above factors. [5.2] Shri Sudhir Mehta, learned Counsel appearing on behalf of the revenue has taken us to number of statements of purchase transactions during the year under consideration as well as the statements of sale transactions during the year under consideration in support of his submissions that the assessee was dealing in trading of shares, and therefore, the income /profit earned was to be treated as business income and not as short term capital gain. Making the above submissions and relying upon the decision of the Delhi High Court in the case of Manoj Kumar Samdaria Vs. Commissioner of Income Tax I reported in 45 Taxman.com 394 [Del] against which SLP has been dismissed by the Hon ble Supreme Court (52 Taxman.com 247[SC]) , it is requested to admit /allow the present Appeals. Shri Sudhir Mehta, learned Counsel appearing on behalf of the revenue has also relied upon the admission order in Tax Appeal No.251/2016 and has submitted that on similar questions Appeal has been admitted. [6.0] The present Appeals are vehemently opposed by Shri S.N. Soparkar, learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h nos.5.1 to 5.6 as under; I have given a careful consideration to the basis given by the Assessing Officer for his findings as also the detailed submissions made on behalf of the appellant-firm and also perused the decisions cited by the learned A.R. In my view the question in the present case has to be considered and determined on the basis of the factual position which emerges from the records and from the discussion given above. In the written submissions the appellant has commented on the various grounds indicated by the Assessing Officer for treating the short term capital gain as business income. The most important point which can be said to be relevant for deciding the issue is the motive and intention of the appellant at the time of purchase of shares. The Assessing Officer has mentioned that the shares were purchased with the motive of selling within a short period of time ranging from one month to three months with the motive to earn quick business profit. In this regard he has also brushed aside the term and condition in partnership deed debarring the firm to engage in trading of shares and mutual funds. Having regard to the clear facts of this case, I do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /04/2005. This shows that there was no motive or intention on the part of the appellant to take any undue advantage of the newly inserted provision to reduce its tax liability. 5.3. I also find that the transactions cannot be said to be frequent transactions of purchases and sales with a view to earn quick profit. A trader in shares would purchase and sell shares frequently within a short period of time. In the present case, as per details given above the net short term capital gain entirely comprises of sales of shares of RNRL. As mentioned above, the shares of this Company were purchased from 5th April, 2007 to 2nd July, 2007. These shares were held by the appellant for various periods ranging from 246 days to 334 days and were sold on 4th March, 2008 on one day. Obviously, this was done by the appellant having regard to the market trend. It is also significant to note that the shares of this Company were accumulated without any sales having taken place before purchases of total accumulated shares of particular script. Thereafter, the shares were held for sufficiently long period of time. In my view there can be no assumption that the motive was to trade in shares of this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed funds in its share transactions. Hon ble Jurisdictional High Court in Tax Appeal 77 to 78 of 2010 CIT Vs. Vaibhav J. Shah decided on 27/06/2012 holds that this issue has to be adjudicated in view of no. of shares sale /purchase transactions, volume, frequency, continuity and regularity followed by necessary inference to be drawn from magnitude of transactions and holding period etc. A perusal of the case file reveals that the assessee has always been treated as an investor and not a trader. Case records contained CIT(A) s different orders; all dated 07/07/2011 in Assessment Years 2003-04 to 2007-08 treating assessee s short term capital gains /loses of ₹ 2,12,522/-, ₹ 1,45,680/-, ₹ 3,10,332/-, ₹ 9,63,528/- and ₹ 17,32,831/- not as business losses. The revenue does not point out any exception in the impugned assessment year. It also does not indicate that the same have not attained finality till date or any litigation therefrom is pending in any higher forum It is further to be seen from the case file pages 51-60 that the assesse s partnership deed contains a negative covenant that its business shall not include trading in equity shares and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. The learned CIT(A) has considered in detail the duration of the transactions, holding period etc. and has specifically held that the transactions cannot be said to be frequent transactions of purchase and sale with a view to earn quick profit. The learned CIT(A) as well as the learned tribunal has taken note of the fact that the profit was earned by the assessee only in one scrip. The learned CIT(A) and the learned tribunal have also taken note of the Clauses in the partnership agreement /deed by which the partners /partnership firm were debarred from doing trading activities in the shares /mutual funds. The learned CIT(A) as well as the learned tribunal have also taken note that wherever the assessee has earned /incurred losses the assessee has never claimed it as business losses. Considering the aforesaid facts and circumstances of the case, it cannot be said that both the learned CIT(A) as well as the learned tribunal have committed any error in directing the Assessing Officer to treat ₹ 2,59,43,473/- for the Assessment Year 2008-09 as short term capital gain and consequently to levy the tax under Section 111A of the Act. The findings recorded by the learned CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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