9911796707
TMI Blog2021 (2) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Assessee has taken delivery of shares before sale. While maintenance of capital and trading transactions as a separate category in books can be insisted upon in practice to ascertain the underlying intentions, the maintenance of separate D-mat account separately is not necessarily in conformity with usage of share trade and thus cannot be insisted upon. We thus find merit in the plea of assessee. Consequent claim of assessee deserves to be allowed on merits. X X X X Extracts X X X X X X X X Extracts X X X X ..... r.w.s. 143(3) of the Act was passed on 05.05.2009 determining total income of ₹ 1,56,36,030/- as against income returned at ₹ 1,54,08,670/- wherein short term capital gains of ₹ 1,40,01,808/- was treated as 'business income' by the AO as against the claim of the assessee to be assessed as 'short term capital gain'. The controversy towards realignment of head from 'Capital Gains' to 'Income from Business/Profession' travelled up to the ITAT, Ahmedabad. The ITAT vide ITA No. 57/Ahd/2010 order dated 19.05.2016 set aside the issue regarding the nature and character of gains arising to the assessee amounting to ₹ 1,40,01,808/- for re-examination. The AO, in this second round of proceeding, once again called for the details of borrowed funds and details of transactions of purchase and sales of shares of Pyramid Siamira Theater Ltd. (PSTL) wherefrom the capital gain was mainly derived. The AO after calling for details, passed a very cryptic order yet again and essentially concluded that in the absence of utilization of own funds for purchase of shares and in the absence of separate de-mat account maintained for purchase and sale of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of shares of PSTL. The assessee has purchased 215802 shares of PSTL and sold 167000 shares giving rise to the impugned gains and remaining 48702 shares have remained in Investment Stock. The total number of transactions of purchase is only five and sale is barely seven. It was thus contended that frequency and repetition in the impugned scrip is prima facie absent justifying the intention of assessee to purchase the shares as capital asset. It was strongly contended that the AO has sought to realign the head of income and shift the income declared under the head 'capital gains' to 'business income' only to deny the assessee of concessional tax treatment of 10% available to the assessee under S. 111A of the Act and has sought to apply the regular rate of tax applicable to business income. It was insisted that the assessee has maintained separate ledger account for its capital investment transactions vis-a-vis trading transactions and therefore declared intention of the assessee of capital investment category ought not to have been displaced simply to seek higher rate of tax, more so, in the absence of any repetition, frequency or regularity etc. 9.2. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the second round of proceedings is bad in law. The learned AR for the assessee referred to the decision of the co-ordinate bench of the Tribunal in the case of Anup Kumar Chatterjee vs. ACIT IT(SS)A Nos. 70-74/Ran/2019 order dated 19.12.2019 to support its aforesaid contention. 11.2. Joining the contention raised towards additional ground(supra) with reference to Section 153D of the Act, the learned DR pointed out that in the first round of the substantive assessment proceedings under S. 143(3) r.w.s. 153A of the Act, the approval of designated authority under S. 153D of the Act was duly taken. However, in the absence of any reference made in assessment order, it is not known whether the approval in the second round of proceedings coming into motion on account of the order of the ITAT has been taken or not. Notwithstanding, it was contended by the learned DR for Revenue that the absence of approval under S. 153D of the Act would not vitiate the assessment order in second round under reference having regard to the fact that the assessment order under S. 143(3) r.w.s. 254 of the Act is at the instance of ITAT which is a superior authority and the AO as well as the designated autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income are well differentiated and certainly the case of the assessee gets more strong if he is able to prove that no borrowed funds have been taken specifically for buying the shares when he intends to show as investment income. Thus, all the facts and circumstances of the case are required to be weighed cumulatively for proper determination of nature of income arising from sale of share. 13.3. The law has considerably evolved on the point and continuing. The Courts have laid down several tests for ascertaining the nature of transaction. The CBDT itself has also laid down parameters by way of circular No. 4 dated 15.06.2007. In the instant case, we note few peculiar facts from the financial statements placed in the paper book. The assessee has claimed profits arising on sale of a solitary share (PSTL). The frequency of purchase and sale instances are quite few as noted above. The sale of the shares of part quantity has happened within a period of one month and thus claimed as STCG. A part utilization of borrowed capital, if any, in this peculiar background would not necessarily overwhelm the low frequency having regard to the decision of Hon'ble Gujarat High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, in absence of the approval u/s. 153D, the whole proceedings is itself bad in law and void as held in Ranchi Bench ITAT as well as Gujarat High Court decision in the case of Sunrise Finlease reported in 89 Taxmann.com 1 and therefore, this assessment framed is bad in law and void and liable to be quashed." 16. In the instant case, the issue involved is identical to the issue involved in ITA No. 1513/Ahd/2019 concerning AY 2007-08 (supra). The facts in brief are noted as follows. In the return filed by the assessee in pursuance of notice under S. 153A of the Act, the assessee has declared short term capital gains of ₹ 27,62,912/- chargeable at concessional rate of 10% under S. 111A of the Act. The aforesaid gains have been earned on purchase and sales of shares of Pyramid Simara Theater Ltd. (PSTL). The assessee had purchased 215802 shares out of which 167000 shares were sold in AY 2007-08 and remaining 48802 shares have been sold in FY concerning AY 2008-09 in question. The total number of transactions of sale during the year is stated to be six only. In parity of the reasons recorded for AY 2007-08 (supra), we find force in the plea of the assessee for allowability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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