Income Tax Appellate Tribunal - Mumbai
C.M. Jain Impex & Investment P. Ltd, ... vs Department Of Income Tax on 22 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "C",
MUMBAI
BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER &
SHRI P.M.JAGTAP, ACCOUNTANT MEMBER
ITA NO. 6455/MUM/2011(A.Y. 2004-05)
The DCIT, Cir. 3(1), M/s. C.M. Jain Impex &
Room No.607, 6th Floor, Investment Pvt. Ltd.,
Aaykar Bhavan, MK Road, Vs. 304, Tulsiani Chambers, Free
Mumbai - 20 Press Journal Marg,
(Appellant) Nariman Point, Mumbai - 21.
PAN: AAACC 1779R
(Appellant)
Appellant by : Shri Rajarshi Dwivedy
Respondent by : Shri R.S.Sanghai
Date of hearing : 22/08/2012
Date of pronouncement : 29/08/2012
ORDER
PER I.P.BANSAL, J.M
This is an appeal filed by the revenue. It is directed against the order dated 26/06/2011 of Ld. CIT(A)-7, Mumbai for the assessment year 2004-
05. The ground of appeal raised by the revenue reads as under:
"On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the expenditure of Rs. 14,92,600/- as deduction against long term and short term capital gain without appreciating the fact that as per the provisions of Sec.48, the full value of consideration received or accruing as a result of transfer of capital asset only the expenditure incurred wholly and exclusively in connection with such transfer and cost of acquisition of such asset and cost of its improvement is allowable as deduction."
2. It was claimed by the assessee before AO that the main object of the company is to make investment in shares and securities and hold them. Therefore, the assessee company is an investment company which does not 2 ITA NO. 6455/MUM/2011(A.Y. 2004-05) tantamount to carrying on of a business. Relying on certain judicial precedents inter-alia including (1) Bengal and Assam Investors Ltd. vs. Commissioner of Income Tax (59 ITR 547) and Commissioner of Income Tax- vs. Distributors (Baroda) Private Limited ( 83 ITR 377) it was claimed that the assessee should be held to be not carrying on any business and its income from the said activity should not be treated to be taxable under section 28 of the Income Tax Act, 1961 (the Act).
3. Originally the return of income was filed at Rs.17,38,953/-, which was subsequently revised on 21/11/2006. The position as shown in the original return and revised return has been tabulised by AO at page 2 of the assessment order which is as follows:
Head of Income Income as per original return Income as per revised return Income from House property Nil 35,72,409/-
Profits and Gains of (-) 35,35,953 Nil Business Capital gains (Short term) 52,79,567 45,33,037 Capital gains (Long Terms) Nil Nil Income from other sources Nil 22,66,196l Gross Total Income 17,38,613 1,03,66,692 Against the aforementioned income disclosed as per revised return the assessee claimed following expenditure against long term and short term capital gain:
Expenses Incurred & claimed as deduction against Capital Gain Particulars Amount in (Rs.) Office Service Charges 1200000 Bank Charges 3013 News papers, books & periodicals 117584 Printing & Stationery 1985 Filing Fees & Licence Fees 1527 Postage & Courier Expenses 482 Profession Tax 2000 Audit Fees 50000 General Expenses 59614 3 ITA NO. 6455/MUM/2011(A.Y. 2004-05) Photocopying Charges 8672 Professional Fees 2700 Computer Expenses 9000 Travelling Expenses 18774 Depreciation as per IT rules 17609 1492960 50% Claimed as deduction against long 746480 term C.G 50% claimed as deduction against long term 746480 C.G 1492960 The AO did not allow the aforementioned expenditure by referring to section 48 of the Act as according to AO the amounts which are eligible to be deducted out of full value of the consideration can be only the following two amounts:
(i) expenditure incurred wholly and exclusively in connection with such transfer.
(ii) The cost of acquisition of the asset and the cost of any improvement thereto.
The AO held that the amount of Rs. 14,92,600/- is not the cost of acquisition of those assets on whose transfer the assessee has earned capital gain. The expenditure which can be claimed should wholly and exclusively be incurred in connection with the transfer. No evidence has been submitted by the assessee to show that these expenditures were actually spent wholly and exclusively in connection with the transfer. The AO computed the short term and long term capital gain as under:
Income from capital gains:
(A) Long term capital profit (as per computation filed) Rs.4,98,41,989 Less:
1. Expenses incurred for transfer (depository fees) Rs. 5,000 Rs.4,98,36,989
2. Long term capital Loss (As per computation) Rs.4,15,26,580 Rs. 83,10,409 4 ITA NO. 6455/MUM/2011(A.Y. 2004-05) Less: Brought forward losses Of earlier year Set Off ( as claimed ) Rs. 83,10,409 Nil (B) Short term capital Profits (as per computation filed) Rs. 52,79,567 Less:
1. Expenses incurred for Transfer (depository fees) Rs. 5,000 Rs.52,74,567/-
3.1 The other two incomes i.e. income from house property amounting to Rs. 35,72,409/- and Rs. 22,66,196/- being from other sources were accepted as per revised return. In this manner the gross total income of the assessee was computed at Rs. 1,11,13,172/-. The AO also calculated the income of the assessee under section 115JB of the Act as MAT payable was less than the tax on income computed under normal provisions of the Act the tax was levied on income computed under the normal provisions of the Act.
4. The only dispute which raised before the Ld. CIT(A) was with respect of disallowance of Rs. 14,92,600/-. It was claimed that the business of the assessee consists entirely of investment in shares and securities. Out of total capital of the company of Rs. 222.67 crores, 91.28% i.e. Rs.203.25 crores is in the investment of shares as per balance sheet as on 31/3/2004 and the total income declared of Rs. 24.67 crores , 97.41% i.e. 24.03 cores is earned through sale of redemption of shares/units and through dividend.
Thus it was claimed that the assessee is wholly and exclusively engaged in the business of investing and dealing in shares and securities when 91% of its fund is invested in shares and 97% of its revenue is from shares. Referring to various judicial pronouncements it was submitted that entire expenses of Rs. 14,92,960/- are incurred wholly and exclusively on the employees and for maintaining office for carrying on the activities of investment in shares. It was submitted that for doing the business of such 5 ITA NO. 6455/MUM/2011(A.Y. 2004-05) magnitude necessary manpower and office is required to manage a portfolio. If any portfolio management company was to assign such a job, charges of 1% portfolio investment would have been charged which would, if counted at 1% would come to Rs. 2.00 crores on the turn over of Rs. 200.00 cores. By incurring expenditure only to the turn of Rs. 14,92,960/- the assessee has saved a huge amount of Rs. 1,86,00,000/-, therefore, also the expenditure should have been allowed.
4.1 On these submissions of the assessee Ld. CIT(A) has held that these amounts are incurred by the assessee wholly and exclusively for the purpose of carrying on a investment activity and earning of capital gain. Ld. CIT(A) has also referred to the decision of the Hon'ble Bombay High Court in the case of CIT vs. Shakuntala Kantilal, 190 ITR 56 (Bom), wherein the expression " in connection with such transfer" used in section 48 of the Act is held to be wider than " for the transfer" and it was held that if any expenditure is absolutely necessary to effect the transfer it will be an expenditure covered by section 48. Ld. CIT(A) has also referred to other decisions also and has come to the conclusion that the expenditure incurred by the assessee are allowable as deduction as these are expenditures incurred by the assessee in connection with the transfer. Ld. CIT(A) has also referred to the decision of Pune Bench in the case of KRA Holding & Trading Pvt. Ltd. vs. DCIT, wherein Portfolio Management fee paid to Portfolio Manager was held to be allowable. Referring to the said decision of Pune Bench and the decision of Hon'ble Bombay High Court in the case of Shakuntala Kantilal (supra) Ld. CIT(A) has directed the AO to allow the aforementioned expenses against assessable capital gain under the provisions of section 48 of the Act. It is against these directions of Ld. CIT(A) the revenue has filed the aforementioned appeal.
5. Ld. D.R submitted that the facts of the assessee's case are different than the facts of the cases relied upon by the Ld. CIT(A). He submitted that 6 ITA NO. 6455/MUM/2011(A.Y. 2004-05) in the case of the assessee the issue is not regarding the allowability or otherwise of portfolio management fee and it is only allowability of general expenditure incurred by the assessee while carrying out investment activities. He submitted that assessee itself is claiming that it does not carry out any business activity. For this purpose Ld. D.R referred to the submissions made by the assessee before the AO as well as the Ld. CIT(A), which have been reproduced in the assessment order and order passed by Ld. CIT(A). Ld. D.R submitted that if assessee has not carried out any business activity then these expenditure cannot be allowed as these are not the expenditure which are incurred in connection with transfer of shares and securities. So far as it relates to decision of Hon'ble Bombay High Court in the case of Shakuntala Kantital (supra) it was submitted by Ld. D.R that later on the said decision has been held to be not a good law by the Hon'ble Bombay High Court in the case of CIT vs. Roshanbabu Mohammed Hussein Merchant, 275 ITR 231(Bom), wherein it has been held that discharge of encumbrance for sale of property is not deductible under section 48 of the Act as those encumbrance were created by the assessee himself after acquisition of the property which was free from all encumbrances. The assessee was liable to capital gain on the entire sale proceeds subject to permissible deductions. He also relied upon the following decisions rendered by the Mumbai Benches, wherein referring to the aforementioned decision of Hon'ble Bombay High Court in the case of CIT vs. Roshanbabu Mohammed Hussein Merchant, (supra), Portfolio Management fee was held not deductible and in arriving at such conclusion Mumbai Benches has considered the decisions of Pune Benches in the case of KRA Holding & Trading Pvt. Ltd. (supra).
1) Shri Homi K. Bhabha vs. ITO, ITA No.3287/M/09, A.Y. 2006-07.
2) Pradee Kumar Harlalka vs. ACIT, ITA No.4501/M/10, A.Y.2006-07
3) Devendra Motilal Kothari vs. DCIT, 136 TTJ (Mumbai) 188.7 ITA NO. 6455/MUM/2011(A.Y. 2004-05)
Reference was invited to the following observation of the Tribunal from the decision of Shri Homi K. Bhabha (supra):
" 6. We have heard the rival submissions and perused the relevant material on record. Both the sides have placed on record copies of the orders passed by the Tribunal in support of their respective stands. The Mumbai Bench of the Tribunal in the case of Devendra Motilal Kothari Vs. DCIT [(2011) 50 DTR 369 (Mum.)] [to which one of us, namely, the ld. JM is party] decided the issue against the assessee by holding that the payment of fees by that assessee for portfolio management services was neither diversion of income by overriding title nor cost of acquisition nor cost of improvement and was consequently not eligible for deduction in computing capital gain. Thereafter, similar issue came up before the Pune Bench of the Tribunal in KRA Holding & Trading P. Ltd. in ITA No.500/PN/08 etc., in which the Revenue relied on the Mumbai Bench order in Devendra Motilal Kothari (supra). Vide its order dated May 2011 and after considering the case of Devendra Motilal Kothari (supra), the Pune Bench recorded a contrary view in assessee's favour. In so deciding, the Pune Bench, inter alia, relied on the judgement of the Hon'ble Bombay High Court in CIT Vs. Shakuntala Kantilal [(1991) 190 ITR 56 (Bom.)]. Once again similar issue came up before the Mumbai Bench of the Tribunal in Pradeep Kumar Harlalka Vs. ACIT in ITA No.4501/Mum/2010. Vide its order dated 10.08.2011, the Mumbai Bench considered both the earlier decisions on the point, viz., Devendra Motilal Kothari (supra) and KRA Holding & Trading P. Ltd. (supra). Through an elaborate order, the Mumbai Bench in latter case followed the decision in the case of Devendra Motilal Kothari (supra) in priority over that of KRA Holding & Trading P. Ltd. (supra). In deciding so, the latter Bench observed that the decision of the Pune Bench in KRA Holding & Trading P. Ltd. is primarily based on the judgement of the Hon'ble Bombay High Court in the case of Shakuntala Kantilal (supra), which has been subsequently held to be not a good law by the Hon'ble Bombay High Court in CIT Vs. Roshanbabu Mohammed Hussein Merchant [(2005) 275 ITR 231 (Bom.)]. As the later judgement overruling the earlier judgement was not brought to the notice of the Pune Bench, the Mumbai Bench of the Tribunal in Pradeep Kumar Harlalka (supra) chose to follow the decision in the case of Devendra Motilal Kothari (supra), thereby deciding the issue against the assessee. The position discussed above has been fairly admitted by both the sides.
7. From the above discussion it is seen that the first order on this issue was passed against the assessee in Devendra Motilal Kothari (supra). The second order, in the point of time by the Pune Bench in KRA Holdings (supra), decided the issue in favour of the assessee after considering the first order. Third order, being the latest in the point of time in Pradeep Kumar Harlalka (supra), decided the issue against the assessee after considering both the earlier orders. Not only that, the third order also took note of the fact the basis of the Pune Bench order, being the judgment of the Hon'ble jurisdictional High Court in Shakuntala Kantilal (supra), already stood overruled by a subsequent judgment of the Hon'ble Bombay High Court in CIT Vs. 8 ITA NO. 6455/MUM/2011(A.Y. 2004-05) Roshanbabu Mohammed Hussein Merchant (supra), which fact was not brought to the notice of the Bench. No other order, in favour of the assessee, has been brought to our notice by the ld. AR. Accordingly it is vivid that the majority opinion (in terms of the number of orders) on the issue and also the latest order (in the point of time) together with the special circumstances of the Pune Bench case (in considering an overruled judgment), bring us to a stage where the current and the majority view taken by the tribunal so far on the point, is against the assessee.
8. The learned Counsel for the assessee vehemently argued that certain important aspects of the matter were not taken into consideration by the Mumbai Benches of the Tribunal in both the cases in deciding the issue against the assessee. It was argued that there was no basis for excluding fees paid by the assessee to his portfolio manager from the computation of income under the head `Capital gains' as there was no other purpose for its incurring, except in connection with the purchase and sale of shares. Referring to agreement of the assessee with the portfolio manager, ENAM Asset Management Co. Ltd., the learned A.R. explained that the assessee agreed to place a sum of Rs.2.25 crore at the discretion of his portfolio manager, which was to be used for purchase and sale of securities etc. Referring to various clauses about the consideration payable to the portfolio manager, he stated that it was at half percent of the net asset value (market value of assets inclusive of all Securities and cash balances) under management at the beginning of each quarter and further the portfolio managers were entitled to a return based fee calculated at the rate of 20% per annum of the profits in excess of 15% of the profits after deducting all the expenses. The sum and substance of his submissions was that such fees paid by the assessee has direct relation with the income arising from the transfer of shares and hence the same should be allowed as deduction, either by considering it as diversion of income by overriding title from the sale proceeds; or as part of the cost of acquisition of the shares; or alternatively as an expenditure incurred wholly and exclusively in connection with the transfer of shares. These aspects constitute three additional grounds stated to be articulation of the main ground on disallowance of the amount of fees. He relied on certain judgments to drive home his point of view on deductibility of the fees. In this process, he also took us through the judgment of the Hon'ble Supreme Court in CIT Vs. Sitaldas Tirathdas (1961) 41 ITR 367 (SC), which has been considered by the Mumbai bench in Devendra Motilal Kothari (supra), to argue that the ratio decidendi of this judgment was not properly understood by the Mumbai Bench in holding that there was no diversion of income.
9. Sounding a contra note, the ld. DR stated that there was no infirmity in the view taken by the authorities below as the fees had no direct relation with the purchase or sale of shares and hence was liable to be excluded from consideration. He vigorously accentuated on the orders passed by the Mumbai Benches and contended that all the aspects now raised on behalf of the assessee, have been already considered and decided against the assessee and there was nothing new to justify going away from the earlier view.
9 ITA NO. 6455/MUM/2011(A.Y. 2004-05)10. We are not inclined to accept the submissions tendered by the ld. AR that the Mumbai Benches of the tribunal have not properly appreciated the matter in right perspective in deciding the issue against the assessee. It can be easily noticed that the facts and circumstances of the case in question and the two cases decided by Mumbai Benches are similar. It is axiomatic that the nature of services provided by any portfolio manager cannot be materially different, as has been fairly conceded by the ld. AR during the course of hearing. It is further manifest that all the contentions raised before us, being the treatment of fees as cost of acquisition of shares; or expenses in connection with transfer of shares; or diversion of income by overriding title, have been elaborately discussed in these two cases. After considering all the aspects of the issue threadbare, the tribunal has held in both these cases that the fees cannot form part of computation of capital gains u/s 48 and has to be ignored. It is the only issue in the present appeal and the facts are in pari materia with those considered and decided by the Mumbai Benches.
11. The arguments advanced by the assessee on merits are an attempt to persuade us for not following the aforenoted view taken against the assessee. We are not impressed with this argument. Judicial discipline requires that when a particular issue has been decided by a bench, then the subsequent co-ordinate benches should normally follow the same. At the same time, we want to clarify that there are no fetters on the powers of the subsequent benches to doubt the correctness of the earlier order, if they are not convinced with it. Whereas following the earlier decision is a rule, calling into question its correctness is only an exception. Unless there are compelling reasons for not following the earlier view, such as, if it is inconsistent with judgment of the Hon'ble Supreme Court or that of the jurisdictional High Court or earlier decisions of the same rank; or if it is sub silentio; or if it is rendered per incuriam in the sense that it is patently inconsistent with the statutory or settled legal position, the same should be respected and adhered to by the subsequent benches so that consistency in the approach of the tribunal is achieved. The above referred exceptions can be classified into two categories. First, when there is a direct contrary judgment of the Hon'ble Supreme court or that of the Hon'ble jurisdictional High Court on the point, rendered prior to or after the earlier tribunal order, the later Bench would be fully justified in differing from the earlier contrary view and following the higher wisdom. Second, when the subsequent bench perceives earlier view to be rendered per incuriam or sub silentio etc., the right course for it is to make a reference to the President of the tribunal for constitution of a special bench on the point so that the larger bench may consider whether the earlier view is correct or the perception of the latter bench is correct.
12. Ordinarily neither the assessee nor the Revenue can be allowed to reargue the same issue over and over again, when it has already been decided by a co-ordinate bench of the tribunal. If such a course is allowed, then every single repetitive issue would require reconsideration time and again because 10 ITA NO. 6455/MUM/2011(A.Y. 2004-05) the aggrieved party would always try to convince the later bench over its point of view. Following the earlier order or making a reference to the special bench depends on the satisfaction of the Bench about the correctness or otherwise of the earlier order and not that on the view point of the aggrieved party. It is only when a subsequent bench, on being seized of the matter, finds itself unable to endorse the earlier view, either suo motu or on the arguments of the parties, that it may make reference for the constitution of the special bench. The party dissatisfied with the earlier view cannot compel the later bench to either take a contrary view or make a reference for the constitution of the special bench. Thus it follows that once a particular view is taken, the subsequent benches of the tribunal become functus officio on that issue, subject to the exceptions discussed supra. Needless to mention at this juncture that the party unconvinced with the tribunal order is not without remedy as the Act enshrines the provisions enabling it to appeal to the Hon'ble High Court against the order and convince it about its stand.
13. We are reminded of the well known latin maxim `stare decisis', which means to stand by the things decided. It expresses the underlying basis of the doctrine of precedent, which, in turn, means to abide by the former precedent when the same points arises again in litigation. It has got the seal of approval from the Hon'ble Supreme Court in several cases including Union of India VS. Azadi Bachao Andolan (2003) 263 ITR 706 (726,727) (SC). The maxim stare decisis provides that when a point of law has been decided, it takes the form of a precedent which is to be followed subsequently and should not normally be departed from. A decision which is followed for a long time will generally be followed, even though the court before whom the matter arises afterwards, might be of different view.
14. Adverting to the facts of the present case, we find that the issue raised before us has been predominantly decided in the above referred two cases against the assessee after making thorough analysis of the issue, dealing with all the aspects now raised by the ld. AR before us. These cases do not fall into the exceptions, as discussed supra, justifying departure from the earlier view. We are, therefore, not inclined to revisit all the relevant facts and the legal position on it with a view to test the correctness of these orders. Respectfully following the rule of precedent, we refuse to take a contrary view from that expressed by the Mumbai Benches in the afore-noted cases. The disallowance is thus sustained and resultantly the impugned order is upheld.
15. In the result, the appeal stands dismissed."
11 ITA NO. 6455/MUM/2011(A.Y. 2004-05)5.1 It was thus submitted by Ld. D.R that Ld. CIT(A) has wrongly granted relief to the assessee and his order should be set aside and that of A.O should be restored.
6. On the other hand, Ld. A.R submitted that even after aforementioned decisions of Mumbai ITAT, Pune Bench in the case of KRA Holding & Trading Pvt. Ltd. (supra) has decided the issue in favour of the assessee. Copy of the said decision is filed at pages 52 to 68 of the paper book and this decision is dated 25/07/2012. Reference was made to the following observations:
"11. The decision of the Mumbai Bench of the Tribunal in the case of Homi Bhabha Vs. ITO was brought to our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is not deductible against capital gains. The decision of the Pune Bench of the Tribunal in the case of KRA Holding & Trading was not followed by the Mumbai Bench in the above cited decision. The Mumbai Bench following other decisions of the coordinate Benches of the Tribunal declined to follow the decision in the case of KRA Holding & Trading (Supra). It is the settled proposition of law that when two view are possible on the same issue the view which is favourable to the assessee has to be followed. [CIT Vs. Vegetable Products 88 ITR 192 (SC)]. Further, in the instant case the Tribunal in assessee's own case has already taken a view in favour of the assessee. Since the AO & CIT(A) have followed the order for earlier year in case of the assessee and since the order of CIT(A) for earlier year has been reversed by the Tribunal, therefore, unless and until the decision of the Tribunal is reversed by a higher court, the same in our opinion should be followed. In this view of the matter, we, respectfully following the order of the Tribunal in assessee's own case for A.Y. 2004-05 allow the claim of the Portfolio Management fees as an allowable expenditure. The ground raised by the assessee is accordingly allowed.
12. In the result, the appeal filed by the revenue is dismissed and the appeal filed by the assessee is allowed."
Thus it was pleaded by Ld. A.R that Ld. CIT(A) has rightly decided the issue and the departmental appeal should be dismissed.
7. We have heard both the parties and their contentions have carefully been considered. The issue involved in the case of the assessee is not with 12 ITA NO. 6455/MUM/2011(A.Y. 2004-05) regard to allowability or otherwise of Portfolio Management fees. This was the alternative contention of the assessee that if Portfolio Management fee has been held to be allowable then why the expenditure incurred by the assessee itself should not be allowed. The facts of the case of the assessee are not disputed as assessee does not have any business income. Its assessable income is in the shape of house property, income from capital gains and income from other sources. The assessee itself is claiming that its activity of sale and purchase of shares is that of investment and it should not be considered as activity related to business and the gain arising out of such activity should be considered to be in the character of capital gain instead of business. Therefore, we have to examine the allowability of these expenditure only under section 48 of the Act. The facts of the cases on which the assessee is relying are not very clear as it has not been shown that whether the assessees in those cases were not having any business income. Against the facts of those cases the facts of the assessee's case are clear as assessee has no business income whatsoever. No expenditure incurred by the assessee has been shown to be incurred in connection with transfer of the shares or securities. These have also not been shown to be incurred as a cost acquisition and cost of improvement to the asset purchased. When an income is assessable under the head capital gain, as per section 48 following two types of expenditure can be claimed:
(iii) expenditure incurred wholly and exclusively in connection with such transfer.
(iv) The cost of acquisition of the asset and the cost of any improvement thereto.
7.1 No co-relation whatsoever has been shown by the assessee between the expenditure claimed by it with the asset in the manner described in section48 The case law relying upon which Ld. CIT(A) has given relief to the assessee i.e. the decision of Hon'ble Bombay High Court in the case of CIT 13 ITA NO. 6455/MUM/2011(A.Y. 2004-05) vs. Shakuntala Kantilal (supra) has been held to be not a good law in the subsequent decision in the case of CIT vs. Roshanbabu Mohammed Hussein Merchant, (supra). All these cases have been considered in detail in the Mumbai Tribunal decision in the case of Homi K. Bhabha (supra). Later on the Pune Bench of the Tribunal has followed the earlier order of the Tribunal in the case of that assessee itself by referring to the decision of Hon'ble Supreme Court in the case of CIT vs. Vegetable Products 88 ITR 192 (SC). However, the earlier decision of KRA Holding & Trading Pvt. Ltd. (supra) i.e. decision dated 31/5/2011 had relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs. Shakuntala Kantilal(supra), which was not considered to be a good law in the subsequent decision of Jurisdictional High . When a decision which is relied upon of Jurisdictional High Court which later on has been considered to be not laying down a correct law by the subsequent of Jurisdictional High Court, it cannot be said that two views of the matter are available .
7.2 The assessee in the present case is blowing hot and cold in the same breath as it is claiming that its activity of sale/purchase of shares and securities is an activity not giving rise to business income and at the same time it is claiming that expenditure which are in the nature of business should be allowed. The capital gain enjoys the benefit of lower rate of taxation and as against that business income is liable for higher rate of taxation. Once assessee itself is claiming that its activity gives rise to capital gain then assessee can only avail the expenditure described in section 48 and it cannot claim the benefit of section 37 against capital gain income.
7.3 In view of above discussion, keeping in view of the peculiar facts of the present case our findings are that facts of the case of assessee are distinguishable from the facts of decisions relied upon by the Ld. CIT(A). In 14 ITA NO. 6455/MUM/2011(A.Y. 2004-05) the present case assessee does not have any income liable for taxation under the head "Income from business or profession". The impugned expenses are not liable for deduction under section 48 of the Act under which the income of the assessee is assessed. Therefore, the order of Ld. CIT(A) is set aside and that of AO is restored
8. In the result, the appeal filed by the revenue is allowed in the manner aforesaid.
Order pronounced in the open court on the 29th day of August,
2012
Sd/- Sd/-
(P.M.JAGTAP ) (I.P.BANSAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 29th August, 2012.
Copy to: 1. The Appellant 2. The Respondent 3. The CIT City -concerned
4. The CIT(A)- concerned 5. The D.R "C" Bench.
(True copy) By Order
Asst. Registrar, ITAT, Mumbai Benches
MUMBAI.
Vm.
15 ITA NO. 6455/MUM/2011(A.Y. 2004-05)
Details Date Initials Designation
1 Draft dictated on 22/8/2012 Sr.PS/PS
2 Draft Placed before author 22/08/2012 Sr.PS/PS
3 Draft proposed & placed before the JM/AM
Second Member
4 Draft discussed/approved by JM/AM
Second Member
5. Approved Draft comes to the Sr.PS/PS
Sr.PS/PS
6. Kept for pronouncement on Sr.PS/PS
7. File sent to the Bench Clerk Sr.PS/PS
8 Date on which the file goes to the
Head clerk
9 Date of Dispatch of order