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Income Tax Appellate Tribunal - Mumbai

Surjit Singh Bagga Huf, Mumbai vs Ito 17(1)(1), Mumbai on 18 November, 2016

     IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
     BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND
                SHRI C.N. PRASAD, JUDICIAL MEMBER

             I.T.A. No.403/M/2016 (Assessment Year: 2006-2007)
 Surjit Singh Bagga HUF,              फनाभ/ Income Tax Officer,
 2003, Silver Arch CHS,                      Ward-25(1)(3),
                                      Vs.
 Shastri Nagar, Lokhandwala,                 Pratyakshakar Bhavan,
 Andheri (W), Mumbai -053.                   BKC, Bandra (E),
                                             Mumbai - 400 051.
 स्थामी रेखा सं ./ PAN : AAAHS0155G
 (अऩीराथी /Appellant)                            ..     (प्रत्मथी / Respondent)


        अऩीराथी की ओय से / Appellant by     :         Shri Hari S. Raheja

        प्रत्मथी की ओय से/ Respondent by     :        Shri Akhilendra Yadav, DR


     सन
      ु वाई की तायीख / Date of Hearing                 : 09.11.2016
     घोषणा की तायीख /Date of Pronouncement : 18 .11.2016

                        आदे श / O R D E R
PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 28.1.2016 is against the order of the CIT (A)-32, Mumbai dated 20.11.2015 for the assessment year 2006-07.

2. In this appeal, assessee raised five grounds in toto and they revolve around the solitary issue relates to the decision of the AO / CIT (A) in taxing the earning on sale of shares of Talent Infoway Ltd involving some disputes under the head income from other sources. On this issue, Ld Counsel for the assessee fairly submitted that the decision of the AO is linked to the statement of Shri Mukesh Choksey, which was subsequently retracted and therefore, the claim of the assessee should be accepted as claimed in the return of income without any changes. However, bringing our attention to the contents of CBDT Circular no.6/2016, dated 29.2.2016, Ld Counsel for the assessee submitted that the claim of the assessee in the books of accounts assumes significance in the light of the said Circular.

3. Per contra, Ld DR for the Revenue submitted that the matter may be remanded to the file of the AO for fresh adjudication in the light of the said Circular No. 6/2016 (supra).

4. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On perusal of the facts as well as the said Board Circular (supra), we find, the option of the assessee in matters of the claim relating to the profits / gains on sale of shares based on the entries in the books of accounts, assumes significance. Further, the Officers are prevented from changing the head of income for taxing the said gains arbitrarily and without having contrary evidence against the assessee. The said Circular enlists certain conditions and the Revenue Authorities are required to examine the said Circular (supra) closely and adjudicate this issue after grating a reasonable opportunity of being heard to the assessee. For this purpose, we remand this matter to the file of the AO. Prima facie, we find, the contents of para 3(a) and other paragraphs of the said Board Circular do not permit the Revenue Authorities to change the head of income from „business income‟ to „the capital gains‟ or vice versa, unless the conditions specified in para 4 of the said Circular (supra) ie bogus claims or sham transactions / questionable transactions are involved. The Revenue Authorities are required to honour the books of account and the entries therein pertaining to the shares. If the assessee opts certain transactions of purchase and sale of shares in the books of account as stock-in-trade, business income constitutes appropriate head of income in such cases. In such case, it is pertinent for the AO to not to disturb the head of income. Considering the above, all the grounds raised by the assessee is allowed for statistical purposes.

5. In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 18th November, 2016.

       Sd/-                                                        Sd/-
(C.N. PRASAD)                                             (D. KARUNAKARA RAO)
JUDICIAL MEMBER                                             ACCOUNTANT MEMBER
भुंफई Mumbai; ददनांक       18.11.2016
व.नन.स./ OKK , Sr. PS
                                              3

आदे श की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to :

1. अऩीराथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमुक्त(अऩीर) / The CIT(A)-

4. आमकय आमक् ु त / CIT

5. ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भंफ ु ई / DR, ITAT, Mumbai

6. गार्ड पाईर / Guard file.

सत्मावऩत प्रनत //True Copy// आदे शानस ु ार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, भंफ ु ई / ITAT, Mumbai