Income Tax Appellate Tribunal - Kolkata
Aniruddh Mundra, vs Department Of Income Tax
आयकर अपीलीय अधीकरण, Ûयायपीठ - " ǒव ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH : KOLKATA
(सम¢)Before ौी डȣ. ×यागी, Ûयायीक सदःय, एवं/and ौी सी.
डȣ. के. ×यागी, सी.डȣ.
डȣ.राव,
राव लेखा सदःय)
[Before Hon'ble Sri D. K. Tyagi, JM & Hon'ble Sri C. D. Rao, AM]
आयकर अपील संÉया / I.T.A No. 2157/Kol/2008
िनधॉरण वषॅ/Assessment Year : 2005-06
Joint Commissioner of Income-tax, -Vs- Aniruddh Mundra, Kolkata.
Range-43, Kolkata (PA No. AKFPM 7824 D)
(अपीलाथȸ/APPELLANT ) (ू×यथȸ/RESPONDENT)
For the Appellant : Shri Ashutosh Rajhans
For the Respondent Sri S. K. Tulsiyan
आदे श/ORDER
Per D. K. Tyagi, JM (ौी डȣ.
डȣ. के. ×यागी, ×यागी, Ûयायीक सदःय) The revenue is aggrieved by the order of the Ld. CIT(A), Kolkata dated 04.09.2008 for assessment year 2005-06 in directing the AO to assess the short term capital gain of the assessee as an investor instead of business income as held by the AO.
2. Briefly stated facts of the case are that the AO noticed that the assessee disclosed short term capital gain/loss from the transaction in shares. The AO proposed to treat transaction as business transaction and assessed income as business income. Before the AO, the assessee stated that the assessee made investment in shares. It was also submitted that shares were not treated as stock in trade. The AO held that the volume and multiplicity of the share transaction was huge. He therefore, held that the assessee acted as dealer in shares. He also held that the assessee failed to furnish the details regarding the shares held as investment and the shares held as stock in trade. He also held that the income earned on the share transaction is assessable as business income. Before the Ld. CIT(A), the assessee submitted that the AO erred in treating the investment in shares as stock in trade. It was submitted that the assessee held the shares as investment. It was also submitted that shares were not shown in balance sheet as current assets but were disclosed as capital assets. It was also submitted that the investment was for the purpose of earning dividend. After considering the arguments of the assessee, the Ld. CIT(A) was of the view that the AO is not correct in assessing the short term capital gain/loss as business income. Since the assessee is an investor, the 2 short term capital gain is assessable as disclosed by the assessee. The AO was, therefore, directed to asses the short term capital gain as disclosed by the assessee. Aggrieved by the said order, now the revenue is in appeal before us.
3. At the time of hearing before us, the Ld. DR relied on the order of the AO and submitted that the main issue in the order passed u/s 143(3) of the Income-tax Act, 1961, for which the assessee has appealed before the Ld. C1T(A, is that the short term capital gain income of Rs.12,57,908/- was considered by the Assessing Officer as business income and was taxed accordingly. The assessee's contention that all the shares held by him as investor and he was not a dealer as no separate establishment was maintained, was not accepted by the Assessing Officer. The Assessing Officer opined that the assessee had totally ignored the volume of transactions undertaken by his father on behalf of him when he was minor and now by himself after becoming major. The volume of transactions as per Assessing Officer should be decisive factor for considering the STCG as business income. Detailed volume of purchase and sales of shares for the last four years is mentioned in the assessment order. It cannot be overlooked that the assessee has acted as a dealer as there is no bar to a dealer investing in shares. Apart from this, which shares were held as investment and which shares were held as stock-in-trade was within the knowledge of the assessee. Further, the assessee could not substantiate his claim with any supporting evidence that he was not a dealer and shares held were not as stock-in-trade. Therefore, the Assessing Officer has rightly assessed the short term capital gain income as business income and the Ld. CIT(A) has erred in directing the Assessing Officer to assess the short term capital gain as disclosed by the assessee. He, therefore, urged before the bench to set aside the order of the Ld. CIT(A) and restore that of the AO.
4. On the other hand, the Ld. Counsel for the assessee while reiterating his same submissions as submitted before the lower authorities relied on the order of the Ld. CIT(A) and further submitted that the assessee is an investor in shares and the investment was for the purpose of earning dividend and not for business The DR at the time of hearing before the Bench could not be adduced any single evidence to disprove this contention of the assessee. Hence, the urged before the Bench to confirm the action of the Ld. CIT(A) in this regard.
35. After hearing the rival submissions and perusing the material available on record, we find force in the submissions of the assessee that the assessee is an investor and made the investment only for the purpose of earning dividend. The Ld. DR was not able to produce any evidence in support of his contention that the assessee is in the business of share dealing and the investments made by the assessee were stock in trade. We also find that while giving relief to the assessee the Ld. CIT(A) has elaborately dealt the issue as under :
"The appellant made investment in shares. The appellant earned short term capital gain/loss on the share transaction. From the evidence presented by the appellant it is seen that the assessment year 2004-05 the income earned by the appellant is assessed in the hands of his father Mr. V Mundra since the appellant was a minor. Substantial investment was made by the appellant as per the balance sheet of the assessment year 2004-05. The capital account shows the balance of Rs. 6.55 crores. The investment of shares disclosed is Rs. 1.03 crores. The appellant continued the investment in this assessment year also. The volume of transaction in shares is more in view of the quantum of capital applied in making investment in the stock market. During earlier years the income of the appellant is assessed as short term capital gain though the volume of transaction is high. The appellant made submissions that investment is made in shares for earning dividend and not for business. The A.O has not brought any material on record to disprove this contention of the appellant. As per the balance sheet the shares are disclosed as current assets are not as stock in trade. The account of this year and the earlier year clearly prove that the appellant is an investor in shares. The profit earned by the appellant in speculation transaction of shares is separately disclosed by the appellant. The A.O is not correct in assessing the short term capital gain/loss as business income. Since the appellant is an investor, the short term capital gain is assessable as disclosed by the appellant. The A.O is directed to assess the short term capital gain as disclosed by the appellant."
In view of the above and in the absence of any controverting material brought on record by the revenue to rebut the aforesaid finding of the Ld. CIT(A), we do not find any infirmity in his order and decline to interfere with the same. The revenue appeal is therefore, dismissed.
6. In the result, the appeal of the revenue is dismissed.
7. Order is pronounced in the open court on 31.8.10 Sd/- Sd/-
सी.डȣ.राव, लेखा सदःय डȣ. के. ×यागी, Ûयायीक सदःय
(C. D. Rao) (D. K. Tyagi)
Accountant Member Judicial Member
(तारȣख)
तारȣख) Dated :31st August, 2010
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
4
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - JCIT, Range-43, Kolkata.
2 ू×यथȸ/ Respodent, Sri Aniruddh Mundra, 113B, Monohar Das Katra,
Kolkata-7.
3. आयकर किमशनर/The CIT,
4. आयकर किमशनर (अपील)/The CIT(A), Kolkata
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata
स×याǒपत ूित/True Copy, आदे शानुसार/ By order,
उप पंजीकार/Deputy Registrar.