IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "B" NEW DELHI
BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
AND
SHRI C.M. GARG, JUDICIAL MEMBER
ITA No: 5675/Del/2011
Asstt. year 2007-08
M/s. Dreamland Buildtech Pvt. Ltd. vs. ACIT
910, Ansal Bhawan, Circle-10(1)
Kasturba Gandhi Marg New Delhi.
New Delhi.
(PAN AACCD0809M)
(Appellant) (Respondent)
Appellant by : Shri Santosh K Aggarwal, Advocate
Respondent by :Smt. Parvinder Kaur, Sr. DR
Date of Hearing :17.8.2015
Date of pronouncement :17.8.2015
ORDER
PER T.S. KAPOOR, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order of Ld. CIT(A) dated
13.10.2011. The assessee has taken 13 grounds of appeal. However the crux of the
appeal is the grievance of assessee by the order of Ld. CIT(A) by which he had
upheld penalty imposed by AO u/s 271 (1)(c) of the Act. At the outset Ld. AR invited
our attention to an order of Tribunal dated 12th December, 2014 and submitted that
the issue on which penalty was imposed has already been decided by the Hon'ble
Tribunal in favour of assessee and in this respect he invited our attention to para 8.3
ITA No. 5675/Del/2011
Dreamland Buildtech Pvt. Ltd. vs ACIT
of the said order. Further explaining the facts the Ld. AR submitted that Ld. CIT(A)
had upheld the penalty u/s 271(1)(c) of the Act as a part of capital gain income
declared by assessee was treated as business income which the Hon'ble Tribunal
had decided in its favour and therefore the penalty does not survive. The Ld. DR
though supported the order of Ld. CIT(A) but submitted that she will go through the
orders of Hon'ble Tribunal.
2. We have heard rival submissions and have gone through the material available
on record. We find that the penalty was imposed as the AO treated as part of
income from sale of shares as business income and in this respect the facts noted in
penalty order are reproduced below :-
"I accordingly, hold that gain of Rs. 2,53,84,621/- earned by the
company on sale of shares within a period of 30 days was I the nature
of business income. Accordingly, I accept the contention of the
appellant to the extent of short term capital gain of Rs. 3,35,01,577/-
as short term capital gain, Rs. 7,24,61,100/- and I also hold that
amount of Rs. 2,53,84,621/- is in the nature of business income. AO is
directed to treat Rs. 3,35,01,577/- as short term capital gain, Rs.
7,24,61,100/- as long term capital gain and Rs. 2,53,84,621/- as
business income. This ground is partly allowed."
3. We find that the Hon'ble Tribunal vide its order dated 12th December, 2014
has disposed of cross appeals for assessment years 2006-07 and 2007-08. In the
assessee's appeals for the assessment years 2006-07 and 2007-08 one of the issues
is regarding treatment of capital gain as business income. The Hon'ble Tribunal vide
para 8.3 and 8.4 has held income from shares held for less than 30 days in the
present case cannot be treated as business income. The relevant para 8.3 and 8.4 is
reproduced below:-
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ITA No. 5675/Del/2011
Dreamland Buildtech Pvt. Ltd. vs ACIT
"8.3 We now consider the findings of the Ld. CIT(A) wherein he has held
that the gains received on shares which were held for a period of less than
30 days should be assessed as income from business. The Mumbai H Bench
of the Tribunal in the case of Mr. Hitesh Satishchandra Doshi Etemia vs. JCIT
in ITA No. 6497/Mum/2009 and ITA 148/Mum/2010 for the assessment year
2003-04 and other appeals had after considering a number of decisions at
page 15 held as follows.
"Therefore, the bifurcation of the short term capital gain and treating the
transaction as investment in the cases where the holding period of more than
30 days and as business transaction in the case where the holding period is
less than 30 day, in our considered opinion, is not justified on the part of the
CIT(A). Since there cannot be a single criteria for judging the transaction as
capital asset or trading asset, the CIT(A) adopted only holding period as a
sole criteria for bifurcating the transactions relating to the short term capital
gain, which is neither proper and nor justified."
8.4 Respectfully following the same we have to necessarily dislodge this
direction of the Ld. CIT(Appeals). We hold that the entire profits from the
purchase and sale of shares have to be assessed under the head "capital
gains".
4. The Hon'ble Tribunal in the same order has allowed relief to the assesee in
assessment year 2007-08 by following the order for assessment year 2006-07. The
ground No.2 in asstt. year 2007-08 reads as under:
"That the CIT(A) erred in holding that the gain of Rs. 25384621/- out of the
total short term capital gain from sale of shares was business profit."
5. The Hon'ble Tribunal has disposed of this issue vide para 12 and 12.1. The
same is reproduced below :-
12. Ground Nos. 2 and 3 are identical to ground Nos. 2 and 3 of the
assessee's appeal for the assessment year 2006-07. In this assessment year
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ITA No. 5675/Del/2011
Dreamland Buildtech Pvt. Ltd. vs ACIT
the factual position of period of holding is brought out by the Ld. CIT(A) at
page 42 of his order as follows :
"I have also called for bifurcation of profit relating to shares declared as
investment in the past and transaction carried out in the year under
reference on the basis of period of holding. The relevant bifurcation is as
under :-
1. Capital gain on shares sold of investment of preceding years which were
disclosed in the balance sheet as investment
(ST) Rs. 1,95,06,51/- and
(LT) Rs. 7,24,61,100/-
2. Short term capital gain on investment relating to holding period of 6
months and above Rs. 2,39,07,368/-
3. Short term capital gain oninvestment relating to holding period of 5-6
months Rs. 68,24,511/-
4. Short term capital gain on investment relating to holding period of 4-5
months Rs. 62,90,269/-
5. Short term capital gain on investment relating to holding period of 3-4
months Rs.47,05,291/-
6. Short term capital gain on investment relating to holding period of 2-3
months. Rs. 12,82,245/-
7. Short term capital gain on investment relating to holding period of 1-2
months Rs. 29,04,972/-
8. Short term capital gain on investment relating to holding period upto 1
month Rs. 2,53,84,621/-
12.1 As the factual position of this year is identical to the factual position of
the P.Y. We allow these grounds of the assessee for the same reasons that
were cited by us while disposing of the case for the assessment year 2006-
07."
6. From the above findings of Hon'ble Tribunal, we find that the assessee has
been granted relief in this respect and therefore the penalty upheld by the Ld.
CIT(A) on account of this addition does not sustain. In view of the above the appeal
of the assessee is allowed.
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ITA No. 5675/Del/2011
Dreamland Buildtech Pvt. Ltd. vs ACIT
7. In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 17th August, 2015.
sd/- sd/-
(C.M. GARG) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 17th August, 2015
`veena'
Copy of the Order forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. Guard File By order
Dy. Registrar
Sl. Description Date
No.
1. Date of dictation by the Author 17.8..2015
2. Draft placed before the Dictating Member 17.8.2015
3. Draft placed before the Second Member
4. Draft approved by the Second Member
5. Date of approved order comes to the Sr. PS
6. Date of pronouncement of order
7. Date of file sent to the Bench Clerk
8. Date on which file goes to the Head Clerk
9. Date of dispatch of order
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