Commissioner Of Income Tax, Central- Ii v. M/S. Reliance Trading Enterprises Limited

OD-14 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/22/2012 COMMISSIONER OF INCOME TAX, CENTRAL- IIVS. M/S. RELIANCE TRADING ENTERPRISES LIMITED BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAM AndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 1[st] March, 2023 Appearance :Mr. Tilak Mitra, Adv.….for appellant. Mr. Rajeev Kumar Jain, Adv.… for respondent. The Court : This appeal by the revenue filed under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the common order dated 28[th]July, 2010, passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Kolkata(Tribunal) in ITA No. 505/Kol/2010 along with CO. No.42/Kol/2010 for theassessment year 2006-07. The appeal was admitted on 19[th] January, 2012 on the followingsubstantial questions of law : “i) Whether on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in treating the profit onsale of investment as capital gain instead of business income since theshare transactions were commercial in nature ?Income Tax Appellate Tribunal has erred in law in treating the profit onsale of investment as capital gain instead of business income since theshare transactions were commercial in nature ? ii)Whether on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in restricting theIncome Tax Appellate Tribunal has erred in law in restricting the disallowance of Rs,8,48,305/- made under Section 14A of the IncomeTax Act, 1961 to Rs.12,000/- ? We have heard Mr. Tilak Mitra, learned standing counsel appearing for theappellant and Mr. Rajeev Kumar Jain, learned advocate for the respondent. It is submitted by the learned advocate appearing for the respondent thatthe name of the respondent company is presently known as M/s. Avant GardeRe-Energy Ltd.. This correction be done in the cause-title. With regard to the first substantial question of law, we find that theinvestments in the share were made in the earlier assessment year and inrespect of the earlier assessment years, namely, for the years 2004-05 and2005-06, the purchase and sale of shares and securities were held to beinvestment. Furthermore, the department did not dispute the fact that theshares were shown by the assessee under the head ‘investment’ in its balancesheet for the earlier assessment years as well. The orders passed by theTribunal in respect of the assessee’s own case for the earlier assessment yearshad attained finality. Thus, considering the totality of the facts and circumstances of the case,the learned Tribunal had affirmed the view taken by the Commissioner ofIncome Tax (Appeals), who had reversed the order passed by the AssessingOfficer and directed the Assessing Officer to accept the long term capital gain asclaimed by the assessee in its return of income. We find that there is no error in the approach of the learned Tribunal northe revenue has been able to show as to why the consistent approach should notbe maintained in the assessee’s case when the orders passed by the Tribunal for the earlier years had attained finality. Therefore, the appeal would standrejected and the substantial question of law no.1 is answered against therevenue. So far as the substantial question of law no.2 is concerned, the learnedTribunal had taken note of the fact that reasonable disallowance of Rs.12,000/-in terms of Section 14A had been made and there was no justification for theAssessing Officer to take a different view or for that the matter, theCommissioner of Income Tax (Appeals). Thus, the reasoning adopted by thelearned Tribunal to allow the cross-objection filed by the assessee by restrictingthe disallowance of Rs.12,000/- does not warrant interference. Accordingly, the appeal would stand rejected and the substantial questionof law no.2 is answered against the revenue. In the result, the appeal is dismissed and the substantial questions of laware answered against the revenue. (T.S. SIVAGNANAM, J.) So far as the substantial question of law no.2 is concerned, the learnedTribunal had taken note of the fact that reasonable disallowance of Rs.12,000/-in terms of Section 14A had been made and there was no justification for theAssessing Officer to take a different view or for that the matter, theCommissioner of Income Tax (Appeals). Thus, the reasoning adopted by thelearned Tribunal to allow the cross-objection filed by the assessee by restrictingthe disallowance of Rs.12,000/- does not warrant interference. Accordingly, the appeal would stand rejected and the substantial questionof law no.2 is answered against the revenue. In the result, the appeal is dismissed and the substantial questions of laware answered against the revenue. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Pal/SN.