Itxa/1146/2016 Of Principal Commissioner Of Income Tax-33 Mumbai v. Krishna Tandon

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1146 OF 2016 Pr. Commissioner of Income Tax-33.. Appellant v/s. Krishna Tandon .. Respondent Mr. Arvind Pinto for the appellant None for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 23[rd] JANUARY, 2019 1.The Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal ("the Tribunal" for short), raising following questions for our consideration :- (i) Whether in law and on the facts of the instant case, was theTribunal in error in holding that the assessee is an investor inshares, ignoring the volume, frequency and regularity oftransactions thereby indicative that he was a trader in shares? (ii) Whether in law and on the facts of the instant case was theTribunal correct in holding that since no borrowed funds wereutilized, the assessee is an investor; unmindful of the fact thattraders no do necessarily have to borrow funds when they havesufficient liquidity? (iii) Without prejudice to the above, whether the question ofborrowed funds is the sole criterion for determining whether one isa trader or an investor 2.Though three questions are framed, the issue is single namely; “Whether the receipts of the respondent assessee arising out of saleof shares should be taxed as his business income or capital gain ?"of shares should be taxed as his business income or capital gain ?" 3.The Revenue obviously argued that the assessee was in thebusiness of buying and selling the shares, the assessee contends to thecontrary. 4.The issue eventually reached to the Tribunal, which dismissed the Revenue's appeal making following observations :- "6.We have heard both the parties and their contentions havecarefully been considered. So far as it relates to the case ofindividual, for immediate preceding assessment year similarclaim has been accepted by way of an assessment order passedunder section 143(3) of the Act. According to the figures placedin the chart the assessee in earlier year has dealt in number ofscrips i.e. 11 and in respect of A.Y. 2008-09 the scrips dealt in are16. There is not much difference in the position of sale andpurchase of shares except higher value of the shares", the periodof holding is also substantial and main income has been earnedby the assessee in two scrips only. All these positions have beendescribed in the chart, which have been reproduced in the abovepart of this order. The AO has not brought out any substantialdifference in the facts between the case for the year underconsideration and for assessment year 2007-08. The assessee isan old person and is regularly making investment in the sharesand the number of scrips dealt is also not high. We do not findany differential fact for the year under consideration as comparedto the immediate preceding assessment year for which similaractivity has been held to be assessable under the head capitalgain. There is also no substantial difference in the activitiescarried out by the assessee in individual capacity vis-a-vis in the capacity of HUF. The assessee did not utilize the borrowed fundsfor making investment as the entire investment is made out ofown capital of the assessee. Keeping in view all these facts, whichhave been accepted by Ld. CIT(A) by detailed discussion in thecase of HUF and also in view of facts of the present case andposition depicted in teh charts, we are of the opinion that Ld.CIT(A) did not commit any error in granting impugned relief tothe present assessees. We decline to interfere in the relief grantedby him. Accordingly, the appeals filed by the Revenue aredismissed." 5.It can thus be seen that the Tribunal was influenced by the facts capacity of HUF. The assessee did not utilize the borrowed fundsfor making investment as the entire investment is made out ofown capital of the assessee. Keeping in view all these facts, whichhave been accepted by Ld. CIT(A) by detailed discussion in thecase of HUF and also in view of facts of the present case andposition depicted in teh charts, we are of the opinion that Ld.CIT(A) did not commit any error in granting impugned relief tothe present assessees. We decline to interfere in the relief grantedby him. Accordingly, the appeals filed by the Revenue aredismissed." 5.It can thus be seen that the Tribunal was influenced by the facts that the claim of the assessee was accepted in the assessment orderpassed after scrutiny, that the assessee had dealt with few scrips forpurchase and sale, that the assessee was a senior citizen and retiredbank employee who had invested funds in different scrips in hisindividual capacity as well as in the capacity of a Karta of HUF andlastly that the assessee has not utilized any borrowed funds for makingsuch investments. The investment was out of his own capital. In viewof such relevant facts noticed by the Tribunal, we do not see any errorin the view taken by the Tribunal. No question, therefore, arises. 6.The tax appeal is dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)