Itxa/748/2007 Of The Commissioner Of Income-Tax-Central-Iv,Mum v. M/S Nirmal Bang Securitiies Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.748 OF 2007 The Commissioner of Income Tax,Central-IV, Mumbai . ...Appellant V/s.Nirmal Bang Security Pvt. Ltd., Mumbai ...Respondent Mr.B.M. Chatterjee with Mrs.P.P. Bhosale, Advocates,for the Appellant. Mr.Murlidharan with Mr.A.K. Jasani, Advocates, for theRespondent. .Heard the learned Counsel for the Appellantand the learned Counsel for the Respondent. 2.By the above Appeal, the Appellant has soughtto raise the following substantial questions of law:- circumstances of the case the special Bench ofthe Tribunal was justified in law in holdingthe transactions of the purchase of the unitsof mutual funds a few days before the recorddate for the dividend entitlement and its sale immediately after the record date as businesstransactions when it was a foregone conclusionthat the transactions would result in a lossto the assessee? (b).Whether on the facts and thecircumstances of the case, the special Benchof the Tribunal was justified in law inholding the transactions of the purchase andsale of units of Mutual funds as businesstransactions when as per the modern view ofthe law, the assessee is not permitted toavoid tax incidence, even if nothing that theassessee does, is either illegal or downrightdishonest? (c).Whether on the facts and in thecircumstances of the case, the Special Benchof the Tribunal was justified in law inholding the transactions of the purchase andsale of units of Mutual funds as businesstransactions when the transactions put throughby the assessee need not have been taken inorder to achieve a commercial result orobject, but were taken only with a view toreducing the tax burden and hence though such transactions or steps may be legal andactually put through, they are hollow andcolourable devices? (d).Whether on the facts and in thecircumstances of the case, the Special Benchof the Tribunal was justified in law inholding the assessee was not disentitled tohave the loss from the transactions ofpurchase and sale of units of mutual funds setoff against his income from any othertransactions or source when the saidtransactions were purely hollow and colourabledevices and the result of such transactionsand necessarily to be ignored in computing thetotal income of the assessee? (e).Whether on the facts and in thecircumstances of the case, the Hon.ITAT wasjustified in holding that the addition onaccount of diversion of profits ofRs.18,93,048/- for A.Y.2000-01 and Rs.33,500/-for the A.Y.2001-02 does not fall within thedefinition of undisclosed income u/s.158B(b)of the Act? (f).Whether on the facts and in thecircumstances of the case, the Hon.ITAT wasjustified in holding that the addition onaccount of disallowance of brokerage ofRs.1,61,592/- does not fall within thedefinition of undisclosed income u/s.158(B)(b)of the Act? (g).Whether on the facts and in the circumstances of the case, the Hon.ITAT wasjustified in holding that the addition ofRs.22,426/- on account of dividend receiveddoes not fall within the definition ofundisclosed income u/s.158B(b) of the Act? 3.The learned Counsel appearing on behalf of theRespondent pointed out that in view of the Judgment ofthis Court in the case of Commissioner of Income-TaxV/s. Vikram A. Doshi & Anr. [256 ITR 129], the abovesubstantial questions of law does not arise at all. Inthat behalf the learned Counsel for the Respondentbrought to our notice the following observations in theaforesaid Judgment :- "The other questions sought to beraised by the Revenue need noconsideration as the issues raised (g).Whether on the facts and in the circumstances of the case, the Hon.ITAT wasjustified in holding that the addition ofRs.22,426/- on account of dividend receiveddoes not fall within the definition ofundisclosed income u/s.158B(b) of the Act? 3.The learned Counsel appearing on behalf of theRespondent pointed out that in view of the Judgment ofthis Court in the case of Commissioner of Income-TaxV/s. Vikram A. Doshi & Anr. [256 ITR 129], the abovesubstantial questions of law does not arise at all. Inthat behalf the learned Counsel for the Respondentbrought to our notice the following observations in theaforesaid Judgment :- "The other questions sought to beraised by the Revenue need noconsideration as the issues raised therein are based on transactionswhich, by no stretch of imaginationcan be said to be undisclosedtransactions falling under section158B of the Income-Tax Act, since thetransactions in question weredisclosed in returns which were thesubject-matter of regular assessment.The same ought to have been assessedin the regular assessment and not inthe block assessment. We, therefore,affirm the conclusions or findingsrecorded by the Tribunal with respectto those transactions referred to inother questions sought to becanvassed, may be for additionaldifferent reason recorded herein." 4.In view of this, we do not find anysubstantial question of law involved in the aboveAppeal and the same is dismissed. [A.V. NIRGUDE, J.] [DR. S. RADHAKRISHNAN, J.]