Pr. Commissioner Of Income Tax-6 Mumbai v. M/S.envision Investment & Finance P. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1810 OF 2016 Pr. Commissioner of Income Tax-6Mumbaiversus M/s.Envision Investment & Finance P. Ltd. : Appellant. : Respondent. ................... Mr. Ashok Kotangle a/w Mr. Prabhakar Ranshur for the Appellant.Dr.K Shivram, Senior Counsel i/by Mr. Sameer G Dalal for the Respondent ................... CORAM : AKIL KURESHI & M.S.SANKLECHA, JJ. DATE : FEBRUARY 27, 2019. P.C.: 1This Appeal is filed by the Revenue challenging the Judgment ofthe Income Tax Tribunal (for short “Tribunal) . 2The questions framed in this Appeal relate to the applicability ofExplanation to Section 73 of the Income Tax Act, 1961 in relation to theRespondent-Assessee which is a limited company. At the outset we may recordthat such an issue had never been raised by the Revenue in the earlier stage ofthe litigation. The real controversy between the parties all along has been withrespect to a gain earned by the Respondent-Assessee out of sale of shares. TheAssessing Officer treated the entire gain as arising out of the Assessee's business activities. The CIT (Appeals) and the Tribunal, however, gave partialrelief holding that the shares which were sold after the period of one yearwould give rise to long-term gain in the hands of the Assessee. It is thisJudgment of the Tribunal which the Revenue has challenged by way of presentAppeal. 3In this context the Tribunal had made the following observations :- “6.2We have heard the rivall submission and perusedthe material before us. In the case under considerationthe asseessee had acquired shares of RNRL, RelianceCapital Ltd., Reliance Communications Ltd, andReliance Industries Ltd. And the profit arising out ofsale proceeds of these shares was shown under thehead LTCG. Shares of first two companies and the lastcompany i.e. except the shares of RelianceCommunications Ltd.) were acquired in the month ofJanuary 2006 and were sold in the Month ofSept./July, 2007 and February, 2008 respectively.Shares of Reliance Communications Ltd. Werepurchased in May, 2006 and were sold on 13.02.2008.In our opinion, the FAA had rightly held that the shareswere rightly offered under the head LTCFG. Thepattern of purchase of sale and holding period clearlyprove that the behavior of the assessee was of aninvestor and not of a businessman. In our opinion thebasic ingredients of business are missing in the abovereferred transaction. Therefore, confirming the orderof the FAA, we decide ground no.1 against the AO.” 4The two things immediately emerge from the Judgment of theTribunal. Firstly the question of nature of assessee's activities of buying andselling of shares being speculative in nature with special reference to Explanation 73 of the Act was not an issue at all. We therefore do not permitthe Revenue to raise such a contention for first time in this Appeal before theHigh Court since this issue can at the be considered as one of the facts and law.The second thing which emerges from the Judgment of the Tribunal is that theTribunal had noted relevant facts applying correct parameters to come to aconclusion that in relation to the shares held by the assessee in excess of oneyear the intention was to invest in shares and not to engage itself in business ofbuying and selling the shares. 4No question of law therefore arise for consideration. The Appeal isaccordingly dismissed. [ M.S.SANKLECHA,J.] [ AKIL KURESHI, J ]