Tca/732/2013 Of Commissioner Of Income Tax v. Shri R.raghavan

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE R.HEMALATHA The Commissioner of Income Tax,Chennai – 600 034.... Appellant R.Raghavan ... Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "D" Bench, dated 30.04.2013 in I.TA.No.1755/Mds/2012 forAssessment Year 2005-06 as against the order dated 28/06/2012 byThe Officer of the Commissioner of Income Tax (Appeals)-VI inI.T.A No.522 of 2010 to 2011 for the Assessment year 2005 to2006 and as against the order dated 29/12/2010 by the Office ofthe Assistant Commissioner of Income Tax, Business Circle-II,Chennai – 600 034 in P.A No/G.I.R No.AACPR9939H for theAssessment year 2005 to 2006. JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) Challenging the order passed in I.T.A.No.1755/Mds/2012 inrespect of the Assessment Year 2005-06 on the file of the IncomeTax Appellate Tribunal, “D” Bench, Chennai, the Revenue hasfiled the above appeal. 2.The assessee filed return of income for the AssessmentYear 2005-06 declaring a total income of Rs.2,01,19,494/-. Thereturn of income was processed under Section 143(1). The casewas re-opened by issuing notice dated 10.03.2010 under Section148. A notice under Section 142(1) was served on the assessee.The assessee is in the business of trading of shares, mutual https://hcservices.ecourts.gov.in/hcservices/ funds, futures, options and money lending. The assessee filedthe return of income for the Assessment Year 2005-06, 2008-09and 2009-10 treating the gain arising from the sale of shares asshort/long term capital gains. For the Assessment Year 2005-06,the case of the assessee was re-opened and notice under Section148 was issued to the assessee on 10.03.2010. The AssessingOfficer vide assessment order dated 29.12.2010 passed underSection 143(3) read with Section 147 of the Income Tax Act, 1961held that the profit from trading in shares, mutual funds,future, options and money lending is to be treated as normalbusiness income and thus is liable to be taxed at 30%. Aggrievedover the assessment order, the assessee preferred an appealbefore the Commissioner of Income Tax (Appeals) and theAppellate Authority held that the profits arising from the saleof shares held for more than 30 days is to considered as shortor long term capital gain depending upon the period of holdingand in cases where shares have been purchased and sold within 30days, the profit arising from such transactions should beconsidered as business income. 3.At the time of admission, the following substantialquestions of law arose for consideration:1. Whether on the facts and in the circumstances ofthe case, the Tribunal was right in holding thatbonus units of Chola Freedom STF Units is to betreated as long term capital gains since theholding period is more than 12 months?2. Whether on the facts and in the circumstances ofthe case, the Tribunal was right in allowing theappeal of the assessee having come to theconclusion that shares held for more than 30 daysis to be treated as capital gains and shares heldless than 30 days is to be considered as businessincome and such bifurcation of 30 days isunsustainable? 4.The Tribunal found that there is nothing on record to showthat the assessee was maintaining separate books of account fortrading in shares and investment in shares. Further, the bonusunits of shares were allotted to the assessee on 26.02.2004 andthe same were sold by the assessee on 01.03.2005. Since theholding period is more than 12 months, the Tribunal has rightlycome to the conclusion that the same has to be treated as longterm capital gains. We do not find any error or irregularity inthe findings of the Tribunal. 4.The Tribunal found that there is nothing on record to showthat the assessee was maintaining separate books of account fortrading in shares and investment in shares. Further, the bonusunits of shares were allotted to the assessee on 26.02.2004 andthe same were sold by the assessee on 01.03.2005. Since theholding period is more than 12 months, the Tribunal has rightlycome to the conclusion that the same has to be treated as longterm capital gains. We do not find any error or irregularity inthe findings of the Tribunal. 5.Mr.M.Swaminathan, learned senior standing counselappearing for the appellant-Revenue submitted that no findingneed be given in respect of the 2[nd] question of law and the samemay be kept open. 6.As already the Tribunal has rightly decided the issue infavour of the assessee, we do not find any ground much less anysubstantial question of law to interfere with the order of theIncome Tax Appellate Tribunal. 7.With the above observations, the Tax Case Appeal isdismissed. However, we are not giving any finding with regardto the 2[nd] question of law and the 2[nd] question of law raised bythe Revenue is left open and may be decided in an appropriateappeal. No costs. Sub Assistant Registrar va To 1. The Income Tax Appellate Tribunal, Chennai, “D” Bench Chennai, “D” Bench 2. The Commissioner of Income Tax (Appeals)-IV, Chennai. Chennai. 3. The Assistant Commissioner of Income Tax, Business Circle-II, Chennai. Business Circle-II, Chennai. +1cc to Mr.M.Swaminathan,, Advocate, S.R.No.28496 SSN(CO)HS(22/07/2021) T.C.A.No.732 of 2013