The Commissioner Of Income Tax – 21, Mumbai v. Pankaj J. Patel

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.953 OF 2011 ANDINCOME TAX APPEAL NO.954 OF 2011 The Commissioner of Income Tax – 21, Mumbai Versus Pankaj J. Patel ..Appellant. ..Respondent. Mr.Suresh Kumar for the appellant.Mr.V.S. Hadade for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 23[rd] January 2013 P.C. : 1.In these appeals by the Revenue for the assessment years 2003-2004 and 2004-2005, the basic question raised is whether the Tribunal was correct in directing the assessing officer to assess the income of the respondent – assessee on sale of shares as capital gains rather than as business income as sought by the Revenue ? 2.The respondent – assessee is a trader and an investor in shares and securities. The assessing officer assessed the respondent – assessee under the head business income in respect of the income arising not only out of trading activity in shares and securities but also income arising on account of sale of shares and securities which were held as investment. 3.In appeals, both the Commissioner of Income Tax (A) and the Tribunal held that the gains arising on sale of investments has to be assessed under the head capital gains. This was in view of the fact that the profits made on investment in shares were in respect of those share held for a long period of time as investment. Further, it was held by the appellate authorities that conversion of stock-in-trade into investments was not motivated by the avoidance. The Tribunal also records the fact that respondent – assessee started its trading activity in shares and securities only in assessment year 2001-2002. Prior thereto, the respondent – assessee was being assessed under the head capital gains in respect of its profits earned on investment of shares and securities. 4.Therefore, the decision of the Tribunal to tax profits on sale of shares held as investment under the head capital gains was reached on a finding of fact also arrived at by the Commissioner of Income Tax (A). In view of the impugned order being based on finding of fact, and the Revenue has not been able to show the same is perverse, we find no question of law arises for our consideration. 5.In these circumstances, we see no reason to entertain the appeals. Both the appeals are accordingly dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)