TMI Blog2015 (8) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase consideration paid was justified, has not been controverted or found to be false by the income tax authorities. Therefore, in the absence of any repudiation of the explanation furnished by the assessee, we are satisfied that the difference in the stated consideration paid vis-à-vis market value in March, 2008 is quite justified and is certainly not reflective of payment of any consideration by the assessee over and above the stated consideration. Thus direct the AO to delete the entire addition made on account of unexplained investment in the property. - Decided in favour of assessee. Sale of shares and securities - Long Term Capital Gain as well as Short Term Capital Gains V/S business income - Held that:- In the present case, the pertinent facts are that the assessee was employed with Larsen & Toubro Ltd. for 41 years and retired in the year 2001 as the President of the company. In the years 1999 and 2000, assessee was offered stock options which resulted in his getting 41000 equity shares of the said concern in 2004 and after the bonus issue in the year 2006-07, the total share holding increased to 82000 shares. Out of this holding, a small quantity of 6895 shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted. On both the issues, assessee carried the matter in appeal before CIT(A). In appeal CIT(A) accepted the plea of the assessee that the short term/long term capital gain earned on sale and purchase of shares and securities was not assessable as business income and, against such a finding of the CIT(A), Revenue is in appeal before us on the basis of Ground of appeal Nos.1 2, reproduced hereinafter:- (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the Assessing Officer to treat the Long Term Capital Gain as well as Short Term Capital Gains as such and not as business income without appreciating the following facts; (a) The magnitude of transactions is voluminous in very frequent interval which clearly establishes that the motive for transactions was to earn profit by pursuing an adventure in the nature of trade. (b) The decision in the case of Gopal Purohit [122 TT J (Mum) 87] has not been accepted by the Department which is also not applicable in the instant case because the facts are distinct. (c) The guidelines laid down in CSDT Circular No. 4/2007 dated 15.06.2007. (2) On the facts and in the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty value and the purchase price of the property. 5.1 In the course of the appellate proceedings before CIT(A), the valuation report of the DVO was received whereby the value of the property as on 14/3/2088 was estimated at ₹ 4,50,25,000/-. The assessee contended before CIT(A) that there was no justification to adopt the valuation estimated by the DVO in order to determine any unexplained investment. The assessee also explained the reasons for the difference between the stated consideration and the value adopted by the stamp duty valuation authorities as on the date of registration of the property, i.e. on 14/03/2008. It was explained by the assessee that he had booked the said premises with the builder in September,2007 itself and out of the total consideration of ₹ 3.50 crores, a substantial amount of ₹ 2.50 crores was paid in September to October 2007. It was explained that since a substantial portion of the consideration was paid upfront knowing that the premises would be ready for occupation only after 3 to 4 years, the assessee was able to get a good price from the builder. Secondly, assessee also explained that the registration of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition of the property. It has also been pointed out that there was no material on record to establish any payment made by the assessee over and above the stated consideration. It has also been submitted that in law, the value determined by the report of the DVO cannot form a basis to hold that assessee has paid any consideration over and above the stated consideration. 7. On the other hand, Ld. DR appearing for the Revenue has defended the action of the AO by pointing out that the value adopted by the stamp duty valuation authority was much higher than the stated consideration, which reflected that assessee did not acquire the property at its fair market value and, therefore, addition made by the AO on account of unexplained investment in acquisition of the property is justified. 8. We have carefully considered the rival submissions. In the present case, the addition proposed by the AO and which has been partly retained by the CIT(A), is on account of unexplained investment in acquisition of property; and, the same is primarily based on the valuations determined by the stamp duty valuation authority and the DVO respectively. In our considered opinion, the value adopted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired on the basis of a price negotiated in September, 2007 and that he had paid almost 70% of the total consideration in September October 2007 itself knowing fully that the premises would be available for occupation only after a period of 3 years to 4 years. The second aspect canvassed by the assessee was the increase in the stamp duty Ready Reckoner rates in 2008 visa- vis the rates in 2007. The facts and figures, in this regard have been reproduced in the order of the CIT(A) which clearly establish that the stamp duty ready recknor rate in 2008 were almost 53.5% higher than those in 2007. All the aforesaid explanations furnished by the assessee to show that the purchase consideration paid was justified, has not been controverted or found to be false by the income tax authorities. Therefore, in the absence of any repudiation of the explanation furnished by the assessee, we are satisfied that the difference in the stated consideration paid vis- -vis market value in March, 2008 is quite justified and is certainly not reflective of payment of any consideration by the assessee over and above the stated consideration. 8.2 In the result, on the basis of the aforementioned discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as business income. On the point of consistency with the past assessments, CIT(A) has relied upon the judgment of Hon ble Bombay High Court in the case of CIT vs. Gopal Purohit, 336 ITR 287(Bom). Against such a decision of CIT(A), Revenue is in appeal before us. 10. Before us, the Ld. DR appearing for the Revenue has primarily relied upon the order of the AO in support of the case of the Revenue. The reasoning adverted by the AO has already been noted by us in the earlier paras and is not being repeated for the sake of brevity. The only other plea put forth by the Ld. DR before us was to the effect that each year is an independent year and the CIT(A) erred in deciding the issue based on the stand taken by the AO in the past assessment years. 11. Ld. Representative for the assessee has vehemently supported the order of CIT(A) with reference to the factual position analyzed by him. According to the Ld. Representative for the assessee the facts considered by CIT(A) clearly establish that it is a case of investor in shares so as to assess the profit on sale and purchase of shares and securities as capital gains and not as business income . 12. We have carefully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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