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The ITO, Ward-8 (1) , Ahmedabad Versus Rupesh Balwantbhai Brahmbhatt and Vica-Versa

2016 (1) TMI 165 - ITAT AHMEDABAD

Eligibility for concessional tax treatment u/s.111 - CIT(A) directing to consider the business income from share trading of ₹ 1,15,01,549/- as short term capital gain - Held that:- The intention of the assessee has to be seen and in the facts of the case it has been strongly pleaded that the intention of the appellant was to make investments and to make gain on sale of shares and it was not to do share trading. Even in earlier year, ie. A.Y.2005-06 the appellant has shown short term capita .....

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se of payment of Stamp Duty shall be deemed to be the full value of the consideration as per the provisions of Section 50C - Held that:- In the present case, the assessee has demonstrated that before the AO the Valuation adopted by the Stamp Valuation Authority was disputed, therefore, the AO ought to have refer the issue to the Valuation Officer (DVO) in terms of provisions of Section 50C(2) of the Act . Thus restore this issue to the file of AO to decide the issue afresh after obtaining the re .....

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BER : These cross-appeals by the Revenue and the Assessee are directed against the order of the Ld. Commissioner of Income Tax(Appeals)-XIV, Ahmedabad [ CIT(A) in short] dated 17/04/2009 pertaining to Assessment Year (AY) 2006-07. These appeals were heard together and are being disposed of by way of this consolidated order for the sake of convenience. 2. First, we take up the Revenue s appeal in ITA No.1981/Ahd/2009 for AY 2006-07. The Revenue has raised the following grounds of appeal:- 1. The .....

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t of the Assessing Officer be restored. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 22/12/2008. While framing the assessment, the Assessing Officer (AO) treated the surplus of sale and purchase of the shares as business income of ₹ 1,15,01,549/-. The AO made disallowance u/s.14A of ₹ 30,146/- and recomputed the .....

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A) confirmed the finding of the AO in respect of re-computation of LTCG by invoking the provisions of section 50C of the Act on sale of proeprty and also confirmed the disallowance made u/s.14A of the Act. Aggrieved by the order of the ld.CIT(A), now the Revenue is further in appeal before us. 3. The only effective ground in this Revenue s appeal is against reversing the finding of the AO and directing the AO to treat the income as STCG. The ld.Sr.DR supported the order of the AO. 3.1. On the co .....

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cided the issue in favour assessee. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. we find that the ld.CIT(A) has given a finding on fact that reads as under:- 3.3. I have considered the facts of the case and the submissions as given by the A.R. of the appellant carefully. In support of his contentions, the A.R. has relied upon several judicial decisions, as also the Press Note issued by the CBDT clarifying t .....

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classified as business transactions. I also find force in the argument of the A.R. that in the case of an assessee earning livelihood from full time employment the department cannot suggest that the transactions of such an assessee amount to an adventure in the nature of trade. It is also a fact that an assessee makes investment in financial assets not merely with a view to earn periodical income by way of dividend or interest, but also with a view to get appreciation of the investment partly i .....

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accepted by the A.O. as short term capital gain in assessment made u/s.143(3) of the I.T. Act on 7/12/2007. Considering these facts I hold that the appellant has earned short term capital gain and not business income and so I direct the AO to treat the income as short term capital gain taxable at concessional rte of 10%. This ground is thus allowed. 4.1. The Revenue has not pointed out as to how the facts of the present case are different from the earlier year. When the Revenue in earlier year, .....

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n the present case, the assessee is engaged in the business of purchase and sale of shares and, therefore, the surplus arising on such purchase and sale of shares cannot be treated as business profit and it has to be taxed as short term capital gain as has been offered by the assessee. The judgement of Hon ble Bombay High Court rendered in the case of CIT vs Gopal Purohit as reported in 228 CTR 582 (Mum.) also supports the case of the assessee. Respectfully following all these judgements and in .....

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and in the circumstances of the case, the learned CIT(A) erred in confirming the order of the Assessing Officer to the effect that while computing income from long term capital gain, the value adopted for the purpose of payment of Stamp Duty shall be deemed to be the full value of the consideration as per the provisions of Section 50C of the Income-tax Act. 5.1. The ld.counsel for the assessee submitted that the AO has adopted the Jantri value of the property as sales consideration. He submitted .....

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see submitted that it was contended before the AO that the value adopted by the Sub Registrar was much in excess of real market value. The ld.counsel for the assessee submitted that when the assessee disputed the Valuation before the AO, the AO ought to have referred the issue of Valuation of property to the Valuation Officer. The ld.counsel for the assessee has placed reliance on the decision of the Coordinate Bench (ITAT Jodhpur Bench) in the case of Manjula Singhal vs. ITO in ITA Nos.290 & .....

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a capital asset, being land or building or both, is less than the value adopted [or assessed or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted [or assessed or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Howeve .....

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f sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under subsection (1) of section 16A of that Act. 6.1. In the present case, the assessee has demonstrated that before the AO the Valuation adopted by the Stamp Valuation Authority w .....

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e consideration. (ii) lf the assessee disputes the stamp duty valuation before the Assessing Officer, he may refer the valuation of the capital asset to DVO subject to the condition that valuation adopted by the stamp valuation authority has not been disputed by the assessee before any higher forum. (iii) If the value ascertained by the DVO is less than the valuation as per stamp valuation authority, then the DVO's valuation will be adopted. (iv) If the valuation as per the DVO is more than .....

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ved out to the adoption of valuation as per stamp valuation authority and if the conditions laid down in the sub-section are fulfilled, then the claim of the assessee that the valuation as per stamp valuation authority is more than the fair market value, cannot be rejected by the Assessing Officer without complying with the procedure laid down in the said subsection. The discretion of the Assessing Officer is circumscribed by the fulfilment of the conditions as contemplated in sub-section (2). E .....

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