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DCIT, Circle-2, Pune Versus Shri Apoorva A. Patni

2016 (4) TMI 32 - ITAT PUNE

Transaction in shares/mutual fund by engaging PMS - whether an investment activity and resultant gain/loss was assessable under the head Capital Gains or business income - Held that:- The issue stands decided in favour of the assessee and against the revenue by the decision of the Tribunal in assessee’s own case for A.Y.2008-09 which has been followed by the CIT(A) that activity of transaction in shares/mutual funds by engaging PMS was an investment activity and therefore the resultant gain was .....

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The above factual finding given by the learned CIT(A) could not be controverted by the learned DR - Decided in favour of assessee

Treating the stock-in trade of shares as investment - treatment merely on the basis of a notice of closure u/s.176(3) - Held that:- We find identical issue had come up before the Tribunal in the case of the assessee for the A.Y. 2007- 08 wherein held that the finding given by the learned CIT(A) that assessee has duly given the notice of discontinuation of .....

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by the Mumbai Bench of the Tribunal in the case of ACIT Vs. Bright Star Investment Pvt. Ltd. (2008 (7) TMI 442 - ITAT BOMBAY-H ) that receipt from sale of shares after conversion from stock in trade to investment has to be held as capital gain in absence of provision like sec. 45(2)- Decided in favour of assessee - ITA No.1511/PN/2014 - Dated:- 12-2-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri C.H. Naniwadekar For The Revenue : Shri Hitendra Ninawe ORDER PER R.K. .....

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e-tax (Appeals) erred in not appreciating the fact that the assessee had carried out business of trading in shares/mutual funds in a systematic and organized manner by utilizing the services of Portfolio Management Service Providers to act as an agent. 3. The Learned Commissioner of Income-tax (Appeals) erred in not appreciating that most of the transactions effected were of short term nature, clearly indicative of the motive of the assessee to earn profits by resorting to frequent trading rathe .....

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an individual and has returned income of ₹ 26,19,900/- which also comprised of income earned on sale of shares and the same had been shown as capital gains/loss in the return of income filed. During the year, the assessee had entered into Portfolio Management Services (PMS in short) agreement with HDFCPMS, DSPMerrilLynchPMS and EnamPMS to whom the assessee had entrusted certain funds. As per the PMS agreement, the funds of the assessee were invested in stock market by the above party and t .....

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e s own case for A.Y.2008-09 vide ITA No.1569/PN/2011 and other connected appeals order dated 27-09-2012 held that the activity of transactions in shares/mutual funds by engaging PMS was an investment activity and the resultant gain is assessable under the head capital gains. 5. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 6. After hearing both the sides, we find the issue stands decided in favour of the assessee and against the revenue by the decision of the Tribu .....

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e appeals filed by the revenue were dismissed. Since the CIT(A) following the decision of the Tribunal in assessee s own case for A.Y.2008-09 has decided the issue in favour of the assessee and in the subsequent year the Tribunal in the case of other related parties has also decided the issue in favour of the assessee and against the revenue, therefore, in absence of any contrary material brought to our notice by the Ld. Departmental Representative against the order of the Tribunal, we find no i .....

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hile disclosing the income under capital gains in the return of income filed has not claimed any such expenses which were incurred by him and which were arising out of PMS activity. The AO held the capital gain as business income and thereafter disallowed the total expenses on account of PMS and other charges at ₹ 13,16,563/- under Rule 8D of the I.T. Rules. 9. In appeal the Ld.CIT(A) following the decision of the Tribunal in assessee s own case for A.Y.2008-09 deleted the disallowance by .....

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allowed under Rule 8D of the I.T. Rules. 4.3 This has also been elaborately discussed in the appellate order passed by the undersigned vide order dated 06-09-2011 and upheld by the Hon ble ITAT Pune, vide combined order dated 27-09-2012 passed in the case of the appellant and other related cases in ITA Nos. 1534, 1535, 1568, 1569, 1570 and 1571/PN/11. The Hon ble ITAT held as under : 10. After hearing both the sides, we find no infirmity in the order of the CIT(A). The learned CIT(A) has given a .....

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w of the above facts, the disallowance made of ₹ 13,16,563/- is directed to be deleted. 10. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 11. After hearing both the sides we find the issue stands decided in favour of the assessee by the decision of the Tribunal in assessee s own case for A.Y.2008-09 vide ITA No.1568/PN/2011 and other connected appeals order dated 27-09-2012 wherein the Tribunal at Para 9 and 10 of the order has discussed the issue and dismisse .....

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no expenditure has been incurred or claimed disallowance u/s.14A cannot stand. He observed that the expenditure on PMS has not been claimed by the assessee and therefore there does not remain any other expenditure other than this expenditure which otherwise is liable to be disallowed under Rule8D of the Income Tax Rules. He accordingly directed the AO to delete the disallowance made at ₹ 5,57,396/-. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 10. After hear .....

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g the disallowance made by the AO. Grounds raised by the revenue are accordingly dismissed. 12. Since the Ld.CIT(A) while deciding the issue has followed the decision of the Tribunal in assessee s own case which has been followed by the Tribunal in A.Y. 2009-10 in the case of other related parties, i.e. Smt. Sadhana Ashokkumar Patni and other connected appeals vide ITA No.1835/PN/2013 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014, therefore, in absence of any contrary material b .....

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tar Investment Pvt. Ltd.(2009) 17 DTR 399 (Mum Trib.). 14. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has closed its share trading business in F.Y. 2005-06 and all the stocks were transferred at cost to the investment account. The stand of the assessee was not accepted by the AO in the order passed u/s.143(3) during A.Y. 2006- 07 by holding that merely showing the stock of shares as on 31-03- 2006 as investment may not be trea .....

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.Y. 2007-08 decided the issue in favour of the assessee by observing as under : 5.1 This issue also came up during the A.Y. 2007-08 wherein my predecessor CIT(Appeals) has held as under : 6.2 I have considered the submissions and the decision of the ITAT in the case of ACIT Vs. Bright Star Investment (P) Ltd. (2009) 17 DTR 399 (Mum). The appellant has cited the head notes for the ratio of this decision, which is reproduced in the above submission. In this decision, the ITAT had observed that the .....

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ion of business vide letter dated 07-04-2006 submitted with the Assessing Officer on 12-04-2006, i.e. within the prescribed period of time as mentioned in section 176(3) of the I.T. Act, 1961. Considering the facts and circumstances of the case and the legal position enunciated by the above referred to decision of the Mumbai Tribunal the appellant s claim is held to be tenable in law. Accordingly, ground No.4(a) & (b) are held to be allowed. Since ground No.4(a) & (b) are allowed, there .....

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Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 17. After hearing both the sides, we find identical issue had come up before the Tribunal in the case of the assessee for the A.Y. 2007- 08. We find the Tribunal vide ITA No.804/PN/2011 order dated 28-06-2012 in case of the assessee has decided the issue in favour of the assessee and dismissed the appeal filed by the Revenue by observing as under : 13. After hearing both the sides we do not find any infirmity in the ord .....

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