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Asstt. Commissioner of Income Tax 16 (3) , Mumbai Versus Rohan P. Shah

2017 (10) TMI 377 - ITAT MUMBAI

Foreign Travel Expenses - allowable business deduction - Held that:- We are of the opinion that each Assessment Year is a unique unit of assessment and principle of resjudicata do not apply to Income Tax Proceedings. The primary conditions of claiming the expenses, in terms of Section 37, is that the expenses have been incurred wholly and exclusively for the purpose of Business or profession. Although, the assessee has placed relevant invoices and relevant ledger extracts, however, no details of .....

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directed to substantiate his claim in this regard failing which Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. Resultantly, this ground of revenue’s appeal stands allowed for statistical purposes. - Income from sale of shares - ‘business’ or ‘capital gains’ - Held that:- Assessee is a lawyer by profession and major portion of total income consist of professional income. A perusal of Balance Sheet reveals that the assessee reflects investment i .....

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scrips is 6601 days and average holding period comes to 57 Days and total number of unique trade days is 64 days. This data is nowhere controverted by the revenue before us. Moreover, latest CBDT Circular No.6/2016 which is clarificatory in nature applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently. Hence, we find that their cannot be any straight jacket formula to distinguish the same and further there cannot be any si .....

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(Appeals)-7 [CIT(A)], Mumbai, Appeal No.CIT(A)-7/IT.06,17&18/Rg.16(3)/2014-15 dated 13/02/2015. The assessment was framed by Ld. Addl. Commissioner of Income Tax 11(3), Mumbai u/s 143(3)(ii) on 31/12/2010. The effective grounds of appeal read as follows:- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO amounting to ₹ 23,28,423/- on account of Foreign Travel Expenses. 2. On the facts and circumstances of the case .....

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ee on 30/09/2008. The two issues involved in the appeal are Foreign Travelling Expenses claimed by the assessee and secondly, the head under which Share Income earned by the assessee would be assessable. 2.2 During assessment proceedings, it was noted that the assessee claimed total expenses of ₹ 23,79,927/- towards foreign travelling expenses which comprised of travelling cost of ₹ 16,74,633/- and Hotel Expenses of ₹ 6,53,790/-. The assessee pointed that it already made suomot .....

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The second issue pertains to head under which share income would be assessable. The assessee reflected Short Term Capital Gain [STCG] of ₹ 1,21,01,161/- on sale of certain shares. Upon perusal of share transactions, Ld. AO noted that magnitude of the transactions was very high in terms of volume, frequency & regularity. Further, the assessee earned miniscule dividend income of ₹ 3,02,468/- against share investment. The Ld. AO analyzed that out of 116 transactions, 111 transaction .....

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equentially, the assessee was denied the set-off of Short Term Capital Loss incurred by him during the year from the same and also saddled with higher rate of tax on Share Income as against concessional rate of tax @10% as applicable to Short Term Capital Gain. 2.4 Aggrieved, the assessee contested both the actions of Ld. AO with success before Ld. CIT(A) vide impugned order dated 13/02/2015. The Ld. CIT(A) noted that the assessee, being lawyer by profession, was required to visit foreign countr .....

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sactions in same scrip on same day. It was also noted that Ld. AO did not apply the same criteria to Long Term Capital Gains reflected by the assessee. Finally, placing reliance on various judicial pronouncements, Ld. CIT(A) agreed with the stand of assessee. Aggrieved, the revenue is in further appeal before us. 3. The Ld. Departmental Representative [DR] justified full disallowance of foreign travelling expenses on the premises that sufficient documentary evidences could not be furnished by th .....

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ign countries so as to attend various seminars / conferences etc. for the purpose of enhancing / sharing professional knowledge and therefore, the impugned expenses were incurred for the professional purposes. Our attention is drawn to the fact that foreign visit was a regular feature of assessee s profession and these expenses are being incurred year on year basis by the assessee and the Assessing Officer, in several other years accepted the same barring certain adhoc disallowance against the s .....

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was rightly offered under the head capital gains. 5. We have carefully considered the rival contentions and perused relevant material on record. We find that relevant documents qua foreign travelling expenses have been placed on page nos.27 to Page Nos. 44 of the paper-book. Upon perusal of the same, we find that the assessee has incurred expenses of ₹ 8.53 Lacs on Hotel Expenses out of which an amount of ₹ 2 Lacs has suo-moto been disallowed by him and the balance amount of ₹ .....

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the same. However, we are of the opinion that each Assessment Year is a unique unit of assessment and principle of resjudicata do not apply to Income Tax Proceedings. The primary conditions of claiming the expenses, in terms of Section 37, is that the expenses have been incurred wholly and exclusively for the purpose of Business or profession. Although, the assessee has placed relevant invoices and relevant ledger extracts, however, no details of any conferences / seminars are available on recor .....

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this regard failing which Ld. AO shall be at liberty to adjudicate the same on the basis of material available on record. Resultantly, this ground of revenue s appeal stands allowed for statistical purposes. 6. Now adverting our attention to the second issue, we find that the classification of income from share trading as business or capital gains is dependent upon the facts and circumstances of a particular case and there is only a thin line separating the two view point. The CBDT has so far is .....

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l trade or business/was incidental to it or was an occasional independent activity; (ii) Whether, the purchase is made solely with the intention of resale at a profit or for longterm appreciation and/or for earning dividends and interest. (iii) Whether scale of activity is substantial; (iv) Whether transaction were entered into continuously and regularly during the assessment year. (v) Whether purchases are made out of own funds or borrowings; (vi) The stated objects in the Memorandum and Articl .....

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endent companies. (xiii) Whether transaction is by promoters of the company. (xiv) Total number of stock dealt in (xv) Whether money has been paid or received or whether these are only book entries . As per Circular No. 4/2007 it is possible for a taxpayer to have two portfolios, i.e., an investment portfolio comprising of securities which are to be treated a capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading assets. The above instructions have .....

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than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; c) In all other cases, the .....

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in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. 7. Applying the above principals upon the case in hand, we find that the assessee is a lawyer by profession and major portion of total income consist of professional income. A perusal of Balance Sheet reveals that the assessee reflects investment in securities under the head .....

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