Thursday, May 9, 2013

[aaykarbhavan] Wall Street Journal FYI Not of any professional value or interest, Judgment,



Intimation u/s 143(1) cannot be disturbed subject to the reason recorded by AO

Posted on 09 May 2013 by Bijoy Paul

Court

INCOME TAX APPELLATE TRIBUNAL


Brief

Brief facts of the case are that assessee was running a proprietary business as whole seller at Nainital. It had filed its return of income declaring total income of Rs. 1,90,000/-. The Assessing Officer, vide order sheet entry dated 19th August, 2009, recorded the following reasons before issuing notice u/s 148 of the Income Tax Act, 1961 as under: - "The examination of ITR it is gathered that the assessee is a whole seller while, he has not submitted any details in P&L accounts as well as in Balance Sheet. He has not disclosed Bank Balance, while he claimed interest for Rs. 11909/-. Turnover of the assessee also not disclosed. Therefore, I have reason to believe that the assessee has not furnished accurate information as in ITR and this is an escapement case."


Citation

Mahesh Kumar Arora, 7, Bankey Mansion, Mailital, Nainital. ADJPA4330P (Appellant) Vs. ITO,Nainital. (Respondent)


Judgement

 
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E': NEW DELHI
 
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
&
SH. C.M. GARG, JUDICIAL MEMBER
 
ITA No. 3819/Del/2011
Assessment Year: 2007-08
 
Mahesh Kumar Arora,
7, Bankey Mansion,
Mailital, Nainital.
ADJPA4330P
(Appellant)
 
Vs.
 
ITO,
Nainital.
 (Respondent)
Appellant by: Shri K.V.S. Gupta, Adv.
Respondent by: Ms. Pramila Sharan, Sr. DR
 
O R D E R
PER S.V. MEHROTRA, A.M.
 
This appeal filed by the assessee is directed against the order of ld. CIT(A) dated 05/05/2011 for A.Y. 2007-08.
 
2. Brief facts of the case are that assessee was running a proprietary business as whole seller at Nainital. It had filed its return of income declaring total income of Rs. 1,90,000/-. The Assessing Officer, vide order sheet entry dated 19th August, 2009, recorded the following reasons before issuing notice u/s 148 of the Income Tax Act, 1961 as under: -
 
"The examination of ITR it is gathered that the assessee is a whole seller while, he has not submitted any details in P&L accounts as well as in Balance Sheet. He has not disclosed Bank Balance, while he claimed interest for Rs. 11909/-. Turnover of the assessee also not disclosed. Therefore, I have reason to believe that the assessee has not furnished accurate information as in ITR and this is an escapement case."
 
3. Consequently notice u/s 148 was issued on 19th August, 2009 stating therein that income to the extent of Rs. 1,28,220/- has escaped assessment. The assessee filed following objections to the notice u/s 148:
 
"This notice says that an income of Rs. 128220/- has escaped an assessment. This is incorrect and any income amounting to Rs. 128220/- has not escaped assessment. The assessment was complete on the basis of this return on 24th September, 2008 on an income of Rs. 128220/- and the extra tax of Rs. 378/- demanded vide your intimation u/s 143(1) dated 24/09/2008 DCR No. 3509/2008-09 was also paid. There has been no escapement of any income, much less of the income of Rs. 128220/- mentioned in your notice under reply. Under the circumstances year notice u/s 148 dated 19/08/2009 needs to be cancelled/withdrawn."
 
4. The assessment was completed at a total income of Rs. 6,39,291/-.
 
5. Ld. CIT(A) while confirming the AO's action, inter-alia, observed that though assessee had not specifically challenged the action u/s 148 but still the same needs to be decided and after considering the findings of AO confirmed the action u/s 148. Before us ld. Counsel has taken following additional grounds of appeal:
 
1. On the facts and circumstances of the case the ld. CIT(A)'s erred in on both facts and in law in not holding that the AO erred in reopening the assessment bases on Scanty & Vague reasons with no tangible material to form the reason to believe that income escaped assessment & therefore the reassessment framed consequent thereto is liable to annulled/Set aside as not sustainable in law.
 
2. The action of the ld. CIT(A)'s in confirming the action of the ld. AO in framing the reassessment without supplying the reasons for reopening before the completion of reassessment is illegal arbitrary unwarranted uncalled for & against the facts and circumstances of the case."
 
6. Ld. Counsel submitted that these grounds are on pure question of law and do not require any fresh investigation into the facts.
 
7. Ld. DR submitted that assessee had not challenged action u/s 148 before ld. CIT(A).
 
8. We have considered the submissions of both the parties and have perused the record of the case.
 
9. As noted earlier, ld. CIT(A) has decided the validity of action u/s 148. Therefore, even if assessee had not challenged the action before ld. CIT(A), the issue relating to validity of proceedings u/s 148 does arise out of ld. CIT(A)'s order. Therefore, even if assessee had taken these additional grounds still this issue needs to be decided in view of ground no. 1 to 3 raised by assessee before us. Under such circumstances, the additional grounds raised by assessee has to be admitted.
 
10. We, therefore, now proceed to decide the legality of proceedings u/s 148. Ld. Counsel referred to the reasons recorded by AO, noted earlier, and pointed out that the same are vague as they do not refer to income which had escaped assessment. He referred to page 5 of the paper book, wherein the copy of notice u/s 148 is contained in which AO had mentioned that income to the extent of Rs. 1,28,220/- had escaped assessment.
 
11. Ld. Counsel submitted that assessment was completed at Rs. 1,28,220/- after allowing deduction u/s 80C and the extra tax of Rs. 378/- demanded by AO was also paid. In support of its contention, ld. Counsel referred to page 7 of paper book, wherein the acknowledgment of return for A.Y. 2007-08 is contained in which assessee had declared total income of Rs. 1,28,222/-. Ld. Counsel relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. for the proposition that an intimation u/s 143(1) cannot be disturbed unless there is reason to believe that the income chargeable to tax has escaped assessment. In this regard ld. Counsel has relied on following observations of Hon'ble Delhi High Court:
"This judgment, contrary to what the Revenue would have us believe, does not give a carte blanche to the Assessing Officer to disturb the finality of the intimation u/s 143(1) at his whims and caprice; he must have reason to believe within the meaning of the Section.
………………………………………………………..
 
The fact that the intimation issued u/s 143(1) cannot be equated to an "assessment", a position which has been elaborated by the Supreme Court in the judgment cited above, cannot in our opinion lead to the conclusion that the requirements of sec. 147 can be dispensed with when the finality of an intimation u/s 143(1) is sought to be disturbed. We are at pains to point out this position, which seems fairly obvious to us, because of the argument frequently advanced before us on behalf of the Revenue in other cases as well, under the misconception, if we may say so with respect, that an intimation u/s 143(1) can be disturbed on any ground which appeals to the Assessing Officer. The consequence of countenancing such an argument could be grave
……………………………….
 
When section 147 was recast with effect from 1st April, 1989, the legislature sought to replace the expression "reason to believe" with the expression "for reasons to be recorded by him in writing"
………………………..
 
Having regard to the judicial interpretation placed upon the expression "reason to believe", and the continued use of that expression right from 1948 till date, we have to understand the meaning of the expression in exactly the same manner in which it has been understood by the courts. The assumption of the Revenue that somehow the words "reason to believe" have to be understood in a liberal manner where the finality of an intimation u/s 143(1) is sought to be disturbed is erroneous and misconceived. As pointed out earlier, there is no warrant for such an assumption because of the language employed in sec. 147; it makes no distinction between an order passed u/s 143(3) and the intimation issued u/s 143(1). Therefore, it is permissible to adopt different standards while interpreting the words "reason to believe" vis-à-vis sec. 143(1) and sec. 143(3). We are unable to appreciate what permits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made u/s 143(3) cannot apply where only an intimation was issued earlier u/s 143(1). It would in effect place an assessee in whose case the return was processed u/s 143(1) in a more vulnerable position than an assesse in whose case there was a full-fledged scrutiny assessment made u/s 143(3).
 
Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return u/s 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression "reason to believe" in cases where assessments were framed earlier u/s 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed
…………………………..
 
In the present case the reasons disclose that the AO reached the belief that there was escapement of income "on going through the return of income" filed by the assesee after he accepted the return u/s 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the AO, both strongly deprecated by the Supreme Court in CIT vs. Kelvinator (supra). The reasons recorded by the AO in the present case do confirm our apprehension about the harm that a less strict interpretation of the words "reason to believe" vis-à-vis an intimation issued u/s 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the AO subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred u/s 147."
 
12. We have considered the submissions of both the parties and have perused the record of the case. It is evident from the reasons recorded by Assessing Officer on 19th August, 2009, as reproduced earlier, that he had not specifically pointed out the income which had escaped assessment. The AO has not recorded any concrete reasons regarding escapement of income. There is no correlation between the reasons recorded and notice issued u/s 148. From the reasons it cannot be inferred that a sum of Rs. 1,28,220/- escaped assessment as mentioned in notice u/s 148. It is not clear as to how AO reached a conclusion that income to the tune of Rs. 1,28,220/- escaped assessment as mentioned in notice u/s 148 of I.T. Act, 1961. This is not in conformity with the reasons recorded. Admittedly, assessment had been completed at a total income of Rs. 1,28,220/- and, therefore, this, in any case, could not be the escaped income. Thus, reasons recorded are clearly vague and the entire endeavour of the AO was to make fresh enquiries on the basis of mere suspicion. It has been elaborately explained by the Hon'ble Delhi High Court in Orient Craft Ltd. (supra) that an intimation u/s 143(1) cannot be disturbed on any ground which appeals to the AO. He has to have reason to believe, in consequence to some tangible material, which has come into his possession after issuing intimation, that income has escaped assessment. The intimation u/s 143(1) has to be evaluated on the same footing on which an assessment order u/s 143(3). The AO has referred to, in the reasons, various details regarding bank account, turnover etc. being not on record. If that was so, nothing prevented the AO to issue notice u/s 143(2). He could have called for all the details. But on this basis he could not reach a conclusion regarding escapement of income to the extent it was originally returned by assessee. Thus, reasons recorded are vague and the proceedings have been initiated only with an intent to make fresh enquiries, which is not permissible. We, therefore, are of the opinion that the notice issued u/s 148 is bad in law and, accordingly, quash the proceedings initiated in consequence to the said notice.
 
13. In the result, the assessee's appeal is allowed.
 
Order pronounced in the open court on 22/03/2013
 
Sd/- Sd/-
(C.M. GARG) (S.V. MEHROTRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
 
 
Dated: 22.03.2013
*Kavita
 
Copy to:
 
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
 
TRUE COPY
 
By Order
ASSISTANT REGISTRAR


Microsoft Concedes Windows 8 Misses Expectations

By SHIRA OVIDE
Just six months into one of Microsoft Corp.'s MSFT -1.00% biggest fix-it projects, the company has gone back to the drawing board.
The software giant, in an unusually frank admission about the shortcomings of its Windows 8 operating system, has confirmed that it is making changes to its sales strategy and to its software to address user complaints with a coming update dubbed "Windows Blue."
Getty Images
Visitors try out Windows 8 Surface tablet computers.
"The world is changing and changing fast, and frankly we also didn't get everything we dreamed of done in the first release," said Tami Reller, a co-head of Microsoft's flagship Windows business, in an interview last week.
Ms. Reller said Microsoft plans in coming weeks to provide more details about the product, which will introduce new features and address user gripes that Windows 8 is too confusing to use. She didn't provide details in the interview or in a corporate blog post on Tuesday.
Last fall's launch of Windows 8 was supposed to be a milestone for Microsoft, but just a few months in, the company announces a reboot is on the way. George Stahl reports. Photo: Microsoft.
But analysts have speculated that Microsoft may change one of the focus points for Windows 8 haters: the removal of the familiar Microsoft "Start" menu, and a sometimes awkward fusion of the traditional Windows desktop with a new type of screen showing rows of colorful tiles similar to a smartphone screen. Some users have said they dislike having to move back and forth between those modes.
Some analysts criticized Microsoft's long-delayed admission that Windows 8 needs a reboot.
[image] Bloomberg News
Microsoft CEO Steve Ballmer has bet big on Windows 8 software.
"Almost everybody in the tech industry already knows the [Windows 8] experience is suboptimal," said Patrick Moorhead, president of research firm Moor Insights & Strategy. "Microsoft was the last one…in the room to realize this was the case."
Windows 8, the operating software launched in October, was intended to catapult Microsoft and its allies into the market for new kinds of computing devices—including tablets—and help generally get consumers more interested in buying new personal computers. Six months after the operating software's debut, it isn't yet a hit by the accounts of some PC executives and research firms.
One market-research firm, IDC, went so far as to say that Windows 8 did more than fail to revive the PC market—it actually turned off users with changes to basic elements of the widely used operating system.
Ms. Reller disputed IDC's contention, and said the company is seeing steady if not steep sales progress. She said Microsoft has sold 100 million copies of Windows 8 since October, up from 60 million in January.
Microsoft's willingness to shift strategy on Windows 8 is a test for Microsoft Chief Executive Steve Ballmer, whose leadership has been criticized by some investors. Mr. Ballmer placed a high-profile bet on a computing philosophy that PCs, tablet computers and smartphones should share common elements, style and underlying software.
"Windows 8 is simply the biggest deal from our company in at least 17 years," Mr. Ballmer said at a July event.
The hiccups for Windows 8, however, have spotlighted the sometimes-awkward fit when software is grafted onto both a tablet computer used for watching movies and surfing the Web, and on a 27-inch desktop computer primarily for workplace functions.
Microsoft rival Apple Inc. AAPL -0.87% has different software for tablets and for computers, believing the tablet is a separate computing category altogether and it shouldn't try to be a PC in a different guise.
As part of a wave of changes that Microsoft is planning in coming months, Ms. Reller outlined how Microsoft is working on helping people overcome obstacles to learning a dramatically revamped software, altering the shopping experience for consumers, getting more of people's favorite apps available for Windows 8, and making sure a wider array of Windows 8 computing devices will be on sale.
Ms. Reller repeated what Windows 8 users and retailers have said for many months—Windows 8 is a better experience on touch-screen devices—and vowed that Microsoft will put all its weight behind touch-screen devices. But Ms. Reller conceded Microsoft missed a sales opportunity by not having enough touch-screen Windows 8 devices out of the gate, especially at prices that are hundreds of dollars and not in the range of $1,000 as some higher-end Windows 8 touchscreen computers have been.
"If we could have done a better job accomplishing that in the holiday launch or in the selling season following, that certainly would have made a positive difference," Ms. Reller said. She said Microsoft has been having discussions with PC makers such as Dell Inc. DELL +0.68% to help them figure out what devices should get the most attention, so they're not making bets on an unsustainable number of different devices.
Ms. Reller also said Microsoft is spreading the message to retailers that if they want help from Microsoft's marketing and promotional muscle, they will need to offer more and more variety of touchscreen Windows 8 machines.
Microsoft also missed a sales boom of the small tablets that suddenly became popular with consumers last fall. People familiar with Microsoft's product plans have said the company didn't anticipate the rise of sub-8-inch tablets, which comprised nearly half of the tablet market in the fourth quarter, according to IDC.
Ms. Reller in the interview said Windows technical staff responded "awfully darn fast" to the surge of sales of devices such as Google Inc.'s GOOG -0.25% 7-inch Nexus tablet and Apple's 7.9-inch iPad Mini.
Ms. Reller declined to discuss Microsoft's plans for more homegrown computing devices in addition to two models of its Surface tablet-style computer introduced since October. The Wall Street Journal has reported Microsoft is working on a new lineup of its own devices including a 7-inch tablet.
For the updated Windows software, Microsoft plans two updates in coming weeks.
First up will be details about pricing, packaging and an official name to replace the Blue code name. The new software will be available later this year in time for the holiday season, Ms. Reller said.
On Tuesday, Microsoft also said a test version of the new Windows software will be available in late June.
A second Blue update will explain the technical vision, address customer feedback about Windows 8, and outline options for new types of Windows 8 machines, she said.
Write to Shira Ovide at shira.ovide@wsj.com

Lesson From Buffett: Doubt Yourself

Columnist's name

[image] Reuters
Warren Buffett has sought people to tell him why he might be wrong. 'I believe he enjoys challenges,' said Doug Kass, who challenged him Saturday.
There was no big news at Berkshire Hathaway Inc.'s BRKB +0.20% annual meeting this past weekend, but there was one great lesson for investors: Perhaps the most important thing you can do when everything seems to be going right in your portfolio is to listen to somebody who insists you are wrong.

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To spice up the annual ritual, Berkshire's chairman, Warren Buffett, invited someone who has placed a bet against the stock—short-seller Doug Kass of hedge fund Seabreeze Partners Management—to join the panel of analysts posing questions to Mr. Buffett and vice chairman Charles Munger.
Carp, if you will, that it didn't take much bravery for Mr. Buffett to give air time to one skeptic among the more than 35,000 worshippers who would trample their grandmothers to kiss Mr. Buffett's feet if he took his socks off. Complain, as many already have, that Mr. Kass's questions weren't all that tough.

Photos From the Meeting

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Mr. Buffett at Berkshire's annual shareholder meeting on Saturday.

More

Then ask yourself: When is the last time the management of a major U.S. company sought out unrestricted criticism from someone betting against the stock?
To get a sense of how unusual it was for Mr. Buffett to invite a bear to ask questions freely, consider a survey of more than 500 companies by the National Investor Relations Institute in 2011. The research found that 80% placed limits on who can ask questions during the quarterly ritual of the earnings conference call. Nearly 25% of the companies took questions only from "pre-approved lists" of callers. Only 11% permitted individual investors to ask questions; just 12% said the floor is open to everyone.
What is more, 76% of companies prepared scripted answers to the questions they expected to get. According to the NIRI survey, the prepared comments by top executives that open the typical earnings conference call are prerecorded by about one out of 12 companies, but more than 80% of them don't disclose that the remarks have been prerecorded.
But before you start comparing U.S. corporate management to a closed system like, say, North Korea, ask yourself another question: When is the last time I tried as hard as possible to find someone to refute my own investing ideas?
Mr. Buffett is "self-confident, but he's not afraid of a challenge," Mr. Kass told me last week. "I believe he enjoys challenges."
A deliberate, lifelong effort to find people to tell him why he might be wrong is one of the keys to Mr. Buffett's success. It doesn't come naturally to most investors.
Mr. Buffett once noted about the scientist Charles Darwin that "whenever he ran into something that contradicted a conclusion he cherished, he was obliged to write the new finding down within 30 minutes. Otherwise his mind would work to reject the discordant information, much as the body rejects transplants. Man's natural inclination is to cling to his beliefs, particularly if they are reinforced by recent experience."
Another vehement believer in the importance of challenging your own investing ideas is Ray Dalio, founder of Bridgewater Associates, the world's largest hedge-fund manager, which oversees more than $150 billion.
"When two intelligent parties disagree, that's when the potential for learning and moving ahead begins," Mr. Dalio told me last week. "The most powerful thing that [an investor] can do to be effective is to find people you respect who have opposite, different points of view [from yours]—and have an open-minded exchange with them about what's true and what to do about it."
This principle, which Mr. Dalio calls "thoughtful disagreement," is more important than ever. Few sayings on Wall Street are more true, or more universally ignored, than "don't confuse brains with a bull market." When markets are around record highs, as stocks and bonds alike are today, those rising prices inevitably lead to overconfidence and complacency.
"When you think you're right, you don't go looking," says Mr. Dalio. "When you think you're right, your mind isn't open to learning. The more you think you know, the more closed-minded you'll be."

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Mr. Buffett stood next to the Golden Jubilee Diamond on May 5, 1996, in Omaha, Neb.
Berkshire Hathaway's annual meeting is about a lot more than a Q & A with Warren Buffett. WSJ's Jason Bellini tracks the picture-perfect moments and rapid rise of the annual pilgrimage to Omaha. Image: AP
Adds Mr. Dalio: "The most common mistake of investing is the failure to distinguish something that's become more expensive from something that's still a good investment. Too many people [make] the mistake of looking to the price to gain confidence, without recognizing that that doesn't make any sense."
Only by deliberately seeking out thoughtful disagreement, says Mr. Dalio, can you counteract the false confidence conferred by a rising market. Investors "could really improve their probabilities of being right by 30% or 40% simply by saying, openmindedly, 'Who disagrees with me in an intelligent way? And let me understand that disagreement,'" he says. "I think everybody can do that. They just have to make a deal with the people around them to be that way."
How can investors build this kind of thoughtful disagreement into their decision-making?
"People on Wall Street take themselves very seriously, and in order to do this you need almost a sense of play and make-believe," says Mariko Gordon, chief executive of Daruma Capital Management in New York, which manages roughly $2 billion.
Explains Ms. Gordon: "You have to pretend to be somebody completely different. Ask yourself: If I'm the most brilliant short-seller in the world, what is the investment case I'd be looking for? If I'm a momentum guy [who buys rapidly rising stocks], is there anything here for me?" This way, she says, you force yourself to take radically different perspectives on the same idea.
Mike Ervolini, chief executive of Cabot Research, a Boston-based firm that advises money managers on how to improve their skills and processes, measures how long it typically takes for good investments to stop working. Often, his firm has found, an investor will hang on to a winning stock even after its superior returns start to fade.
Bloomberg News
Seabreeze Partners Management's Doug Kass, right, has bet against Berkshire Hathaway's stock.
He suggests studying your account history to learn how long your average winner tends to outperform. As your latest winner comes up on that average holding period, use that as a signal to seek out a contrary opinion.
Finally, look back in your account statements, not in your fallible memory, to see what you did in mid-2007 and in early 2000, the last times the market hit record highs. If you bought more, became a fast trader or piled on other risks, then you need to invite the toughest, most critical person you respect over for a cup of coffee.
Talk about your temptations. Throw yourself wide open to criticism. When the bull market ends, as it surely will, you'll be glad you did.
Write to Jason Zweig at intelligentinvestor@wsj.com

Turn Bad Stress Into Good

The Right Type of Pressure Can Boost Daily Performance; Taking More Control

Columnist's name

Kate Matheny isn't exactly someone who shies away from stress. Throughout her career, the Aurora, Colo., certified public accountant has pursued a progression of high-pressure management jobs. "I'm hard core," says the 44-year-old wife and mother of two. "I wanted to be on top of the food chain [at work], and I wanted to be a great mom"—one who could attend lacrosse games, drive carpool and help with homework even after an hour-long commute and workdays that started, more often than not, with a 5 a.m. marathon-training run.
New research proves that all stress isn't bad for the body, as previously believed. How do you get more good stress into your life, and get rid of the harmful kind? Sue Shellenbarger explains, and business consultant Desiree Adaway offers her personal account. Photo: Getty Images.
[image] Hedley Jones/Cherifoto
Adjusting the Schedule | Kate Matheny, of Aurora, Colo., took a pay cut to move to a new firm with a supportive boss and a flexible schedule.
That is, until she hit the proverbial wall.
After months of losing sleep, dropping weight and "feeling pushed to the brink of losing my mind" by her juggling act, Ms. Matheny decided she had to address her stress—and turn it to her advantage. The new job she recently switched to still has its share of pressure, but with more support from her boss and more flexibility in her schedule, she says she feels great.
Contrary to popular belief, stress doesn't have to be a soul-sucking, health-draining force. But few people know how to transform their stress into the positive kind that helps them reach their goals.
Recent research confirms that gaining control over job demands, doing work that lends meaning and purpose to life and enjoying support and encouragement from co-workers are all linked to beneficial stress. Simply changing attitudes and expectations about stress—through coaching, training or peer-support groups—can also foster the constructive kind of stress.

Quiz: What's Your Good-Stress Score?

"Stress is paradoxical," says Alia Crum, a research scholar in the management department at Columbia Business School who studies how people's attitudes shape their response to stress. "On one hand, it can be the thing that hurts us most. On the other, it's fundamental to psychological and physical growth. Our belief system, the lens through which we choose to view and approach stress, will shift the outcome."
Employees at a troubled financial-services company were able to change their attitudes toward stress with the help of a video-training program showing athletes, leaders and professionals accomplishing great feats in the face of daunting challenges, according to research led by Dr. Crum that was published this year in the Journal of Personality and Social Psychology. "We found a consistent shift in the mind-set among participants," she says, toward seeing stress not as a drain, but as an aid to performance. And, the research showed, people who made the shift were more likely to experience a healthier physiological response during a difficult public-speaking exercise, exhibiting only moderate levels of stress hormones.
[image] Rob Shepperson
Ms. Matheny, the Colorado C.P.A., felt more than moderate stress levels in her previous job as a chief financial officer for an investment company. The smallest snag, such as bad weather delaying her kids' school bus, could derail her tightly wound daily schedule. After dropping 20 pounds she didn't want to lose, she says she found herself too weak to enjoy running a marathon. "I asked myself, 'What are you doing?'"
Her new job, as C.F.O. for a smaller, less financially stable company, has let her blast her biggest causes of harmful stress. She gained control of her time by cutting her commute to 20 minutes and getting work done from home during off hours while still making time for her kids' activities—which her new boss endorses. She is sleeping better, her weight is rising and she is strong enough to enjoy running again. "Work is still extremely stressful," she says. "But it's not personal stress."
In a healthy stress response, the heart pumps faster and the brain goes on high alert as stress hormones flow into the bloodstream, temporarily shutting down the digestive and immune systems to devote more resources to the challenge at hand. Stress becomes harmful when these indicators stay chronically elevated, raising blood pressure, damaging the cardiovascular system, compromising immunity and causing aches, pains, digestive upsets and insomnia.
It is difficult to reverse an extreme stress response once it is under way, researchers say. More often, people who succeed in turning stress to their advantage make changes in advance, in their mind set or beliefs about stress, or in the way they work or organize their lives.
[image] Gary Schmidt
Seeking Support | After repeatedly blowing interviews, Gary Schmidt says peer coaching helped him nail a job in Oregon City, Ore.
When severe stress caused Gary Schmidt to fail repeatedly in job interviews after graduating from college years ago, he tapped a peer-support group for help. He learned, through coaching from other members of Toastmasters International, a nonprofit communication and leadership-training group, to frame challenges as an opportunity to perform well, rather than a threat, he says.
The old anxieties struck anew after he was thrust into the job market in 2008. Beset with negative thoughts about what would happen to his finances if he blew his first job interview, he fidgeted, perspired heavily and studded his answers with "ummm" and "ahh," he says. The interviewer rejected him immediately, Mr. Schmidt says.
Recalling his Toastmasters' coaching, he approached a later opportunity with a different attitude: "I'm excited, my adrenaline is pumping," he told himself, visualizing a home run. He "nailed the interview," his new boss later told him, and landed the job as a county government-affairs director in Oregon City, Ore.
People differ in their capacity to dial down the stress response. Some are hard-wired by genetics and early-life experience to react more fearfully to challenges. Others who experience early adversity seem to stop responding to stress at all, posting little or no physiological reaction. No stress-management technique works for everyone; many people find their own best tactics through trial and error.
For stress to be most beneficial, it's important to find meaning in your work, says Debra Nelson, a management professor at Oklahoma State University who has been studying stress for 30 years. "You have to have hope—the will and the way to accomplish what you are trying to do." A 2011 research review in Stress and Health co-written by Dr. Nelson found that even workers doing intense, high-stakes jobs, such as air-traffic controllers and intensive-care nurses, thrive under heavy stress if they are optimistic about the future and find their work meaningful.
It also helps to eliminate known predictors of harmful strain, such as a lack of autonomy on the job, an unsupportive boss or co-workers, Dr. Nelson says. Some people, for example, assert themselves by negotiating to trim down impossible work loads or asking for more of the kind of work they enjoy, says Lois Barth, a New York City career coach.
Suzanna Camarata
Taking Control | Desiree Adaway, in Asheville, N.C., ditched a position in which she felt powerless to start her own consulting business.
Desiree Adaway was chronically stressed in a previous job as a senior manager for a nonprofit organization. She traveled half the time, often carrying three phones to respond to clients, co-workers and volunteers, and felt powerless to implement her ideas in a big organization. She often fell ill with bronchitis, her hair was falling out and her weight rose. In 2009, she says, her doctor looked at her, saying, "Your stress levels are off the roof."
The exit route she chose—starting her own business consulting for and coaching nonprofits—actually compounded her stress by some measures, says the Asheville, N.C., single mother. She continues to work 10-hour days to support herself and put her two daughters, 19 and 22, through college. "I have to juggle payroll and cash flow, I have to blog and market myself…I go to networking events several nights a week," she says. But her work, helping clients reach their goals, "just lights my fire," she says. Now, stress is "the kind of tension that leads me to action, and it feels really good. I'm exhausted, but I'm exhilarated."


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