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From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Saturday, 27 July 2013 4:09 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Rajasthan high Court in RAJASTHAN URBAN INFRASTRUCTURE case holding firstly that no TDS u/s 194J etc on SERVICE TAX portion; Ahd bench ITAT TDS u/s 194C on pass through payments; Section 14A/Rule 8D restrictive comport by Ahd & Mumbai ITAT; Rev Fav Detailed orders on repetitive bulk shares transactions Held as Business income of Trader (not investor) (2 orders)
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Saturday, 27 July 2013 4:09 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Rajasthan high Court in RAJASTHAN URBAN INFRASTRUCTURE case holding firstly that no TDS u/s 194J etc on SERVICE TAX portion; Ahd bench ITAT TDS u/s 194C on pass through payments; Section 14A/Rule 8D restrictive comport by Ahd & Mumbai ITAT; Rev Fav Detailed orders on repetitive bulk shares transactions Held as Business income of Trader (not investor) (2 orders)
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR (1) D.B. INCOME TAX APPEAL NO.235/2011
COMMISSIONER OF INCOME TAX(TDS), JAIPUR
Vs.
M/s. RAJASTHAN URBAN INFRASTRUCTURE DATE:01.07.2013 The dispute relates to a point as to whether
TDS is to be deducted on the amount payable on
account of service tax or not? 30.06.2008. The words, "any sum paid",
used in Section 194J of the Act, relate to fees for
professional services, or fees for technical
services. As per the terms of agreement, the amount
of service tax was to be paid separately and was not
included in the fees for professional services or
fees for technical services. In these circumstances, we are satisfied that the orders passed by the
Appellate Authority as well as the Appellate
Tribunal, are in accordance with the provisions of
Section 194J of the Income Tax Act In these circumstances, we find no force in
any of the appeals and the same are, accordingly,
dismissed. (Hence no requirement of TDS on service tax separately billed/mentioned)
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH – AHMEDABAD ITA No.810/Ahd/2010
A. Y.: 2008-09 The Assistant Geologist,
Geology & Mining Dept Date of pronouncement: 10-07-2013
Brief facts of the case are that during the course of survey
carried out in the case of Geology and Mining Department on 01st
July, 2008, it was observed by the survey team that the department
had paid Rs.6,93,16,000/- to Gujarat Mineral Development
Corporation (GMDC) and Gujarat Mineral Research & Development
Society (GMRDS) for construction of Marble Park for Artisans and
using of mineral without deducting tax as required u/s. 194C of the
Act during the financial year 2007-08. A show cause notice was
issued to the assessee to explain as to why demand may not be
raised u/s. 201 (1) and interest may not be charged for the above
default u/s 201 (1A) of the Act. The assessee in their reply stated
that since the amounts paid to the aforesaid parties are grant-in-aid,
therefore, the assessee is not required to deduct TDS on such
payment. The learned AO did not accept the explanation of the
assessee and held that these payment is contract in nature for the
work executed by GMDC and DMRDS for which the assessee is
required to deduct tax u/s 194C of the Act @ @% + EC + SC.
Accordingly, the learned AO made addition of Rs.15,72,059/- u/s
201(1) of the Act and Rs.1,45,692/- on account of penalty levied u/s
201(1A) of the Act
Further, as pointed by the learned AR, it is evident that the
state government had made resolution for providing grant-in-aid to
GMDC and GMRDS for Rs.4,78,76,000/- and Rs.2,15,00,000/-
respectively and these grant-in-aid were routed to the above said
corporations through the assessee. Therefore, these are not
payments made for carrying out any work; however, instead they are
grant-in-aid given to the corporation through the assessee by the
state government. These facts are evident from the paper books filed
by the assessee viz. Page No.18 to 29. Therefore, the provisions of
section 194C of the Act would not be attracted in the assessee's case
and consequentially the provisions of section 201(1) and 201(1A) of the Act will also not be applicable. Therefore, the ground raised by
the assessee is allowed in its favour.
8. In the result, the appeal of the assessee is allowed
Rev Fav orders on classification of shares gains: Business head or capital Gains
IN THE INCOME TAX APPELLATE TRIBUNAL "C " BENCH, MUMBAI I.T.A. No.4140/Mum/2010 Assessment Year: 2006-07) Mr.Pankaj Varj lal Karani 26.07.2013 The only issue involved in this appeal is regarding nature of income from share transactions undertaken by assessee during the Financial Year relevant to the assessment year under consideration. 11. In the case before us, there is no dispute to the fact that there are number of transactions entered into by the assessee, the details of which are filed by the assessee vide his letter dated 11.7.2013 and on perusal thereof it is observed that the said statement is running into 11 pages containing 624 transactions. AO has stated at page 23 of the impugned order and the relevant part of which we have reproduced hereinabove in para 5. That there were total 4943 transactions during the year, which clearly shows that the daily transactions of the assessee in one day is about 153
transactions. We also observe on perusal of the statement filed by the assessee that there are repetitive transactions entered into by the assessee. The assessee has again purchased the shares after the same were sold. During the course of hearing ld.AR was also confronted that if the intention of the assessee was to make the investment in shares then why the assessee had entered into the repetitive transactions and that too
when period of holding of most of the transactions is less than one month. As is evident from page 1 of the said statement, the maximum period of holding of one scrip (Sr.No.57) is 30 days otherwise the period of holding varies from 03 days to 23 days. The Ld.AR could not controvert the above facts nor could satisfactorily explained the reasons for such a short period holding of the shares in respect of which assessee has claimed short term capital gains. We also observe from the order of the assessing
officer at page 24 that there were 53 transactions in Jet Airways. The scrip of Jet Airways were purchased on 29.3.2005 and were sold on 1.4.2005 i.e. period of holding is only for three days. The AO has further stated that the assessee made 100 transactions in the scrip of M/s Tata Tele Services Ltd on 23.3.2006 which were purchased between 13.1.2006 to 23.2.2006 and the assessee during the course of hearing before us has not disputed the above fact. Considering all these facts it shows that the assessee is a trader in shares and not an investor as the frequency and
volume of shares are not only quite high, but the intention is clear that the assessee was trading in shares and not purchased the shares with an intention as an investor. The Hon'ble Apex Court has held in the case of CIT V/s H. Holck Larsen (1986) 160 ITR 67 that whether a person is an investor or a dealer is a mixed question of law and fact. The Hon'ble Delhi High Court has held in the case of CIT V/s Sahara India Housing Corporation Ltd (2012) 2012 TPL 1265 (Delhi) in ITA Nos.740 of 2009, 762 of 2009 and 847 of 2010 dated 27.4.2012 that the most important text to be considered is whether the activity is in the nature of business or not is volume, frequency, continuity and regularity of transactions of purchase and sale of the goods concern, on the basis of which an inference can be drawn. Similar text has also been laid down by the Hon'ble Gujarat High Court in the case of CIT V/s Rewashanker A Kothari (2006) 283 ITR 338(Guj). We are of the considered view that all the texts laid down in all above cases takes us to the conclusion that the AO has rightly held that share transactions from which the assessee has earned profits of Rs.30,01,631/- and claimed as short term gains is in the nature of trading activity of the assessee. We also observe that ld. CIT(A) has only adopted the adhoc basis without giving the reasons considering the facts and circumstances of the case to hold that profit should be considered in the
nature of short term capital gains but no reasons have been given which could be set to fit in the principle laid down in various cases of the Hon'ble Supreme Court as well as Hon'ble High Courts to support the observations of ld. CIT(A). 12. In view of above, we hold that the entire profit shown by the assessee on purchase and sale of shares of Rs.30,01,631/- has rightly been considered by the AO as profit from business and not short term capital gain. Therefore, we reverse the order of ld. CIT(A) and confirm the order of AO by allowing ground of appeal taken by the department.
IN THE INCOME TAX APPELLATE TRIBUNA "F" BENCH, MUMBAI Veena S. Kalra I.T.A. No.2403/M/2012 Assessment Year :2008-2009) 10.7.2013 19. To sum, the facts about the entries in the books of accounts are inconclusive. By not contesting the conclusion of the CIT(A) with regard to so called STCG Rs 21,50,410/-, the assessee forfeited the claims relating to the credibility of the books entries at least with reference to the transactions involving the re-entered scips. With this, with regard to claims of investment in other scrips, the onus shifts to assessee and assessee failed to discharge the same. The intention of acquiring the shares as investment for capital appreciation is not translated and instead the symptoms of going for quick profits are evident. The stock: turnover ratio at 1:16 does against the claims of the assessee. Other data relating to opening stocks and closing stocks on one side and the assessee's final exiting from the so called claim of STCG at the end of 2011-12 indicates the assessee's conduct for quick profits and not for investment. Of course, the holding period particulars also confirm the AO's conclusions. Regarding the decisions relied upon by the Ld Counsel for the assessee,
we find those cases are factually distinguishable and none of them has the record of re-entered transactions, high stock: TO ratio and also the history of causing dent to the original claim of the assessee with regard to the book entries and the intention of the assessee. Therefore, from the facts and the legal propositions narrated above, we are of the opinion that the conclusions of the CIT (A) on the balance of the STCG are reversed and order of the AO is restored. Accordingly, ground raised by the Revenue is allowed.
Regarding the intention of the assessee, the decision of ITAT, Rajkot in the case of DCIT vs. Mukeshbhai Babulal Shah and it is relevant for the
proposition "where intention of the assessee behind purchase and sales of the shares was quickly to realize profits and not to earn dividend from them, the income would be assessable as business income". This proposition was drawn on the facts of the stock turnover ratio of 1:16 and capital turnover ratio of 1:14. Order of the Tribunal in the case of Hitesh S. Bhagat (supra) relied upon by the Ld DR is relevant for the proposition that the STCG claimed by the assessee were treated as business income on the facts that which involve 86 transactions on sale with the holding period of 1 to 44 days. In the said decision, the Tribunal held "acceptance of
the claim for the earlier year would not operate res judicata or estoppels on the Assessing Officer for deciding the issue for the year under consideration when the facts are not strictly identical".
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "A",MUMBAI ITA No.8026/M/2011
Assessment Year : 2008-09 Kunjal Hemant Shah 10.07.2013 This is an assessee's appeal against the orders of CIT(A)-36 dated 29.09.2011. The issue in this appeal is with reference to disallowance of Rs.2,71,653/- u/s. 14A.2. The assessee is an individual and has received lease rent from ICICI Banking Corporation to an extent of Rs.39,88,480/- during the year. As against this lease rent received, the assessee claimed lease rent paid to Maratha Mandir on the property at Rs.5,61,600/-. The net amount of Rs.34,26,880/- was offered as income under the head "income from other sources" without claiming any other expenditure. The assessee offered total income of Rs.31,70,040/- after claiming deduction u/s. 80C and 80G. In the return the assessee claimed exemption of PPF interest at Rs.1,00,610/- exempt u/s.10(11) and dividend of Rs.2,03,94,545/- u/s. 10(34). AO invoking provisions of section 14A and Rule 8D stated that the assessee debited an expense of Rs.4,19,604/- in the capital account and therefore, an amount of Rs.2,71,653/- was to be disallowed on the basis of average investment u/r. 8D. He disallowed the amount and added to the income returned. The ld. CIT(A) confirmed the same on the basis of the Special Bench decision of the ITAT in the case of Daga Capital Management Pvt. Ltd. without examining the facts.
Therefore, the assessee is aggrieved. Only in the event of expenditure being incurred by assessee, then
only attribution of expenditure to the exempt income will arise. Since there is no expenditure claimed, and only lease rent claimed is directly relatable to lease rent received, disallowance per se does not arise. AO and CIT(A) are wrong in invoking the provisions of section 14A on these facts. AO is directed to delete the same. Accordingly, assessee's grounds are allowed.
5. In the result, assessee appeal is allowed
IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, AHMEDABAD I.T. A. No. 2228/AHD/2012
(Assessment Year:2008-09) Karnavati Petrochmem Pvt.
Ltd., 05-07-2013 Before us, the learned D.R. relied on the order of Assessing Officer. On the other hand the learned A.R. submitted that provisions of Section 14A are applicable only when Assessee earns an income which is exempt from tax and incurs some expenditure for earning the aforesaid income. He further submitted that the Assessing Officer has to establish nexus between the expenditure incurred and the source of exempt income. In the present case, no nexus has been established by the Assessing Officer and therefore no disallowance under 14A can be made. The learned A.R. further submitted that the Assessee has received dividend of Rs. 300 which has been received through ECS and no specific expense has been incurred for collecting and depositing the dividend. He thus supported the order of CIT(A). We have heard the rival submissions and perused the material on record. We find that CIT(A) while granting relief to the Assessee has given a finding that no nexus has been established by the A.O. with the amount incurred by the Assessee for earning the tax free income. He has further noted that in the Assessee's case the interest income was more than interest expense and thus the Assessee was having net positive interest income and therefore the same cannot be considered for disallowance and for which he placed reliance on the decision of Kolkata Tribunal in the case of Trading Apartment Limited and the decision of Tribunal in the case Morgan Stanley India Securities Private Limited. He however considered the administrative expenses to be 0.5% of the average investments and disallowed the same. 8. Before us the Revenue could not bring any material on record to controvert the findings of CIT(A). We therefore find no reason to interfere the order of CIT(A). Thus this ground of the Revenue is dismissed.
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