M/s. Satellite Mercantiles Private Limited v. Commissioner of Income-tax-II, Kolkata
[Citation -2015-LL-0115-8]

Citation 2015-LL-0115-8
Appellant Name M/s. Satellite Mercantiles Private Limited
Respondent Name Commissioner of Income-tax-II, Kolkata
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 15/01/2015
Judgment View Judgment
Keyword Tags sale transaction • stock-in-trade • capital gain
Bot Summary: The Court : The subject matter of challenge in this appeal at the instance of the assessee is an order dated 30th June, 2014 by which the learned Tribunal dismissed an appeal of the assessee. Subsequently on 07.04.2008 the shares were sold and the assessee claimed short term capital gain of Rs.66,20,920/-. Now when the shares have been sold in such a short period and the shares are being dealt with by the assessee both trading and investment account the onus is on the assessee to prove that these shares have been dealt with on investment account. The fact remains that the assessee has purchased and sold these shares within a period of one week s time and gained Rs.66,20,920/-. The learned Tribunal evidently held that the assessee has been dealing in shares both in the trading and investment account and the assessee has failed to prove that the shares in question were dealt with in the investment account. 4 Mr. Khaitan learned Senior Advocate submitted that it is not a fact that the assessee has failed to prove that the shares were dealt with in the investment account. Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, 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.


ORDER SHEET GA No.3733 of 2014 ITAT No.194 of 2014 IN HIGH COURT AT CALCUTTA SPECIAL JURISDICTION ( INCOME TAX) ORIGINAL SIDE M/S. SATELLITE MERCANTILES PRIVATE LTD. Versus CIT, TAX-II, KOLKATA BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 15th January, 2015. Appearance: Mr. J. P. Khaitan, Sr. Adv. Mr. P. Jhunjhunwala, Adv. Mr. C. S. Das, Adv for appellant. Ms. Asha G. Gutgutia, Adv For respondent. Court : subject matter of challenge in this appeal at instance of assessee is order dated 30th June, 2014 by which learned Tribunal dismissed appeal of assessee. facts and circumstances of case, briefly stated, are that on 31st March, 2008, it is alleged, shares were purchased, on 3rd April, 2008, delivery was taken and on 7th April, 2008 2 shares were sold at profit of sum of Rs.66,20,920/-. assessee claimed aforesaid income to be short term capital gain whereas at all three stages contention of revenue succeeded that profit was business income. learned Tribunal has given following reasons. shares in M/s. Gujarat NRE Come Ltd. are said to be purchased on 31.03.2008. However, in balance sheet for financial year 2007-08 this purchase has not been accounted for. Hence there is no classification of these shares as investment in assessee s accounts in year of purchase. Subsequently on 07.04.2008 shares were sold and assessee claimed short term capital gain of Rs.66,20,920/-. Hence it is evident that purchase and sale transaction in shares have been completed in period of one week s time. purchases made in earlier period has not been accounted for in earlier period and consequently same were not classified as investment. Now when shares have been sold in such short period and shares are being dealt with by assessee both trading and investment account onus is on assessee to prove that these shares have been dealt with on investment account. We find that there is no evidence whatsoever in this regard submitted by assessee 3 except claim that investment in shares were authorised by board resolution. As held by Hon ble Apex Court in case of Associated Industrial Development Co. Ltd. (supra), whether particular holding is by way of investment or formed part of stock in trade is matter which is within knowledge of assessee and it is for assessee to produce evidence from his records as to whether he maintained any distinction between shares which were held by him as investments and those held as stock in trade. In this case assessee has not produced any such evidence. fact remains that assessee has purchased and sold these shares within period of one week s time and gained Rs.66,20,920/-. Though purchased in previous year they were not accounted for or classified as investment. This coupled with fact that entire purchase has been sold shows that assessee has never intended to keep these shares as investment. In these circumstances we do not find any infirmity in order of ld.CIT(A) and accordingly we uphold same. learned Tribunal evidently held that assessee has been dealing in shares both in trading and investment account and assessee has failed to prove that shares in question were dealt with in investment account. 4 Mr. Khaitan learned Senior Advocate submitted that it is not fact that assessee has failed to prove that shares were dealt with in investment account. He submitted that resolution adopted by Board of Directors required under Section 292 of Companies Act, dated 31st March, 2008, was there on record and was duly considered, therefore, distinction was in fact made and was also proved. shares are claimed to have been purchased on 31st March, 2008. Admittedly in books of accounts for financial year ended on 31st March, 2008 there is no reference to this purchase. Why is there no such reference is sought to be explained by Mr. Khaitan before us by stating that neither delivery was received on 31st March, 2008 nor was any payment made. Both these things took place on 3rd April, 2008 as will appear from contract note. Delivery and payment may have been made on 3rd April, 2008, but it is case of assessee himself that purchase was made on 31st March, 2008. Therefore, purchase should have been reflected in books of accounts for financial year ended on 31st March, 2008 which assessee admittedly did not do. Merely on basis of resolution relied upon by Mr. Khaitan, learned Tribunal was not prepared to hold that any real distinction was made by assessee himself. Mr. Khaitan relied upon judgement in case of CIT (Central), Calcutta V. Associated Industrial 5 Development Co.(P.) Ltd., [1971] 82 ITR 586 wherein following views were expressed: It can hardly be disputed that there was no bar to dealer investing in shares. But then matter does not rest purely on technical question of onus which undoubtedly is initially on revenue to prove that particular item of receipt is taxable. Whether particular holding of shares is by way of investment or forms part of stock-in-trade is matter which is within knowledge of assessee who holds shares and it should, in normal circumstances, be in 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. Merely on basis of resolution dated 31st March, 2008, it could not have been established that transaction was intended to be investment and not trading activity. judgment in case of Associated Industrial Development Company (P) Ltd (supra) does not lend any assistance to appellant because question essentially is question of fact which has conclusively been decided by Tribunal against assessee. view taken is, by no stretch of imagination, perverse. 6 Certainly it is possible view. Therefore, no interference is called for. appeal is, accordingly, dismissed. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) cs. M/s. Satellite Mercantiles Private Limited v. Commissioner of Income-tax-II, Kolkata
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