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2015 (10) TMI 392 - ITAT MUMBAIIncome from sale of shares - income from business OR short term capital gains - Held that:- From the record we found that assessee has disclosed shares as investment in the balance sheet, there is no claim of any expenses while computing capital gains which demonstrates the intention of the assessee to treat the shares and securities as investment and not as stock-in-trade. No borrowed interest bearing funds was invested in shares except for making investment in one security on long term basis. The said fact was also explained to the AO and the AO has not disputed the same while accepting assessee's claim of long term capital gains. CBDT in its Instruction No 1827 dated 31.08.1989 has laid down certain criteria to determine whether an activity of purchase & sale of shares/securities is in the nature of trading activity or investment activity. One of the criteria laid down is the treatment given by the assessee in its books of account as a trading asset or investment; treatment given in the books is indicative of assessee's intention whether to hold the shares with a view to earn dividend & long term appreciation or with a view to carrying on as business. Even various Courts and Tribunals have approved that treatment given by the assessee in its books of account as a vital factor to decide whether the assessee is a trader or an investor. We also found that the assessee has regularly treated shares as investment in the earlier year and has offered gain on sale of shares under the head "capital gain". In the case of Gopal Purohit (2010 (1) TMI 7 - BOMBAY HIGH COURT), the Hon'ble High Court also accepted tribunal's observations that the principle of res judicata is not attracted since each year is separate in itself. However, there ought to be uniformity in treatment and consistency when the facts and circumstances are identical, particularly in the case of the assessee. No merit in the action of the AO for not accepting assessee's claim for short term capital gains while accepting the long term capital gains on the similar investment made in earlier years. - Decided in favour of assessee.
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