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2009 (4) TMI 556 - AT - Income TaxIncome from share trading - business income or capital gain - Principle of consistency - shares and other securities have been shown under the head "Investment" - Apart from that the assessee had also shown long-term capital on shares and mutual funds - earned substantial dividend income and the investment in shares was made out of owned funds and not borrowed capital - average period of holding in respect of shares from the short-term capital gains was stated to be 122 days - AO did not find any weight in this submission and held that simply because in the earlier years income was shown under the head ‘Capital gains’, which fact was admitted by the Revenue, was not binding in the subsequent years - AO hold that the income shown by the assessee as short-term capital gain was liable to be taxed under the head "Profits and gains of business or profession" - CIT(A) upheld the assessment order. HELD THAT:- We hold that since in identical circumstances the Revenue authorities have accepted the profit arising from the sale of shares as short-term capital gain in the assessment made u/s 143(3), there is no reason as to why a different treatment be given in this year. It is true that res judicata is not applicable in the income-tax proceedings, but at the same time we cannot brush aside the ‘principle of consistency’, which requires that when the facts and circumstances continue to remain the same, then there should not be any variation in the treatment from the earlier year. We therefore, respectfully following the orders in Gopal Purohit v. Jt. CIT [2009 (2) TMI 233 - ITAT BOMBAY-G], set aside the impugned order and direct that the profit on sale of shares offered by the assessee as short-term capital gain be accepted as such. It is however directed that AO shall ensure that the transactions resulting into the amount of long-term capital gain claimed as exempt u/s 10(38) and the short-term capital gain taxable at the reduced rate of 10 per cent u/s 111A have duly suffered the securities transactions tax (STT) and further the assessee has not claimed any benefit u/s 88 in respect of such STT. This ground is allowed for statistical purposes. Disallowance on set off - short-term capital loss on mutual funds against the short-term capital gain on shares - rectification order by AO u/s 154 by which the short-term capital loss was considered while calculating the business income - HELD THAT:- As No copy of the said order passed u/s 154. Thus it is clear that the relevant material about the allowing of set off of the loss from the short-term capital gain is not available before us. We, therefore, set aside the impugned order on this issue and remit the matter to the file AO for considering the allowability or otherwise of set off of short-term capital loss subject to the provisions of section 94(7), after allowing a reasonable opportunity of being heard to the assessee.
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