Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2009 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (5) TMI 925 - AT - Income TaxTreatment to sale of shares - Capital gain or business income - Principles of Res Judicata - frequency of transaction - Whether the activity of the assessee constitute the activity as a business or as an investor? - Assessee is indeed in dealings in investment in shares in past for many years. The main thrust of the argument of the learned counsel is that no borrowed funds are used for purchasing the shares which were held as an investment. HELD THAT:- On the perusal of the balance sheet filed by the assessee, we find that the assessee has shown the investment in shares under the head 'Investment' and not as 'stock-in-trade'. It is true that the principles of res judicata do not apply to income-tax proceedings as each and every assessment year is treated as a separate one. As in strict sense, what is decided in one year may not apply in the following year, but, where a fundamental aspect for permeating through the different assessment years has been found as a matter of fact one way or the other, and parties have allowed such position to be sustained then as held by the Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT[1991 (11) TMI 2 - SUPREME COURT], the position should not be allowed to change in the subsequent year merely because on the same set of facts, different view is possible. Another aspect to be considered here is that the assessee has not borrowed any money for making the investment in the shares. Moreover, the assessee is consistently holding shares as an investment which is always accepted by the AO in the past. In our opinion, there is no justification for treating the activity of the assessee of purchase and sale of the shares as a 'business' merely on reason of the volume of the transactions. As per well settled principles of law, the frequency of the transactions cannot be per se decisive - We answer this issue in favour of the assessee and direct the AO to treat the profit and gain on the sale of the shares as a capital gain and not as a business income. As both the authorities below have only considered whether the profit declared on the sale of the shares is to be assessed as a business income, both the authorities have not considered the another plea of the assessee as well as computation of the short-term capital gain and long-term capital gain declared by the assessee. We, therefore, consider it fit to restore this issue for the limited purpose of verifying the quantum of short-term capital gain as well as long-term capital gain as declared by the assessee to the file of the AO whether the same has been correctly computed. At the same time, the AO is also directed to consider the claim of the assessee regarding concessional rate of tax u/s. 111A in respect of short-term capital gain as well as u/s. 112 in respect of long-term capital gain and accordingly, work out tax liability of the assessee. Assessee's appeal is allowed.
|