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2013 (2) TMI 352 - AT - Income TaxJurisdiction u/s 263 by CIT(A) - directing AO to consider the issue of loss in derivative trading - AO treated the entire short term capital gain as business income and accepted the long term capital gain as such - assessee is dealing in shares and securities maintains dual portfolios, one in trading and another for capital investment - Held that:- As in the assessment years 1995-96 the capital gain was assessed as business profit by the AO as upheld by CIT(A) also confirmed by Tribunal & Hon’ble High Court too. In the assessment years 1996-97, 2001-02, 2002-03, AO himself has accepted the claimed capital gain / loss in the assessment framed u/s 147(3). In assessment year 2003-04 the AO treated "capital loss" as speculative business loss by applying provisions of Explanation to section 73. The Tribunal gave a categorical finding that assessee is doing both the business as well as investment activities in shares uphelding the claim of capital loss and held that the provisions of Explanation to section 73 cannot be applied to capital loss. In the assessment year 2005-06 the AO treated the short term capital gain as business profit. The CIT(A) allowed the assessee’s appeal upheld the short term capital gain also upheld by Tribunal. In the assessment year 2006-07 long term capital gain has been accepted by the AO. Only short term capital gain was disputed by the AO. The CIT(A) allowed assessee’s appeal. And the revenue went in appeal before the Tribunal which has been dismissed. In the assessment year under consideration the material fact also remained that the AO accepted the claimed long term capital gain in the order framed u/s 143(3). The CIT(A) keeping in view the past history of the case has also accepted the assessee’s claim of short term capital gain. The revenue in its appeal before the Tribunal has not raised any ground on the issue of capital gain. Thus as decided in the case of CIT vs. M/s. Escorts Ltd. (2011 (2) TMI 579 - DELHI HIGH COURT) where the nature of transactions have been accepted in the past, the CIT could have had no occasion to take recourse to revisionary powers u/s 263 on the fundamental aspect of the transactions in issue on which a view has been taken in earlier years. As per the past history of the case and in accordance with the principle of consistency, we are of the view that the only view which the AO could have taken was to accept the long term capital gain as such - thus assessment order in question was not erroneous as the AO has accepted the claimed long term capital gain and loss in derivative trading after conducting inquiry thereto and thus the assessment order cannot be held erroneous and thus also prejudicial to the interest of revenue - set aside the revisionary order - in favour of assessee.
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