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2022 (2) TMI 437 - HC - Income TaxCorrect head of income - gain on purchase and sale of shares and security had to be assessed under the head of “capital gain” or “income from business” - Tribunal treating the income from trading in shares as capital gains and not business income - proceedings initiated under Section 263 were dropped - HELD THAT:- We note that the contention of the revenue that the shares and mutual funds that were sold during the year which resulted in the income has been shown as stock in trade and not an investment is a factually incorrect submission.On going through the order passed by the Tribunal therein we find that the Tribunal has recorded that it has been held as an investment and not as a stock in trade. Similar finding has also been rendered by the CIT. Therefore, the said contention cannot be accepted. Volume of transaction - Volume of transaction cannot have any impact to consider as to whether the transaction would give rise to short-term capital gain or not. This aspect of the matter was rightly dealt with by the Tribunal by taking note of the fact that similar transactions were accepted by the department for the previous year and the subsequent assessment year as giving rise to capital gain and not as business income. In fact, for the subsequent investment year 2007-08, proceedings initiated under Section 263 were dropped by the CIT on being satisfied with the nature of the transaction. Hence, if the same volume of transactions were not the subject matter of any review by the authorities, a solitary stand cannot be taken for the assessment year under consideration alone. In any event, the volume of transaction cannot have any impact to assess as to whether it would give rise to short-term capital gain especially when the fact is not in dispute that the assessee is engaged in the business of making investment in shares, mutual funds and debentures etc. for several years. Therefore, the second contention raised by the revenue also is not tenable Plea of res judicata - Tribunal rightly noted the law that rule of res judicata is not applicable to income tax proceedings but the principle of consistency will definitely apply. In the preceding paragraphs we have set out the facts to show as to how the department has examined the returns filed by the assessee for the previous assessment year and the subsequent year. Therefore, we find that there cannot be different yardstick for the assessment year under consideration when facts and circumstances are identical. - Decided against revenue.
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