TMI Blog2011 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... bate allowed u/s.88E of the I.T. Act by order u/s. 154 dated 03.02.2009 so far as it relates to capital gain - The appeal of the Revenue is dismissed. - I.T.A. No. 6429/Mum/2009. - - - Dated:- 25-2-2011 - Shri N.V. Vasudeval, Shri J. Sudhakar Reddy, JJ. Department by : Shri S.K. Mohanty. Assessee by : Shri Pramod Kumar Parida and Ms. Sanjukta Chowdhary. O R D E R Per J. Sudhakar Reddy, A.M. : This is an appeal filed by the Revenue directed against the order of the CIT(Appeals)-35, Mumbai dated 29-09-2009 on the following ground : On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to accept the claim of Short Term Capital Gain and Long Term Capital Gain on profit arriving from purchase sale of shares instead of business income treated by the A.O. without appreciating the fact that the assessee is dealing in large volume of shares, most of the shares are bought and sold within short period, while some are not sold due to market conditions and their holding with assessee remains beyond few days, it will not change the nature of transactions and the assessee is very well engaged in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gain 2984062 4.1.3 In addition to this, as per the statement of trading in shares filed along with the return of income it is observed that assessee has speculated in various scrips thereby earning a speculative profit of Rs.1,10,469/-. The assessee has also traded in futures and options and earned a profit of 9,90,189/- and netted a brought forward speculation loss of Rs.5,29,282/-. Thereafter the AO by relying on number of case laws as well as after quoting Circular No. 4 of 2007 dated 15-06-2007 of the CBDT, held that the income arising from purchase and sale of shares is to be assessed as business income. Aggrieved, the assessee carried the matter in appeal. The first appellate authority after considering the arguments of the assessee, held that the income in question is assessable under the head Capital Gains . Aggrieved, the Revenue is in appeal. 3. The cross objection filed by the assessee is only to support the order of the first appellate authority. 4. We have heard Mr. S.K. Mohanty, learned DR on behalf of the Revenue and Mr. Pramod Kumar Parida, learned counsel for the assessee. 5. On a careful consideration of the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be assessed under the head business. The Hon ble Hyderabad Tribunal in the case of Shah-La Investments and Financial Consultants Pvt. Ltd. vs. Dy. CIT (2 SOT 371) held that there is no bar for the same assessee to do business in shares and hold some shares as investment. Further as contended by the representative, the appellant has no borrowed funds either as on 31.03.2005 or as on 31.03.2006 as per the balace sheet whereas the A.O. held in the Assessment order as [para 4.1.5] that the appellant borrowed loans for the purpose of doing share business which is totally incorrect. Further the appellant has brought to the notice of the A.O. by letter dated 15.10.2008 that the shares on which long term capital gain was offered were held for more than 3-5 years and the same are shown as investment in the balance sheet, but the A.O. held that only some shares were held for more than a month and other shares were held for a very short period. Even in respect of short term capital gain, the appellant had already submitted before the A.O. they were held for atleast 2-5 months and further submitted the details of demat account to prove this claim. But the A.O. merely held that the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our view, in the facts and circumstances of the case, on the basis of principle of consistency alone, the action of the Revenue Authorities is liable to be quashed. . 5.3 Further, the Hon ble Mumbai ITAT in the case of Janak S. Kangwala vs. ACIT (11 SOT 627) held as under on the principle of consistency and the issue of magnitude of transactions: The mere volume of transaction transacted by he assessee would not alter the nature of transaction. It is an established principle that income is to be computed with regard to the transaction. The transaction in whole has to be taken into consideration and the magnitude of the transaction does not alter the nature of transaction. Though the principle of res judicata does not apply to the income-tax proceedings as each year is an independent year of the assessment but in order to maintain consistency, it is a judicially accepted principle that same view should be adopted for the subsequent years, unless there is a material change in the facts. Their lordships of Hon ble Supreme Court in the Radhasoami Satsang v CIT [1992] 193 ITR 321 have categorically held as under : Strictly speaking, resjudicata does not apply to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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