9911796707
TMI Blog2013 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... .14,91,740/- made by the A.O. on account of short term capital gain and long term capital gain. 3. During the course of assessment proceedings on perusal of the computation of income A.O. noticed that assessee has shown short term capital gain of Rs.5,10,220/- and exempted long term capital gain of Rs.9,81,520/-. The assessee was asked to furnish the details of investment made in share, securities etc. On verification of the details the A.O. noticed that assessee has earned a dividend of Rs.1,38,169/- He also observed that during the year the purchase of shares was to the extent of Rs.2,65,70,954/- and the sale of shareswas of Rs.2,81.88,673/-. The net profit earned by the assessee on the sale of shares was to the tune of Rs.14,91,740/-. He further noted that assessee had entered in the sale and purchase transaction in 266 scrips. (151 for short term capital gain and 115 for long term capital gain). He further noted that the assessee was holding majority of the scrips for a very short period. In view of these facts the A.O. was of the view that the frequency of transactions proved the business motive of assessee. He was further of the view that the investment in shares and securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee who could also add the business of trading in shares to his already existing businesses yet, in order to judge whether the surplus earned from the sale of shares was in the nature of capital gain or business income as held by the AO, it is necessary to examine very carefully in the facts of the Assessee's case. 5.1 The CBDT has issued Circular No.4 of 2007 dtd. 15.6.2007 for the express purpose of enabling the Assessing Officers to decide as to whether the income on sale of shares is in the nature of capital gain or business income. For this purpose, the Circular has laid down certain parameters against which the facts of the Assessee's case have to be necessarily examined. While the AO has only made very sweeping reference to the said Circular and has not really examined the specific facts of the Assessee's case against the specific parameters laid down in the said Circular, the AR, in the chart which has been reproduced earlier in this order, has provided very specific details and facts to argue that according to the parameters laid down in the said Circular, the Assessee could only be treated as an investor in shares and the income therefrom could only be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No. 2801/Mum/2000 for the A.Y. 1995-96 wherein it has been held as follows:- "...In the case of Shri Janak S. Rangwala (supra), the tribunal has decided similar issue in favour of the assessee by holding that mere magnitude of the transaction does not change the nature of transaction. In the present case, the facts are similar with the facts in these judgements, wherein the Tribunal has decided similar issue in favour of the assessee. The assessee was consistently following this practice of holding some shares as 'stock in trade' and other shares as 'investment' and assessee is regularly offering the income on sale of shares held as stock in trade under the head 'business income' and income on sale of shares held as investment is offered to tax by the assessee under the head capital gains on regular basis. Balance sheet of the assessee shows that the assessee is showing investment separately under the head investment and shares held as stock in trade are shown under the head stock in trade. This fact is also worth noting that the shares held by the assessee as stock in trade is being valued by the assessee at lower of cost or market price; whereas, the shares held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s simply no basis for the AO to treat the short term and long term capital gains totaling Rs.18,17,901 as business income of the Assessee. The AO is directed to accept the Assessee's claim of STCG of Rs.16,19,876 and LTCG of Rs.1,98,025." 5.1 Following the finding given by me in the Assessee's own case for the A.Y. 2006-07, I hold that there was no justification in the action of the AO in treating the LTCG of Rs.9,81,520 and STCG of rs.5,10,220 as business income of the Assessee. The addition of the sum of rs.14,91,740 will therefore stand deleted." Aggrieved by the order of CIT(A) the Revenue is now in appeal before us. 5. Before us, at the outset, ld. A.R. submitted that for A.Y. 2006-07 Revenue had preferred appeal before Hon'ble ITAT. The ITAT vide its order dated 20.04.2012 in ITA No.2891/Ahd/2009 has remitted the matter to the file of CIT(A). He therefore submitted that following the order of A.Y. 2006-07 in the current year a similar view be taken for A.Y. 2007-08. 6. Ld. D.R., on the other hand, submitted that considering the volume of transactions entered by the assessee which was in excess of Rs.2.5 crores and the number of scrips in which the assessee had traded and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain as business income then computation has to be made in accordance with Section 28 of Act. We feel that under the aforementioned facts and circumstances it would be appropriate in the interest of natural justice that matter is remitted back to the file of the Ld. CIT(Appeal) and we hereby set aside the impugned order. Ld. CIT(Appeal) is directed to pass a speaking order after giving opportunity of hearing to the concerned parties. In the result the appeal of the revenue is allowed for statistical purpose."
8. Since in the present case CIT(A) while deleting the addition has followed his order for A.Y. 2006-07 and since for A.Y. 2006-07 the co-ordinate Bench has remitted the matter back to the file of CIT(A), we are of the view that in the present case also for similar reasons the matter be remitted to the file of CIT(A).
The reasoning given in the aforesaid order of coordinate Bench of Tribunal for A.Y.2006-07 squarely apply to the facts of the present case. We thus direct CIT(A) to pass a speaking order after giving reasonable opportunity of hearing to the assessee.
9. In the result, the appeal of the Revenue is allowed for statistical purpose. X X X X Extracts X X X X X X X X Extracts X X X X
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