TMI Blog2014 (7) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... t Revenue. Deduction under house property – Held that:- The assessee has made initial claim of deduction of interest of ₹ 15 lakhs on the borrowings which were utilised for acquiring residential premises as deductible business expenditure u/s 36(1)(iii) - the assessee filed revised statement of computation of income whereby the claim of ₹ 15 lakhs was given up and was disallowed by the assessee himself and instead interest claimed of ₹ 1.50 lakhs was made under section 24(b) which was the legally correct claim while computing the income from house property - Even if such a claim has been rejected by the AO on the ground that the same should have been made by way of revised return of income, however, the same does not put any fetters on the powers of the appellate authorities to entertain such a legal claim if all the facts necessary for the adjudication are available on records – Relying upon Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] - no new claim of interest has been made except for the fact that the right amount of interest has been claimed under the head "interest" and the amount of claim made in the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case for the assessment year 2006 07, passed in ITA no.5662/Mum./2009. 3. Facts in brief: The assessee is an individual having income from salary in the capacity of a director in C.M. Securities Pvt. Ltd., business income from consultancy fees and also trading in future and options. Besides this, the assessee has also shown income from the head capital gains and interest income . Break up of various heads of income shown by the assessee were as under:- Salary Business income ₹ 5,97,500 Consultancy fee ₹ 20,00,000 Profit from F O transactions ₹ 2,84,80,530 Profit from intraday transactions ₹ 11,29,056 Interest on FDs ₹ 1,04,537 ₹ 3,17,14,123 Expenses claimed ₹ 89,30,640 ₹ 2,27,83,483 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,136 Upto 1 week 47.66% 11,24,636 Upto 1 month 31.11% 7,62,504 Upto 6 months 21.09% 5,098 More than 6 months 0.14% 36,15,374 6. The main contention of the assessee before the Assessing Officer were as under: 1. That the appellant is a whole time director of the Company and is involved in day to day affairs of the Company; 2. That due to his active participation in day to day affairs of the Company, the profitability of the Company has improved considerably; 3. That neither there is large scale activity nor regularity of activity; 4. That the appellant did only 120 transactions when the stock exchange was open for transactions almost 250 days during the year; 5. That the appellant has applied his knowledge and there by made investment in shares of companies which were potentially sound companies; 6. That sales of shares was mainly of the nature of switch over transaction; 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn by the Tribunal are as under:- 17. We have considered the rival submission. We have considered the rival submissions. The issue to be decided is as to whether the STCG on transaction of purchase and sale of shares undertaken by the assessee during the previous year is to be assessed under the head 'income from business' as claimed by the revenue or income under the head 'capital gain' as contended by the assessee. Before we deal with the facts of the case of the assessee, we will briefly narrate the principles applicable in deciding the above issue as laid down in several judicial pronouncements:- (a) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the nature of investments is mixed question of law and fact. CIT Vs. Holck Larsen, 60 ITR 67 (SC). (b) It is possible for an assessee to be both an investor as well as a dealer in shares. Whether a particular holding is by way of investment or formed part of stock in trade is a matter which is within the knowledge of the assessee and it is for the assessee to produce evidence from his records as to whether he maintained any distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n number during the previous year. The Number of shares dealt with by the Assessee was 30,79,124. The holding period was as follows: No. of Shares Holding period % of total 770317 Upto 1 week 25% 874619 Upto 1 month 28% 1275061 Upto 6 months 42% 159127 More than 6 months 5% The factors which go in favour of the Assessee that the income in question is short term capital gain (STCG) are as follows: 1. The fact that in the earlier AY i.e., AY 05-06, on identical volume of transaction, the AO in Assessment u/s.143(3) of the Act, accepted the case of the Assessee that income from purchase and sale of shares is STCG and not business income. The facts as it prevailed in the earlier year were as follows: A.Y. 05 06 A.Y. 06 07 No. of scrips dealt with by the assessee 23 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough in that year also, the Assessee indulged in non-delivery based transactions. 2. The holding period being very short it is reasonable to presume that the purchase was made with an intention to resell. The submission of the Assessee on this aspect is that the holding period is much longer than AY 05-06 3. The scale of activity is substantial. The submission of the Assessee is that the same is because of increase in sensex from 6000 points to 11000 points. 4. The transactions were continuous and regular besides being systematic. The submission of the Assessee is that there were only 148 transactions carried out on 96 days during the previous year. 5. Borrowed funds had been used for purchase of shares. The submission of the Assessee has been that there is no bar to use borrowed funds to make investments. Besides the above, on the same set of facts, the revenue allowed the claim of the Assessee in AY 05-06. 6. Substantial time devoted by the assessee to the activity of purchase and sale. The Assessee did not devote time because the knowledge which gained in the course of his service was used. 7. The shares sold and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b), therefore, does not also raise any substantial question. 15. The above decision of the Hon'ble Bombay High Court is clearly applicable in this case. As we have already seen that the AO in AY 05-06 raised a specific query on the issue whether the STCG declared by the Assessee has to be assessed as business income and the AO after discussion accepted the plea of the Assessee and assessed income declared on purchase and sale of shares as giving raise to STCG. We have also seen that the facts and circumstances in the AY 05-06 are identical. Though the rule of res judicata is not applicable but the principle of consistency will definitely apply and on that basis the claim of the Assessee should be held to be proper. If at all the only factor which may go against the Assessee is the fact that the volume of shares transacted and their value is high in the present A.Y. On this aspect, we find that the CIT(A) had relied on the decision of the Hon'ble ITAT Mumbai Bench decision in the case of Janak S. Rangwala Vs. ACIT 11 SOT 627 (Mum) wherein it has been held that magnitude of the transaction does not alter the nature of the transaction. 16. For the reasons giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parabolic Springs Ltd., [2008] 306 ITR 42 and the decision of Hon ble Punjab Haryana High Court in CIT v/s Ramco International, in ITA No.417 of 2008, judgment dated 8th December 2008, wherein the High Courts have duly considered the decision of the Hon'ble Supreme Court in Goetze India Ltd. (supra). The learned Commissioner (Appeals) allowed the assessee s claim for deduction of ₹ 1.50 lakhs from the income from house property on the ground that firstly, similar issue was decided in the earlier year i.e., in the assessment year 2007 08 and, secondly all the necessary decisions for allowing such claim is available on the record and such a claim can be entertained at the appellate stage. 14. The learned Departmental Representative relied upon the order of the Assessing Officer and submitted that the claim can only be made by way of revised return of income and not otherwise and if such a claim cannot be entertained by the Assessing Officer, then the same cannot be mad in the appellate stage. 15. On the other hand, the learned Counsel for the assessee relied upon the order of the learned Commissioner (Appeals). 16. We have carefully considered the rival contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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