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2016 (1) TMI 253 - ITAT MUMBAI

2016 (1) TMI 253 - ITAT MUMBAI - TMI - Treatment of capital gains as business income - Held that:- There is no dispute that in the Assessment Years 2004-05, 2006-07 & 2007-08 the STCG/LTCG have been assessed as such while making the order under section 143(3) of the Act. We also find that the facts and issues before us are identical to the facts considered in earlier assessment years. Therefore, in our considered opinion on identical set of facts when the law has not changed the Revenue Authorit .....

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avour of assessee.

Additions made by the AO by treating exempt profit on sale of agricultural land as taxable income - Held that:- Since the population of village Ramshej where the impugned land is situated is only 2929 as per the report of the Tahasildar, in our understanding of law the said land has to be treated as agricultural land outside the purview of the definition of capital asset. We accordingly set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition .....

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capital gains as business income. 2. The return for the year under consideration was selected under CASS and accordingly statutory notices were issued and served upon the assessee. 3. While scrutinising the return of income the AO noticed that the assessee has offered income under the head Capital Gains . The assessee was asked to furnish reasons as to why the income from short term capital gains should not be treated as Income from Business . Vide a letter dated 11.12.10, the assessee strongly .....

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and options segment of the share market. The AO further observed that the holding period of the assessee ranges from a short period of one day to 200 days, therefore, the contention of the assessee that he is an investor cannot be accepted. The AO accordingly treated the capital gains offered as STCG/LTCG as Business Income of the assessee. 4. Assessee carried the matter before the Ld. CIT(A) and reiterated his claim. However, the Ld. CIT(A) did not concur with these submissions of the assessee .....

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y different view as taken in earlier years. The Ld. Counsel further pointed out that the Ld. CIT(A) has erred in stating that the assessee has used borrowed funds. Drawing our attention to the balance sheet, the Ld. Counsel pointed out that the assessee was having sufficient own funds for making investments in the shares. It is the say of the Ld. Counsel that considering the past history of the assessee the claim of STCG/LTCG should be accepted. 6. We have carefully considered the orders of the .....

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venue Authorities should not take a different view. This is against the rule of consistency as laid down by the Hon ble Supreme Court in the case of Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax [1992] 193 ITR 321 (SC). 7. Considering the facts in totality in the light of the ratio laid down by the Hon ble Supreme Court (supra), we direct the AO to treat the gains under the head STCG/LTCG . Ground No.1 is accordingly allowed. 8. Ground No.2 relates to the direction of the Ld. CIT(A .....

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ansactions on behalf of its client, and buys and sells shares on behalf of the client . The Ld. CIT(A) at page 10 further observed that respectfully following the case of Delhi ITAT, the AO is also directed to treat all gains from PMS as Income from Business . 9. At the very outset, we have to state that since the Ld. CIT(A) has heavily relied upon the decision of the Tribunal in the case of Radials International (supra) we have to see from the outcome of the decision of the Tribunal. We find th .....

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sion of the Tribunal and since the decision of the Tribunal has been reversed by the Hon ble High Court, respectfully following the decision of the Hon ble High Court of Delhi (supra), we direct the AO to treat the gains under the head STCG/LTCG . Ground No.2 is accordingly allowed. 11. Ground No.3 relates to the additions made by the AO by treating exempt profit on sale of agricultural land as taxable income. 12. During the course of the scrutiny of assessment proceedings and after perusing the .....

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should not be taxed. The AO also deputed Income Tax Inspector to verify land records. The AO also called for the report from the Tahasildar. The AO found that the Tahasildar s report states that the land is 5 kms from the municipal corporation. The assessee was made available this report of the Tahasildar and was asked to explain as to why the gains should not be taxed. On receiving no plausible reply, the AO treated the gains as the STCG. Aggrieved by this, the assessee carried the matter befo .....

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