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2016 (8) TMI 805 - ITAT MUMBAI

2016 (8) TMI 805 - ITAT MUMBAI - TMI - Income earned by the assessee out of share transactions - treated as capital gains or business income - Held that:- The assessee can hold both the portfolio i.e. that of the investor and that of the trader. Although, the assessee in this case had not kept separate accounts regarding its business activity but has treated all the purchases as its investment, however, the learned CIT (A) after going through the transactions in question and considering the expl .....

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OUNTANT MEMBER AND SRI SANJAY GARG, JUDICIAL MEMBER For The Revenue : Shri Jeevan Lal, DR For The Assessee : Shri Apurva R. Shah, AR ORDER Per Sanjay Garg, Judicial Member: Out of the above captioned two appeals, the appeal in ITA No. 2495/M/2014 by the assessee and the other appeal in ITA No.3815/2014 preferred by the Revenue are against the order of the learned Commissioner of Income Tax (Appeals)-27, Mumbai, [hereafter referred to as the CIT (A) ] dated 06-03-2014 for assessment year 2009-10. .....

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ner. The total borrowed funds received by the assessee during the year were ₹ 1.54 Crores and out of which a sum of ₹ 64.00 lacs was returned . The assessee had received dividend income from fived companies amounting to ₹ 2,67,981/-. The AO further noted that the assessee had indulged in trading of shares pertaining to 36 companies. He observed that the volume of the transactions was very high whereas the dividend income was very low. Apart from that, the AO had observed that t .....

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ties. He, therefore, treated the short term capital gains claimed by the assessee as business income of the assessee. However, he did not disturb the claim of the assessee regarding long term capital gains. Being aggrieved by the above order of the AO, the assessee preferred appeal before the learned CIT (A), who after considering the overall facts and circumstances of the case, observed that the stock of shares was always reflected by the assessee as investment in its books of account and the s .....

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venue as an investor. The long term capital gains and short term capital gains offered by the assessee for earlier assessment years 2008-09 and 2009-10 were accepted as such by the Department. Even, the assessee had earned substantial long term capital gains of ₹ 22.00 lacs during the year which showed that the intention of the assessee was that of an investor. All the share transactions were on delivery basis and there was no speculative trading. He, therefore, relying upon the decision o .....

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ed that in certain transactions, there was churning of the portfolio, i.e. there were purchase, sale, re-purchases and re-sales of the same scrip within a short span of time. He, while relying upon the decision of the ITAT, Mumbai in the case of ACIT Vs. Veena S. Kalra in ITA No.2403/Mum/2012 Order dated 10-07- 2013 held that the intention of the assessee in relation to the transactions wherein he had re-entered in sale and purchase of the same scrips within a short span of time was not that of .....

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ich there was churning of portfolios. On the other hand, the assessee has come in appeal agitating the action of the CIT(A) in holding that income from repetitive transactions of ₹ 10,17,065/- is taxable as business income of the assessee. 4. We have heard the rival submissions and have also gone through the records. The learned CIT (A) has categorically observed that the assessee in the past has consistently been treated as investor. The assessee during the year under consideration has ea .....

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had shown losses, the AO had treated the assessee as an investor. However, during the year under consideration, the assessee having earned positive income from share transactions, the AO treated the same as business income. This inconsistent approach of the AO, in our view, cannot be appreciated. The Hon ble Bombay High Court in the case of Gopal Purohit (supra) has categorically held that the Department should take a consistent approach if the nature of the activity is identical in the subsequ .....

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