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Smt. Darshana B. Doshi Versus ACIT, Circle-13 (3) , Mumbai

2016 (10) TMI 347 - ITAT MUMBAI

Gain arising from sale of shares - capital gain or business income - Held that:- There is categorical finding that the Department had been accepting the stand that the assessee was consistently investing in shares and the capital gains, offered by the assessee was assessed either as long term gain or short term gain while passing order u/s 143(3) of the Act. Identical was the situation for A.Ys.2005-06 and 2006-07 framed u/s 143(3) of the Act and the same were found exempted u/s 10(38) of the Ac .....

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stor invest the money for gain and not for loss. - In the basis of principle of judicial discipline, consistency has to be followed and once in a particular year, if any view is taken, in the absence of any contrary material, no contrary view is to be taken as finality to the litigation is also a principle which has to be followed. Before us, no contrary facts or any adverse material was brought on record by the Revenue, therefore, on the principle of consistency also, the assessee is having .....

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ereon at maximum marginal rate. 2. During hearing the crux of arguments advanced by Shri M.S. Mahuria, Ld. counsel for the assessee is that the income may be treated as income from short term capital gains by explaining that the intention of the assessee is merely investment of all surplus funds in equity shares of domestic companies and no interest bearing funds were invested by the assessee. It was also contended that none of the public limited company, where investment was made, is controlled .....

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ch was allowed to be carried forward by the department. On the rule of consistency reliance was placed upon the decisions in Gopal Purohit vs. JCIT (2009) 29 SOT 117 (Mum) (which was affirmed by Hon ble Jurisdictional High Court in 336 ITR 287 (Bom) and SLP was dismissed by Hon ble Apex Court in (2011) 334 ITR (St.) 308 (SC)), Shantilal Jain vs. ACIT (2011) 132 ITD 466 (Mum), Dharmesh R. Shah vs. JCIT (2013) 60 SOT 182 (Mum), Kunverji Nanji Kenia vs. Addl. CIT (2010) 131 TTJ 87 (Mum) and another .....

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ya vs. ACIT (ITA No. 3520/Mum/2010) dt. 17.3.2016. 3. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee in its return of income has claimed short term capital gain of ₹ 45,86,071/- and long term capital gain of ₹ 58,002/- and further income from other sources was shown at ₹ 2,40,566/- and the same was claimed as exempt. However, the learned Assessing Officer treated the same as business income on the .....

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the Assessing Officer on the reasons stated in the assessment order which broadly are that the assessee is regularly and frequently dealing in shares and is doing systematic and organized activity of trading. It was further observed that the volume of transaction is huge, therefore, the assessee is engaged in commercial activity and the intention of the assessee is to earn profit. On appeal before the learned CIT(A) the stand taken in the assessment order was affirmed against which the assessee .....

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the assessee in the present assessment year was denied by the Assessing Officer merely on the premise that the assessee is involved in systematic and organized trading activity and huge quantity of share was purchased. So far as the frequency and holding period is concerned, this issue has been duly deliberated upon by the Tribunal in the case of Gopal Purohit which was affirmed by the Hon ble Jurisdictional High Court in 228 CTR 582 (Bom) and SLP of the Department was dismissed by Hon ble Apex .....

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. 5.4.2011) supports the case of the assessee. It is also noted that the assessee was holding the shares in its books as investment and did not have any office or administrative set up. There was not a single instance where the assessee had squared up the transaction on the same day without taking delivery of the shares. So far as the contention of the Assessing Officer as well as of the Ld. DR that there was large volume of purchase and sale of shares by the assessee is concerned, we are of the .....

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liquidating his investment in shares. The law itself has recognizes this fact by taxing these transactions under the head short term capital gains and if the reasoning of the Assessing Officer/Ld. DR is accepted, that would itself be against the legislative intent. The fact that the assessee did not borrow funds for making the investment in shares is also an important aspect which cannot be lost sight of while deciding the true intention of the assessee, more specifically when the Assessing Off .....

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e Assessing Officer accepted offering of LTCG and also accepted the claim of the assessee in the status of investor. Therefore, without bringing any contrary material/facts, the stand of the Assessing Officer is not permissible. As the modus operandi of the assessee remained the same with respect to other shares, the claim of the assessee cannot be negated only on the basis of frequency of transactions as was held by Hon ble Jurisdictional High Court in Gopal Purohit (228 CTR 582 (Bom)). The rat .....

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f the view that where the assessee has shown investment in shares under the head investment in the Balance sheet for many years and same is accepted by the Assessing Officer in the past, there is no justification for treating the activity of assessee of purchase and sale of shares as business particularly when no money has been borrowed for making investment in shares. In such a situation the decision in CIT vs. Girish Mohan Ganeriwala (2003) 260 ITR 417 (P&H), CIT vs. S. Ramaamirtham (2008) .....

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selling of shares, but the nature of activity, intention and conduct has significant role to play in the entire transaction. Thus, the gain has to be assessed as short term capital gain/long term capital gain, as the case may be. 4. So far as the rule of consistency is concerned, we note that in the previous and subsequent assessment years, the Assessing Officer treated the assessee as an investor, therefore, we are of the view that unless and until contrary facts are brought on record by the Re .....

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