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2016 (10) TMI 892 - ITAT MUMBAI

2016 (10) TMI 892 - ITAT MUMBAI - TMI - Share transactions - business income or capital gain - Held that:- When the claim of the assessee was accepted by the revenue authorities in the earlier years as well as in the subsequent year, therefore AO was not permitted to take a different view on a particular issue in the absence of any change in the facts and circumstances of the case, even otherwise to maintain the principle of consistency, the claim of the assessee cannot be denied ‘until and unle .....

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DEEP GOSAIN, JM For The Appellant : Shri Ajay R Singh For The Respondent : Shri Rajneesh K. Arvind ORDER Per Sandeep Gosain, Judicial Member: The Present Appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)- 8, dated 10.10.2014 on the grounds of appeal mentioned herein below. 1. General: 1.a. erred in treating your appellant as a trader and not as an investor in respect of income arising on sale of shares held by your appellant as investment; 1.b. erred .....

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sessments department assessed treating income from investment in Shares under the head Capital Gains and no fresh facts came to light on investigation. 1.c. erred to conclude appellant's intention based on the frequency, volume, period of holding of script as transacted by appellant. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal. 2. The brief fact .....

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of depreciation on motor car amounting to ₹ 8,03,523/-, disallowance u/s 94(7) of ₹ 40,500/- as well as addition of ₹ 87,895/- on account of notional loss in respect of open positions in the F & O statement were made by the AO. 3. Aggrieved by the order of AO, assessee filed the appeal before CIT(A) and the CIT(A) after considering the case of the assessee partly allowed the appeal of the assessee but sustain the findings of the AO in treating the assessee as trader and no .....

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nsistently the investment in shares as investment in books of account which shows that the intention of the assessee to hold that the investment is clear, fully and properly expressed. It was also submitted that the stand taken by the assessee of treating income from investment in shares under the head capital gains has been accepted by the department in the case of assessee and is duly reflected in the assessment order u/s 143(3) for AY 2008-09. Ld. AR further submitted that the revenue authori .....

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ave only one class of capital gain and that is LTCG, because all the capital gain arising from holding shares for a period less than one year would be treated as business income and as per contention of ld. AR this could not be the intention of the lawmakers. Ld. AR submitted that the revenue authorities have misinterpreted the judgements and wrongly applied the same in the case of assessee. In order to support his arguments. Ld. AR drawn our attention at page no.2 wherein the computation of tot .....

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details regarding date, quantity, amount of purchase and sale of shares. Ld. AR also drawn our attention at page no.7 which shows Profit and Loss A/c for the year ended 31st March 2010. Ld. AR further submitted that had the investment made in the shares was for business purpose then there ought to have been the relevant accounts showing opening stock and closing stock of shares but nothing of that sought is contain in the documents therefore by no stretch of imagination the revenue authorities .....

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the said issue has relied upon different judgments and has taken into consideration that the assessee has dealt in 38 scrips and entered into more than 58 transactions in the year. Therefore while relying upon the citation, the CIT(A) has come to the conclusion that the assessee be treated as a trader and not as an investor for the income in respect of Short Term Capital Gains (STCG). After hearing both the parties at length and after going through the various judgments cited by both the parties .....

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u/s 143(3) of the Act, wherein also the assessee was considered as investor and no reasons have been mentioned by revenue authorities regarding the change in their stand and even not took any initiative to differentiate the facts of the present case from that of the facts of the previous year. Revenue authorities have to make out a case different than that of the previous year in order to reach to a different conclusion but in the present case nothing has been demonstrated in the orders passed b .....

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We have also gone through the judgements in the case of CIT vs. Gopal Purohit rendered by Hon ble Supreme Court as well as other citation relied upon by both the parties. Similar issue on almost identical facts was also decided by coordinate bench of ITAT D Bench in the case of Shri Rajesh C Shah ITA NO. 4135/Mum/2012 for AY 2008- 09 wherein the assessee in that case had carried out 59 number of transaction during the year in 29 scrips and the operative para is as under: 8. In the case in hand, .....

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s and business of the partnership firms. The assessee has used his own funds and funds of his family members and, therefore, no interest was paid on the funds used by the assessee for the purchase of shares and securities. Though in some of the transactions the holding period of the shares ranging from 6 to 8 days but keeping in view the total number of transactions and the number of transactions in which the holding period is less than 10 days, we are of the view that itself will not change the .....

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ong term capital asset otherwise it will be short term capital asset. The gain from sale of capital asset would be treated depending upon the holding period less than 1 year or more than 1 year. Thus if the assessee has treated the transactions as investment then the entire transactions having holding period less than 1 year would be treated as short term capital gain and there is no scope of bifurcation of the short term capital gain on the basis of the holding period because under the provisio .....

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ication in treating the investment as trading activity. Further when no change has been pointed out or brought on record in the facts and circumstances for the year under consideration in comparison to the facts and circumstances of the earlier years as well as in the subsequent year, therefore, the AO is not permitted to take a different view on a particular issue in the absence of any change in the facts and circumstances. Thus when the claim of the assessee was accepted in the earlier years a .....

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ss income is set aside. 8. Our attention was also drawn to the judgment passed by Hon ble ITAT in the ITA No. 959/Mum/2011 in the case of ACIT vs. Shri Jatin J Ashar for AY 2007-08 wherein also the identical question was in dispute and the operative para is as under: 5. Having considered the rival submissions and carefully perusal of the record we note that the AO accepted the short term capital gain offered by the assessee on sale of shares for the assessment year 2004-05 to 2006-07. We further .....

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he Co-ordinate Bench of this Tribunal in case of Smt. Varsha J. Ashar (supra) (the wife of the assessee) has considered and decided an identical issue in para 3 as under: "3. After considering the rival submissions and perusing the relevant material on record, it is observed that the learned CIT{A) has recorded a categorical finding on page 12 of the impugned order that in the earlier years such profit on short term capital asset was treated as short term capital gain. The learned AR has pl .....

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