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2016 (11) TMI 590 - ITAT MUMBAI

2016 (11) TMI 590 - ITAT MUMBAI - TMI - Share transaction - Long term/short term capital gain on profit on sale of shares OR business income - assessment was completed by treating the income from business of trading in shares as business income instead of capital gains, computed by the assessee - Held that:- Frequency and magnitude of transaction cannot be the criteria for determining the head of income. The ratio laid down in NEO Polypack (P.) Ltd. (2000 (4) TMI 26 - DELHI High Court ) supports .....

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term capital gain on profit on sale of shares. 2. During hearing, Shri N. M. Porwal, ld. counsel for the assessee, claimed that the impugned issue is covered by the decision of the Tribunal in the case of ACIT vs Dilip Variya (ITA No.1768/Mum/2010, etc.) order dated 15/05/2013 and also a decision from Hon'ble jurisdictional High Court (ITA No.1088 of 2011) order dated 09/01/2013 and CIT vs Dilip V.Variya (ITA No.2511 of 2013) order dated 12/07/2016 by further submitting that for Assessment y .....

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turn filed on 30/07/2010. The assessment was completed by treating the income from business of trading in shares as business income instead of capital gains, computed by the assessee. The Ld. Commissioner of Income Tax (Appeal) made reference to CBDT Circular No.4 of 2007 dated 15/06/2007 and also a decision in the case of CIT vs Mandan Gopal Radhyalal 73 ITR 62 and dismissed the appeal of the assessee. The assessee is in appeal before this Tribunal. 2.3. If the observation made in the assessmen .....

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year 2005-06. It is also noted that the Tribunal vide order dated 15/05/2013 in ITA No.1768, 1769/Mum/2010 (Assessment year 2006-07) and ITA No.1839/Mum/2009 (Assessment year 2005-06) held as under:- ITA No.1768/Mum/2010 & ITA No.1769/Mum/2010 are appeals filed by the revenue. They are directed against two separate orders passed by Ld. CIT(A) -35, Mumbai dated 14/12/2009 in respect of assessment year 2006-07 in the case of the respective assessees. ITA No.1839/Mum/2009 is an appeal filed by .....

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A.O. without appreciating the fact that the assessee is dealing in large volume of shares, most of the shares are bought and sold within short period, while some are not sold due to market conditions and their holding with assessee remains beyond few days, it will not change the nature of transactions and the assessee is very well engaged in the business of share trading, which denote that the motive of the assessee is to carry on business in shares to book profit rather than investment in shar .....

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t appellant is a investor and not a trader as per letter dated 16/08/2007 submitted during the course of assessment. c) The learned Commissioner of Income Tax (Appeal) failed to appreciate that appellant has shown shares investment under the head INVESTMENT since 25 years and assessed as capital gain. 3. At the outset it was pointed out by the Ld. AR that assessees being individuals in the present case were assessed by the AO in respect of income earned by them on sale and purchase of shares und .....

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ed by Hon ble Bombay High Court vide its order dated 9/1/2013 in Income Tax Appeal No.1088 of 2011 and departmental appeal was dismissed with the following observation: This appeal by the revenue under section 260A of the Income Tax Act, 1961 challenges the order dated 24/3/2010 of the Income Tax Appellate Tribunal relating to assessment year 2005-06. 2) The revenue has formulated the following questions of law for consideration by this Court. a) Whether on the facts and circumstances of the cas .....

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ether on the facts and circumstances of the case and in law, the Tribunal is in law in upholding the CIT(A) s order that the assessee indulged in investment in shares without considering that the assessee has devoted most of his time in only one activity i.e. activity of earning profit through sales and purchase of shares, be it derivatives, intra day trading or purchase and sale within short period or long period? c) Whether on the facts and circumstances of the case and in law the Tribunal in .....

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g into account the volume and turn over coupled with period of share holding and the value of transaction in shares concluded that the respondent assessee was carrying on share trading business. Thus, the income was liable to tax under the head profit and gains of business. 4) However, both the Commissioner of Income Tax (Appeals) as well as Tribunal have recorded a finding of fact that the respondent assessee was carrying business of investment in shares for last 30 years and for the last 25 ye .....

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estion of law arises. 4) In view of the above, the appeal is dismissed with no order as to costs . Ld. A.R has placed before us a copy of the aforementioned order of Bombay High Court and a copy was also given to Ld. DR. It was submitted that in all the past years the revenue had admitted the claim of the assessee and the stand was suddenly changed by the revenue in respect of A.Y 2005-06. In view of these facts, the Tribunal had admitted the claim of the assessee and the order of the Tribunal h .....

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) in the case of Smt. Neena Variya in respect of assessment year 2006-07 as under: (i) The appellant is assessed to income-tax since 25 years and the profit on shares has been shown as capital gain i.e. long term or short term in the past. (ii) The number of transaction increased due to market trend. (iii) The shares were shown as investment and not as stock-in-trade in the balance sheet. Moreover the investment was purely out of appellant s own funds and not out of borrowals. (iv) The appellant .....

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the order passed by Ld. CIT(A). 5. We have heard both the parties and their contentions have carefully been considered. In the case of Shri Dilip Variya the Tribunal after taking into consideration the fact that assessee is engaged in similar activity for the last 30 years and for the last 25 years the assessee was assessed to tax under the head capital gain on similar activity. The revenue never treated the shares as stock-intrade in the hands of the assessee, therefore, the assessee was not c .....

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come tax since last 25 years and the profit on shares has been shown as capital gain . The increase in the transaction is only due to market trend. The shares were shown as investment and not as stock-in-trade in the balance sheet. The investment was purely out of assessee s own funds. These submissions of the assessee have not been controverted by the revenue. If the same is taken into account then the ratio of aforementioned decision of Hon ble Bombay High Court will also be applicable to the .....

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