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TMI Blog2016 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) - 23, Mumbai [CIT (A)] dated 05 March 2012 on the following amongst other grounds: 1. The learned CIT(A) erred in confirming the Assessing Officer's (AO's) action of treating the short-term capital gains of INR 2,47,33,233 as business income. 2. The learned CIT(A) erred in observing that purchases have been made with the clear intention of resale to earn profits. 3. The learned CIT(A) erred in holding that the appellant has indulged in business activity in view of the magnitude and frequency of transactions and low period of holding. 4. Without prejudice to the above, the learned CIT(A) erred in not directing the AO to allow expenditure which was incurred wholly and exclusively for carrying out the business of trading in shares (in relation to re-characterisation of short-term capital gains as business income)." 3. The brief facts of the case are that the A.O. observed that during the year the assessee has made investments in shares and mutual funds. The assessee has also declared income from short term capital gain as well exempted long term capital gain from shares and mutual fund , apart from dividend from mutual funds and shares. During the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken delivery of the shares purchased and similarly she has given delivery in respect of shares sold and the profit/loss resulting from such transactions in shares were declared short term capital gains or long term capital gains depending upon the period of holding of the shares. It was submitted that the assessee has not entered into any day to day trading or settlement of any transactions without delivery of shares or any futures or options transactions in shares and the assessee has not claimed any expenses such as S.T.T., interest, etc. or portfolio management fees from the profit made on sale of shares. It was submitted that the assessee has shown substantial profit as capital gains in earlier years and the same were accepted by the Revenue. It was submitted that the assessments for assessment years 2004-05 and 2007- 08 were completed u/s 143(3) of the Act wherein the A.O. taxed the said profit as capital gains as declared by the assessee in her return of income filed with Revenue. It was submitted that regular books of account were maintained by the assessee and all the shares purchased were shown as investments in the books of account and the assessee has not shown any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumption that transaction is in the nature of trade. The volume of frequency in the case of the assessee while dealing in shares is huge. The short term gain of Rs. 2,47,33,233/- has been derived from about 341 transactions and for this the assessee had sold shares to the tune of Rs. 35,14,65,076/- and the cost of their purchase was Rs. 32,67,31,843/- , whereby the period of holding was 1 to 30 days wherein number of transactions were 75 , while wherein period of holding was from 31 to 100 days the number of transactions were 126 , which showed that the maximum number of shares were sold within 3 to 4 months which clearly shows that shares were purchased to earn profit and not dividend. It was also observed by the AO that the shares of the same company were purchased and sold repeatedly by the assessee . It was further observed that the principle of res-judicata is not applicable in the income-tax proceedings , relying on decision of New Jehangir Vakil Mills Limited v. CIT (1963) 49 ITR 137(SC). The AO , therefore, held that the assessee is a trader in shares and the gains earned on shares transaction amounting to Rs. 2,47,33,233/- are to be brought to tax as business income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed in the file as submitted by the assessees' counsel during the course of hearing before the tribunal. The assessee counsel also submitted that the assessee has also not availed any loan for the purposes of investing in shares/mutual funds. 8. The ld. D.R. relied upon the order of the ld. CIT(A). 9. We have considered the rival contentions and also perused the material available on record. We have observed that the assessee has been regularly assessed to tax in the past years and scrutiny assessments have been framed against the assessee for assessment years 2003-04, 2004-05, 2007-08 and 2012-13 u/s 143(3) of the Act wherein Revenue has accepted that the gains earned by the assessee on share transactions are to be assessed to tax as capital gains. The assessee has earned profit on sale/purchase of shares which was assessed to tax under the head 'Profit and gains from business or profession' by the AO in the relevant assessment year, instead of gains being offered to tax as short term capital gain by the assessee for the impugned assessment year in the return of income filed with the Revenue. We have observed that it is only for this impugned assessment year , whereby the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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