TMI Blog2017 (3) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as the same was not routed through Profit and Loss Account. The assessee has valued investments in shares in Balance Sheet at ‘Cost’ consistently. Assessee was finally treated as an investor since assessment year 2001-02 onwards ( for post 30-5-2010 transactions) except for impugned assessment year. Nothing contrary is brought on record by learned DR to disprove this contentions of the assessee. We have also carefully gone through number of transactions, volumes, frequency etc. of investment in shares. Also observed that assessee has contended that for the transactions squared within 30 days of acquisitions , the same be treated as business income and for transactions for sale of shares which were sold beyond 30 days of purchase of and not more than twelve months , the resultant gains from the sale of shares be classified and brought to tax under the head ‘Income from Capital Gains’ for the shares dealt which are listed securities as per mandate of Section 2(42A) of 1961 Act. We do not find any merit in the contentions of the Revenue of treating assessee as a trader in shares for impugned assessment years. Principles of res-judicata no doubt are not applicable to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock in a particular year is always the closing stock of the previous year and cannot be re-computed. The Act also provides only for the closing stock to be valued at cost or market price whichever is lower. The CIT(A) has further erred in not appreciating that the department has accepted the assessee to be an investor in shares for the past several years and for all subsequent years. The direction as given by the CIT (A) as regards re-valuing opening stock is incorrect and may therefore be cancelled. In the alternative the difference in value of closing stock as on 31/3/2003 and opening stock as on 1/4/2003 may be directed to be allowed as a loss or profit as the case may be. 3. The brief facts of the case are that during the course of assessment proceedings u/s 143(3) r.w.s. 147 of the Act, the assessee was asked to furnish details of sales and purchase of shares for the financial year 2002-03, 2003-04 and 2004-05 and in response the assessee submitted details called for by the AO . It was observed by AO from details filed by the assessee that the assessee had carried out 102 share transactions on account of purchase of shares and 188 share transactions on account of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that for assessment year 2000-01 , assessment was re-opened by the AO to treat the assessee as an investor in shares. It was submitted that for the assessment year 2000-01, the assessee in his return claimed business loss of ₹ 1,59,212/- . The AO invoked provisions of Section 147 of the 1961 Act and held the assessee to be an investor vide orders dated 30-11-2005 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act. It was submitted that learned CIT(A) vide orders dated 22.09.2006 held the assessee to be a trader in shares for the assessment year 2000-01, as was originally claimed by the assessee in the return of income filed with the Revenue. It was submitted that for assessment year 2001-02, the assessee had claimed a business loss on trading of shares of ₹ 2,80,792/- . It was submitted that aforesaid trading loss was for dealing in purchase and sale of shares for the period 01-04-2000 to 31-05-2000 , after which the assessee discontinued share trading business activities. Thereafter, the assessee had incurred short term capital loss of ₹ 3,36,674/- and long term capital loss of ₹ 4,81,712/- and a speculation loss of ₹ 2,87,184/- on shares. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hereunder : S.No. Asst. Year No. of Purchase Transactions No. of Sales Transactions Remarks i. 2002-03 86 110 Treated as investor by the assessee as well as Department except for A.Y. 2004-05, where the assessee has treated himself as investor, whereas the Department has treated him as a trader ii. 2003-04 271 215 iii. 2004-05 102 188 The complete analysis of working of short term capital and long term capital gains were submitted before the AO and it was submitted that the assessee has held individual scrips for more than 30 days except for shares mentioned in page 66 to 69, wherein the shares were held for less than a month and disposed off immediately after purchasing mostly under speculation. It was submitted that F O and speculative transactions are declared as business income and not income from capital gains. The assessee relied on several case laws which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 passed by learned CIT(A) in second round of litigation. 5. Aggrieved by the appellate order dated 07-04-2016 passed by the ld. CIT(A), the assessee filed appeal before the tribunal. 6. The ld. Counsel for the assessee submitted that this is second round of litigation and in the first round of litigation the matter was set aside by the tribunal to the file of ld. CIT(A) for de novo determination/adjudication of the issue on merits. The assessee has filed all the facts by way of written submission before learned CIT(A) and our attention was drawn to the appellate order of learned CIT(A) .It was submitted that for assessment year 2005-06, no scrutiny assessment was carried out by Revenue u/s 143(3) r.w.s. 143(2) of 1961 Act . It was submitted that during the impugned assessment year, the assessment was reopened treating the assessee as trader. It was submitted that investment in shares was made out of owned funds and no borrowed funds were used for making investments in shares. There were 188 sales transactions and 102 purchase transactions undertaken by assessee during the impugned assessment year. The assessee relied on CBDT circular no. 6/2016 dated 29-02-2016 and contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. DR contended that learned CIT(A) has rightly directed A.O. to adopt value of closing stock on the basis of cost or market price, whichever is less . 8. The learned counsel for the assessee submitted in rejoinder that Revenue is blowing hot and cold as different treatment were given by AO and CIT(A) for different years ,while assessee is an investor.. It was submitted that CBDT circular no 6/2016 dated 29-02-2016 is guidance and need to be applied retrospectively. 9. We have considered rival contentions and also perused the material available on record. We have observed that the assessee has undertaken transactions in purchase and sale of shares. The assessee is consistently dealing in shares till assessment year 2001-02 as trader and joined employment with Indusind Bank on 30-05-2010. The assessee has declared itself as investor since 30-05-2010, which stand of the assessee being investor in shares was finally accepted by Revenue either by the AO or by learned CIT(A) while adjudicating first appeal for all these years , except for the impugned assessment year wherein AO and learned CIT(A) have held assessee to be a trader in shares and income was brought to tax as i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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