TMI Blog2021 (11) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the assessee was dealing with the company by paying advances/deposit to the company. Further we notice that the assessing officer has proceeded to treat the difference between the closing balance and the opening balance as the deemed dividend. In order to make the addition under the head deemed dividend, the Assessing Officer should investigate each transaction of money received from the company and the make the addition accordingly. Therefore, we do not see any reason to sustain addition made by the Assessing Officer. Accordingly, we direct the Assessing Officer to delete the addition made under the head deemed dividend under section 2(22)(e) - Decided in favour of assessee. Correct head of income - Gain on sale of shares - capital gain or business income - assessee declares income from sale of shares as capital gains and also deals in derivative transactions while AO treated the transactions carried on by the assessee as business transaction- HELD THAT:- Assessee had shares held for more than 12 months and we are in agreement with the assessee that assessee can have choice of treating the income under the head capital gains as per the circular No. 6 above 2016 dated 29 Fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues of deemed dividend, earning of income from share trading, income from speculative transactions and exemption claimed under section 54B of the Income Tax Act, 1961 (for short the Act ). For the sake of convenience, we are dealing the issues ground wise. 3. Brief facts relating to ground no.1 are, during assessment proceedings the Assessing Officer observed in Form no.3CD, filed by the assessee which shown credit balance of ₹ 12,95,528/ received from M/s.Vogue Property Developers Pvt. Ltd. He observed that the assessee has 50% shareholding in the above said company and the company had reserves and surplus of ₹ 36,92,008/ as on 31st March 2008. When the assessee was called upon to explain the transaction, the assessee submitted that the said advance was not loan but advance received pursuant to the transaction and also submitted a copy of the audited accounts of the said company. The assessee submitted break up of the balance outstanding in his books of accounts as below: 1. Loan Account ₹ (12, 64,000) 2. Deposit for office hire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l advance. In the net result, the assessee has received net additional rental advance of ₹ 10,97,000. He submitted that the Assessing Officer has treated the above amount as deemed dividend he prayed that the extent of the above said addition may be deleted. 6. On the other hand, the Ld DR submitted that Assessing Officer has brought out the facts clearly in his order and he relied on the orders passed by the Ld CIT(A)/AO. 7. Considered the rival submissions and material on record. We notice that assessee is holding 50% of the shareholding in Vogue Property Developers Pvt. Ltd. and in the previous assessment year, assessee has paid advances to the company to the extent of ₹ 3,289,000 and also received ₹ 1,225,000, as the rental advance, as per the books of account clearly discloses that assessee to receive ₹ 2,064,000 from the company. During this assessment year, the assessee has received ₹ 5,650,000 and paid ₹ 425,000. The amount received by the assessee from the company which includes repayment of advances which was paid during the previous assessment year, additional rental advances received from the company and advance for sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made under the head deemed dividend under section 2(22)(e) of the Act. 8. With regard to grounds no.2 and 3, the relevant facts are, the Assessing Officer observed from the documents submitted by the assessee that assessee carrying on the business of dealing in shares and trading in shares and derivative segments. Even noticed that the assessee has declared long-term capital gain of ₹ 81,46,911 short-term capital gain of ₹ 42,24,936 and loss of ₹ 57,28,078 from speculative and derivative transactions. He further observed that the assessee has entered into 1024 transactions, including 913 transactions in case of derivative trading, 97 transactions in case of STCG and 14 transactions in case of long term capital gain. He also observed that the assessee has made purchase turnover of ₹ 384.55 crore and sales turnover of ₹ 385.53 crore, the assessee traded in total of 69,25,386 scripts, scripts in derivatives 65,12,850 scripts, 343,236 scripts in short term capital gain and 69,300 scripts in long term capital gain. Considering the volume of transactions carried on by the assessee and huge amount paid by the assessee towards brokerage, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 portfolios i.e., investment portfolio and trading portfolio. The assessee can have 2 portfolios and declare income in both heads capital gains as well as business income. He prayed that the income declared by the assessee is business income which assessee has maintained books of account based on this consistent method. Therefore, the consistent method of accounting followed by the assessee may be sustained. 11. On the other hand, the Ld DR relied on the orders passed by the revenue authorities and agreed with their findings. 12. Considered the rival submissions and material on record. We notice that assessee declares income from sale of shares as capital gains and also deals in derivative transactions. Assessee has submitted statement and chart before us to indicate that assessee declared income on transfer of shares/securities based on the period of holding. Ld AR brought to our notice various shares which was held as investment for more than 12 months as long-term capital gains. It was submitted before us that assessee should be allowed to claim the benefit under the head capital gains based on the investment portfolios held by the assessee during this year and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either as short-term or, as the case may be, long-term capital gain, depending upon the period of the holding. A finding of fact has been arrived at by the Tribunal as regards the existence of two distinct types of transactions namely, those by way of investment on one hand and those for the purposes of business on the other hand. Question (a) above, does not raise any substantial question of law. 3. Insofar as Question (b) is concerned, the Tribunal has observed in paragraph 8.1 of its judgment that the assessee has followed a consistent practice in regard to the nature of the activities, the manner of keeping records and the presentation of shares as investment at the end of the year, in all the years. The revenue submitted that a different view should be taken for the year under consideration, since the principle of res judicata is not applicable to assessment proceedings. The Tribunal correctly accepted the position, that the principle of res judicata is not attracted since each assessment year is separate in itself. The Tribunal held that there ought to be uniformity in treatment and consistency when the facts and circumstances are identical, particularly in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Before Ld CIT(A), assessee submitted that assessee had purchased 2 agricultural lands out of sale proceed of sale of agricultural land in this assessment year. It was submitted that these details were submitted before Assessing Officer along with the other claim. However, Ld CIT(A) observed that assessee had never claimed any exemption under section 54B before Assessing Officer and assessee was contesting only the eligibility of claiming the sale of land as agricultural land. He observed that assessee in his statement on 17 12 2010 admitted that the agricultural activities was done by watchmen/workers/care takers Akers of the above said land and assessee has never carried on agricultural activities in the above said land himself and also not declared any agricultural income in its statement of income. Further, he observed that there is nothing on record to show that the 2 new lands purchased by the assessee were used for agricultural purposes. Therefore, he rejected the claim made by the assessee under section 54B of the Act. 17. Aggrieved with the above order assessee is in appeal before us. Ld AR submitted that assessee had made a new claim before Ld CIT(A) and prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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