TMI Blog2022 (9) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... e income thereon was computed under the head of short-term capital gains. We are of the clear mind that the rules of consistency has to be maintained in the case of the assessee for the assessment year under consideration and the assessee rightly relied upon the decision of the Hon ble Supreme Court in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] - Decided in favour of the assessee. - ITA/79/2010 - - - Dated:- 15-9-2022 - HON BLE MR. JUSTICE T.S. SIVAGNANAM AND HON BLE MR. JUSTICE SUPRATIM BHATTACHARYA Appearance:- Mr. J.P. Khaitan, Sr. Adv. Mr. Sanjay Bhaumik, Adv. Mrs. Swapna Das, Adv. Mr. Siddhartha Das, Adv.. .For the Appellant. Mr. Tilak Mitra, Adv. ..For the Respondent. JUDGMENT (Judgment of the Court was delivered by T.S.SIVAGNANAM, J.) 1. This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated October 28, 2009 passed by the Income Tax Appellate Tribunal, A Bench, Kolkata (Tribunal) in ITA No. 1563/Kol/2008 for the Assessment Year 2005-06. The appeal was admitted on 31.03.2010 to decide the following substantial question of law: Whether the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths to be falling under the head of Capital Gains and only because some shares were sold within the period of 12 months giving rise to income from Short Term Capital Gains, the Assessing Officer held that the income arising therefrom was income from business which according to the CIT(A) was heads I gain and Tails you lose . Further, on noticing the facts the CIT(A) held that in the earlier years the assessee has paid tax at normal rates on income from short term capital gains and the rule of consistency requires the same treatment to be metted to a particular source of income unless there is a change in law or a mistake has occurred in the previous assessment. Thus, the CIT(A) held that the assessee has proved its bona fide as an investor of shares and taking totality of the facts into consideration, the assessee was allowed to compute the income arising from purchase and sale of shares to be income arising from investment chargeable to tax as Capital Gains. The appeal accordingly stood allowed. The Revenue filed appeal before the Tribunal challenging the said order. It was contended by the revenue that Clause (b) of Section 94(7) as amended provides the period for which the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee purchased and sold shares in the assessment year under consideration has to be considered as relevant factor to ascertain the intention of the assessee as to whether the share transactions entered into by the assessee were in the nature of investment or in the nature of business activity. After referring to a decision of the authority of advance ruling in the case of Fidelity Northstar Fund and Ors. (2007) 288 ITR 641 , the Tribunal held that the transactions entered into by the assessee for purchase and sale of the shares in the year under consideration, are in the nature of trade and not by way of investment. After noting a few decisions, the Tribunal came to the conclusion that the Assessing Officer has rightly considered that the transactions of purchase and sale of shares by the assessee in the assessment year under consideration are in the nature of dealing in the shares instead of treating them as investment in shares. What had weighed in the mind of the Tribunal is the magnitude of the investment and the frequency with which shares were purchased and sold by the assessee to come to a conclusion that the transaction was not an investment but a busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mutual Funds (TDS Rs. 3973/- P.Y. 10485/-) 1,671,863 Loss on Sale of Units (17,892,477) Profit on Sale of Investment 19,231,037 Profit Loss on Speculative Transactions (34,930,501) Misc. Income (TDS Rs. 58443/-, P.Y. Nil) - 26,825,932 8. From the above schedule, it is seen for the assessment year 2004-2005 the amount was Rs. 1,78,92,477/- the profit and loss on speculative transactions was Rs. 1,92,31,037/-.However, these figures were not noted by the tribunal and the case was sought to be projected as if the short-term capital gains had jumped up to Rs. 2.52 crores from Rs. 13,00,000/-. 9. The next aspect which led the tribunal to decide against the assessee is with regard to the holding period of the various shares and stocks. The learned senior counsel had referred to a chart showing details of short-term capital gains/loss on sales of shares with number of transactions and period of holding for the year 2004-2005. From the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was pointed out by the learned senior counsel for the respondent that only less than 1/3rd of the total transactions was held for a short period. That apart, the volume of transaction cannot have any impact to consider as to whether the transaction would give rise to short-term capital gain or not. .........in the case of CIT v. Merlin Holding (P.) Ltd. [2016] 65 taxmann.com 37/[2015] 375 ITR 118 (Cal.). In the said case the Court found that the frequency cannot alone go to show the intention was not to make an investment. 12. At this juncture, it will be useful to refer to the decision of the Hon ble Supreme Court in CIT Versus Associated Development Company Private Limited 82 ITR 586 (SC) wherein it was held that the issue regarding the holding of shares is by way of investment or forming part of stocks in trade is a matter within the knowledge of assessee and if produces evidence to show he had maintained the distinction between the shares which are held as stock in trade and which are by way of investment, then the intention of the assessee is a main criteria to be judged. 13. It is an undisputed factual position that the assessee has been keeping the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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