TMI Blog2022 (11) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... as the assessed income without any reclassification of income. In assessee s own case for the same four assessment years had quashed the order passed u/s. 263 on the same issue raised by the CIT in respect of reclassification of income from capital gains to business income. Reclassification of capital gains into profit and gains of business done by the department. We do not find any reason to interfere with the findings given by the CIT(A) and, therefore, uphold his order. Accordingly, grounds taken by the revenue are dismissed. - ITA No.1420/Kol/2019 - - - Dated:- 22-11-2022 - Shri Sanjay Garg, Judicial Member And Shri Girish Agrawal, Accountant Member For the Appellant : Shri Amal Sudhir Kamat, CIT For the Respondent : Shri Akkal Dudhwewala, FCA ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the revenue is against the order of Ld. CIT(A)-09, Kolkata vide ITA No. 183/CIT(A)-9/Cir-32/2017-18/Kol dated 27.09.2018 passed against the assessment order by the ACIT, Circle-32, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 28.12.2017. 2. Ground raised by the department in the present appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, short term investment and trading. Ld. AO called for the details in respect of claims of the assessee from which he noted that assessee has indulged into total number of settlement 171 times with NSE and 143 times with BSE. Further, settlement in derivative segment was for 234 times. Ld. AO noted that assessee has virtually made no difference between investment and trading in accordance with CBDT Circular No. 06/2016 since the transactions in shares and derivatives shown in different DMAT accounts were settled through single bill. He also noted that no separate bills for purchase and sale of listed shares and derivatives have been made out in so called investment as claimed through DMAT statement having client ID Nos. 021644 and 390929 which are actually merged with the trading items and bills raised as well as net payment made thereof are always in composite manner. 4.2. Ld. AO doubted on the intention of the assessee while acquiring the shares and considering the frequency of share dealings with quantum of shares, derivatives etc., number of transactions held and the volume of transactions thereof coupled with composite dealings of all shares, derivatives through sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of business or vice versa. 4.5. Further, it was submitted that shares held on investment account were always valued in the books of the assessee at cost and in respect of said shares, deduction for STT paid was never claimed. However, shares acquired for trading purposes were valued by following the principle of lower of cost or market value . Thus, valuation loss, if any, in respect of such shares was claimed and was allowed in the regular assessment. Also, STT paid in respect of trading shares was claimed as a deduction in computing the business profit which was also allowed. Assessee thus submitted that bifurcation between shares held as investment and trading was therefore not artificial but was always real and manifestly clear. 4.6. Assessee also submitted that he had transferred shares of only thirteen companies during the year under consideration in respect of which income by way of LTCG of Rs.18,36,65,270/- was realized. The sale consideration in respect of shares sold on investment account was Rs.32,07,35,301/- and in percentage terms, there was a capital appreciation in excess of 57% on his investments. It was also submitted that additionally, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted by the revenue in prior years it was not open for the department to assess the income under the head Profits and Gains of Business . The relevant findings of the Hon ble High Court are extracted as under: The legal issue sought to be raised by the Revenue in the first of these appeals pertains to the treatment of an amount of Rs.3,67,36,507/- as business income earned on transfer of shares held by the assessee for a period of less than 12 months. On such aspect of the matter, the Commissioner (Appeals) went into the accounts of the assessee as presented and discovered that though the assessee was engaged in the business of dealing in shares, the assessee had maintained separate accounts of the assessee's status as an investor and in the assessee carrying out share transaction business. The Commissioner noticed that the dispute was only with the correct classification of 'the head of income for the relevant amount: according to the Assessing Officer, the sum was assessable as business income; but according to the assessee, it was assessable as a short-term capital gain. After referring to several Supreme Court judgments for the proposition that every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has been accepted as the assessed income and no reclassification has been done of treating the capital gains reported by the assessee in its return as business income by the Ld. AO. Copy of the assessment orders for all these four years are placed in the paper book. All the four orders are dated 27.12.2018 which have been passed by the same officer who has passed the impugned order u/s. 143(3) of the Act dated 28.12.2017. Ld. Counsel vehemently argued and submitted that the same person on the same issue has taken divergent views without bringing any cogent and positive material on record to demonstrate any variation in the facts and circumstances as well as the applicable law. 5.1. Ld. Counsel also referred to the order of Coordinate Bench of ITAT, Kolkata in assessee s own case in respect of appeal filed by the assessee for the said four assessment years i.e. AYs 2011-12 to 2014-15 against orders passed u/s. 263 of the Act in which also a similar issue was raised and the Coordinate bench was pleased to allow the appeal of the assessee by quashing the order passed u/s. 263 of the Act. The Coordinate Bench in para 17 noted that assessee has duly explained that separate portfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee(ITA No. 122/Kol/2021 for the A.Y 2011-12) is hereby allowed. 5.2. By referring to the treatment by the department u/s. 147 as well as u/s. 263 of the Act for the preceding four assessment years i.e. 2011-12 to 2014-15 on the same issue which is before the Hon ble Tribunal in the present appeal, it was strongly submitted that even though principle of res judicate is not applicable yet principle of judicial consistency is applicable to tax proceedings. It was submitted that it is evidently demonstrated and is already on record that assessee is a dealer as well as an investor in shares for more than three decades. There has been clear distinction between the two portfolios i.e. investment and trading which has been maintained by the assessee in his books of accounts as well as by maintaining two distinct DMAT accounts. 6. Ld. Counsel referred to the decision of Gopal Purohit Vs. JCIT 228 CTR 582 (BOM.) wherein the Hon ble High Court of Bombay affirmed the decision of Coordinate Bench of ITAT, Mumbai which had held that although principle of res judicate does not strictly apply to the income tax proceedings, yet principles of consistency is to be followed wherein there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly maintained his books of account based on which respective income has been reported in the return of income. It has also been demonstrated evidently that there is no change in the material facts and circumstances as well as the applicable law in the year under consideration when compared with the preceding years, more particularly four assessment years from 2011-12 to 2014-15 wherein in the reassessment proceedings u/s. 147 of the Act the returned income has been accepted as the assessed income without any reclassification of income. Also, the coordinate bench of ITAT, Kolkata in assessee s own case for the same four assessment years had quashed the order passed u/s. 263 of the Act on the same issue raised by the Pd. Pr. CIT in respect of reclassification of income from capital gains to business income. We also take note of the decision of the Hon ble jurisdictional High Court of Calcutta in the case of CDEFPL (supra) in whose case, on identical fact pattern, the Hon ble High Court held in favour of the assessee disregarding the reclassification of capital gains into profit and gains of business done by the department. Considering all of the above, we do not find any reason to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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