Appellate Tribunal rules in favor of taxpayer, classifying gain as Short Term Capital Gain.

The Appellate Tribunal overturned the decision of the Commissioner and directed the Assessing Officer to treat the gain as Short Term Capital Gain. The Tribunal emphasized the principle of consistency and the lack of material change justifying a different treatment. They highlighted the separate maintenance of portfolios by the assessee and the consistent approach in dealing with shares over previous years. This decision ensured the correct classification of the gain and allowed the assessee's appeal.

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Issues:
Assessee appealing against treating short term capital gain as business income.

Analysis:
The appeal was against the order of the Learned Commissioner of Income Tax (Appeals) confirming the Assessing Officer's decision to treat short term capital gain on sale of shares as business income. The assessee maintained two portfolios - trading and investment, reflected separately in the balance sheet. The Assessing Officer raised concerns due to the short holding period and high frequency of transactions. The assessee argued for separate treatment based on CBDT Circular No. 4/2007 and legal precedents. The Assessing Officer rejected the contentions and reclassified the gain as business income.

The Commissioner upheld the Assessing Officer's decision, citing lack of clarity on the assessee's intentions during transactions. The Appellate Tribunal reviewed the case and found consistency in the treatment of shares over previous years. They noted the separate maintenance of portfolios and rejected the significance of transaction frequency and holding period as determinants. Referring to Radhasoami Satsang case, the Tribunal emphasized on maintaining consistency unless there is a material change justifying a different view. Consequently, they directed the Assessing Officer to treat the gain as Short Term Capital Gain.

The Tribunal's decision was based on the principle of consistency and lack of material change warranting a different treatment. By setting aside the Commissioner's order, they ensured the assessee's gain was correctly classified as Short Term Capital Gain. The detailed analysis considered the legal arguments, precedents, and the assessee's consistent approach in maintaining separate portfolios, leading to the allowance of the appeal.

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