TaxTMI 
TaxTMI 
2011 (2) TMI 1127
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....e of the assessee comprises of share of profit from the partnership firms in which he is a partner, apart from capital gains and other sources. Though the return was originally processed under section 143(1) of the Act, the same was later taken up for scrutiny by issuing notice under section 143(2) of the Act. During the course of assessment proceedings, the Assessing Officer noticed that the assessee showed short-term capital gains of Rs. 40,31,124 referable to purchase and sale of shares totalling to 357 transactions. At the outset, the Assessing Officer observed that in the immediately preceding year the Revenue had taken stand that the gains arising out of purchase and sale of shares are assessable to tax as business income. Since the stand taken by the Assessing Officer for the immediately preceding year was affirmed by the Commissioner of Income-tax (Appeals), even in this year income on share transactions was sought to be taxed under the head "Profits and gains of business". 3. According to the Assessing Officer decision with regard to taxability of such income depends on various factors such as : (a) object of investment in shares, (b) number of shares ....
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....did not convince the Assessing Officer. Rather, he had proceeded to analyse the provisions for "security transaction tax" and the consequent changes made under the Income-tax Act to highlight that an investor would be taxed at a concessional rate and such concession is not available to a trader and hence he surmised that the assessee might have shown his portfolio as an investment rather than as a trading activity. Though he admitted that the purpose of investment is mainly with an expectation that investment may appreciate in the long run and not immediately, since most investors are risk averse and attempt is ordinarily made to maximise their wealth, he observed that classification of a particular scrip in the books of account can only be indicative but not conclusive to prove the nature ; frequent dealing in shares indicate that the assessee was actively involved in the stock market which is an essential requisite of a trader in shares. The Assessing Officer observed that the assessee had displayed all ingredients of share trading by engaging himself in some real, substantial and systematic business activity with the purpose of earning income from purchase and sale of shares. He....
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....n following decisions of the Income-tax Appellate Tribunal in support of his contention that in a given case where facts are distinguishable or fresh facts are brought on record, principles of res judicata does not come into play in the income-tax proceedings and an appellate authority is free to take a different view on the matter without merely being guided by the conclusions reached by the Income-tax Appellate Tribunal in the assessee's own case for the earlier year. (i) Smt. Sadhana Nabera v. Asstt. CIT I.T.A. No. 2586 (Mum.) 2009, dated 26-3-2010. (ii) Rakesh J. Sanghvi v. Dy. CIT I.T. Appeal. No. 4607 (Mum.) of 2008 and 5710 (Mum.) of 2009 dated 31-8-2010. 9. As regards the decision of the Income-tax Appellate Tribunal "B" Bench, Mumbai, in the assessee's own case for the assessment year 2005-06 (I.T.A. No. 6544/Mum/2008 dated May 15, 2009), the learned Departmental representative submitted that the same was based on certain assumptions. Adverting our attention to paragraph 6 of the order of the Tribunal it was submitted that the decision was rendered on the premise that there was no dispute that the assessee was dealing in shares as an investor for....
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....ment and not as stock-in-trade. Shares were purchased out of own funds and there was no repetition of transaction, i.e., once a scrip is sold, it is not bought again. It was also submitted that investments were made in purchase of bluechip company's share and the ratio of sales to purchase was not much as compared to the immediately preceding year. Shares were held for a substantial period of time on an average, and the primary intention was wealth maximisation and not profit maximisation. It was thus contended that majority of the requirements listed out in the circular were fulfilled by the assessee and the Assessing Officer has not specifically highlighted as to what are the requirements that were not fulfilled in the instant case. Since all these aspects were taken note of, in the absence of highlighting specific points which would support the Revenue's contention, the Revenue is bound by the decision of the Income-tax Appellate Tribunal in the assessee's own case for the earlier year. He thus strongly supported the order passed by the learned Commissioner of Income-tax (Appeals). 11. We have carefully considered rival submissions and perused the record. It is well-settled t....
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....it. Other means of livelihood available. Other income than of Rs. 24,44,439. 10. Characterisation of securities in books of account Yes Shown as investments in the balance-sheet and the books of account. 11. Are securities purchased or sold are listed ? Yes Listed on the Bombay Stock Exchange and/or National Stock Exchange. 12. Whether investment in independent companies Yes Investment in bluechip concerns. 13 Substantial number of stocks dealt in very limited stocks Yes As compared to the number of shares listed on the stock exchange the number of stocks dealt in is not substantial. 14. Actual money received or paid. Yes Bill wise payment is made and received. 15. No repetition of transaction Yes Once a scrip is sold it is not bought again. 12. In the backdrop of the facts narrated by the assessee it can be seen that the assessee had all along treated the shares as an investment with the primary object of wealth maximisation and treated the same as investment in its books of account over a period of 30 years. Admittedly, the assessee has not borrowed funds for the purpose of making investments in shares and....