TaxTMI 
TaxTMI 
2013 (8) TMI 136
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....nvenience. 2. First, we shall take up the appeal of the Revenue for A.Y. 2007-08 being ITA No. 6603/Mum/2010. In this appeal, the Revenue has raised two grounds of appeal, ground No. 1 relates to the treatment of income of Rs. 13,40,75,773/- as capital gain instead of business income as assessed by the A.O. 3. During the course of scrutiny of assessment proceeding, the A.O. noticed that the assessee has credited a sum of Rs. 20,08,36,535/- to the P&L account being profit on sale of investments and Rs. 13,40,75,773/- and Rs. 6,67,60,762/- by way of other income comprising of dividend and interest. The A.O. further observed that the entire profit of Rs. 13,52,70,833/- on sale of investments has been declared as long term capital gain (L....
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.... on to tax an amount of Rs. 13,40,75,773/- as business income of the assessee. The assessee carried the matter before the ld. CIT(A) and reiterated its stand as taken before the A.O. After considering the facts and submissions of the assessee, the ld. CIT(A) was of the opinion that the assessee has not borrowed any funds from the Bank. Interest bearing borrowed funds has been used in the business of advancing interest bearing loans to clients. Net loan interest is offered as business income in the return of income filed. The ld. CIT(A) also considered the transactions in shares and was of the opinion that the transactions leading capital gains on sale of shares constituted only 55 transactions and out of these 55 transactions, only 15 sale ....
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....as accepted this position in earlier assessment years. The ld. CIT(A) thus directed the A.O. to tax the income under the head capital gain. Aggrieved by this finding of the ld. CIT(A), The revenue is in appeal before the Tribunal. 4. The ld. D.R. strongly supported the findings of the A.O. and submitted that the purchase and sale of shares is a usual trade activity but incidental to the business of the assessee. It is the say of the ld. D.R. that even a singular transaction of purchase and sale could be in the nature of trade. In the present case, the assessee has continuously and systematically carried on trading in shares over a period of one year. The ld. D.R. further submitted that the presence of borrowed funds imparts the activity ....
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....not be held as in the nature of trading. The past history of the assessee also shows that right from assessment years 2001-02 to 2006-07, when the assessments has been made after thorough scrutiny u/s 143(3) of the Act, the Department has accepted the profit under the head capital gain. Even for the sake of argument, it is accepted that resjudicata does not apply to the income tax proceedings , but rule of consistency is to be followed. When the facts are same and the law has not changed, we do not find any reason to take a different view as from the past assessment of the assessee. We, therefore, do not find any merit in Revenue's appeal and accordingly the finding of the ld. CIT(A) is confirmed. Ground No. 1 of Revenue's appeal is dismiss....