TaxTMI 
TaxTMI 
2014 (2) TMI 366
X X X X Extracts X X X X
X X X X Extracts X X X X
....erted by the Revenue by bringing any positive material on record. 3. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion of the aforesaid order dated 14.11.2013: " The Revenue is aggrieved by the impugned order dated 24-04-2012 of the ld. first appellate authority, Indore on the ground that, on the facts and in the circumstances of the case, the income of Rs. 58,25,577/- from trading of shares to be fixed @ 10% from such activity. 2. The crux of argument advanced on behalf of the Revenue is that it was to be taxed @ 30% as information was received from NSE and BSE inferring the nature of transactions were business activity. It was contended that the ld. CIT(A) ignored the facts brought out on record b the Assessing Officer. Plea was also raised that the assessee was a trader ad not an investor. It was submitted that borrowed funds were used for purchase of shares. On the rule of consistency, it was pleaded that each year is an independent, therefore, res judicata is not applicable in income tax proceedings. A strong plea was raised that assessee did trading and m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, the profit maya be assessable as capital gains. Further reliance was placed on the decision in Janak S Ranawala vs ACIT, 11 SOT 627, ITO vs Radha Birju Patel (ITA No.5382/Mum/2009). The impugned order was defended. 3. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion of the conclusion drawn in the impugned order for read reference. ''4.2.2 The issue is considered. Under the old provisions of the Income-tax Act, profits or gains arising to an investor from the transfer of securities were charged to tax either as long term capital gains or short term capital gains depending on the period of holding of the said securities. Short term capital gains arising from transfer of securities wee taxed at the applicable rates (normal rate) and long term capital gains were taxed @ 20%, after adjusting the inflation by indexing the cost of acquisition. For listed securities, the taxpayer had an option to pa tax on long term capital gains @ 10% but without indexation. For foreign institutional investors (FIIs), the long term capital gains and short term capital gains were ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng from F&O transactions and daily trading in shares (without physical delivery) has been reflected consistently for the last several years as speculative business whereas the income on delivery based transactions of sale and purchase of shares have been shown as capital gains - STCG or LTCG depending upon the period of holding. The balance sheet reflects the holdings of shares as Investment(only one portfolio). Therefore, in my considered view income arising on purchase and sale of shares are to be treated as income from 'capital gain which would further be classified as STCG or LTCG. It is noted that although Assessing Officer treated the STCG shown by the assessee as 'business income' and subjected the same at normal tax rate, but the claim of the LTCG (on sale of shares) were accepted as such as exempted income u/s 10(38). Whereas the nature and source of income was same i.e. investment n shares and the income thereon was classified by the assessee as STCG or LTCG depending on the period of holding,, the Assessing Officer applied differential treatments which is even against the rule of consistency. Having considered the facts and following the rule of consistency, I am of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stantiated. The assessee was claimed to be 89 years old, had been showing consistently income from trading in shares, long and short term capital gains on the sale of shares and also income from other sources. We have also perused the assessment order from the assessment year 2001-02, 2005-06 to 2007-08 which have been framed u/s 143(3) of the Act. The details of some of the assessment years alongwith bread up of long term and short term capital gains for the impugned assessment years are summarised as under:- 02. That the break up of long term capital gain and short term capital gain for the assessment year 2008-09 is as under:- (i) Short term capital gain (a) Self investment Rs. 17,21,234/- (b) Through PMSMIV Investment services Ltd. Rs. 41,04,340/- Total:- Rs.58,25,574/- (ii) Long term capital gain (a) Self Investment Rs.37,28,589/- (b) Through PMS Rs. 2,43,840/- Total:- Rs.39,72,429/- 3.1 We further noted that the controversy arose for the first time for the impugned assessment year wherein the Assessing Officer treated the claim of short term capital gain as ''business income'' and simultaneously accepted the long term capital gain of Rs. 39,79,429/- as exempt u/s 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n by the Finance Bill has been recognized by this Court in K.P. Verghese - vs ITO 1981), 131 ITR 597 (SC), at 609. Again in the case of R & B Falcon (A) Pvt. Ltd vs CIT (2008) 301 ITR 309 (SC), it was held that (Page 323):- Rules of executive construction in a situation of this nature may also be applied. Where a representation is made by the makers of legislation at the time of introduction of Bill or construction thereupon is put by the executive upon its coming into force, the carries great weight.'' The Hon'ble Delhi High Court in ARJ Security Printers, 264 ITR 276 and Neo Pollypack Pvt Ltd. 245 ITR 492 (Del.) held that even when the doctrine of res judicata does not apply to income tax proceedings, where a issue has been decided consistently in earlier assessment years in particular manner, the same view should prevail in subsequent years unless there is a material change in facts, meaning thereby, there must be material change in the facts. As mentioned earlier, the ld. CIT(A), identically for assessment year 2002-03 allowed the claim of the assessee and the same has been accepted by the Department. 3.2 The Indore Bench of the Tribunal in the case of ACIT vs Om Prakash Sur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apital gains whereas the income arose from F&O transactions and daily trading in shares were with the business motive which were showed as business income only which was mainly through stock broker, Arihant Capital Markets Limited, registered with NSC, NSE and BSE. It is also seen that in the impugned order the board circular no. 4/2007 dated 15.6.2007 wherein it was emphasized that it is possible for a tax payer to have two port folios i.e. an investment port folio comprising of securities which are to be treated as capital asset and trading port folio comprising stock in trade which are to be treated as trading asset, was considered. The Board further clarifies that no single principle would be decisive and the total proposition needs to be considered. The assessee has maintained only one port folio and claimed that to be an investment folio. Undisputedly, the period of holding is less than one year, consequently, there is no infirmity in holding that these transactions would be treated as short term capital gain on which the applicable tax is @ 10% only. In view of this uncontroverted fact, there is no merit in the appeal of the revenue and the same is dismissed. Order pronounc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounsel for the assessee that accounts were maintained by the assessee in two separate capacities i.e. trader and investor and never treated the same as holdings of shares as stock in trade which clarifies the intention of the assessee. This assertion was not controverted by the Revenue. So from this angle, the stand of the ld. CIT(A) deserves to be affirmed. 3.3 The ld. Sr. DR placed reliance upon the decision of this Tribunal in ACIT vs Shri Naveet Kumar (ITA No.346/IND/2013) order dated 30-08-2013. We have perused this order and found that it has been clarified that ''if the shares are shown as investment and not as stock in trade, profit arriving from such shares will be capital gains and not business profit''. The matter was restored to the Assessing Officer to examine the facts and then decide accordingly. Therefore, this judicial pronouncement may not help the Revenue. The other cases relied upon by the Revenue have also been perused and are of the view that the facts are not identical, therefore, these may no help the Revenue. The Board Circular No. 4.2007 dated 15- 06-207 also emphasizes that it is possible for a tax payer to have two portfolios namely, an Investment Portf....