TaxTMI 
TaxTMI 
2014 (7) TMI 428
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....ght and sold within short period, while some are not sold due to market conditions and their holding with the assessee remains beyond few days, and it will not change the nature of transactions and the assessee is very well engaged in the business of share trading, which denote that the motive of the assessee is to carry on business in shares to book profit rather than investment in shares. The case is covered by the decision of ITAT Mumbai in the case of Smt. Sadhana Nabera V/s ACIT (ITA No 2586/Mum/2009), Jayshree P. Shah v/s ACIT (ITA No. 3608/MUM/07) and the case of ACIT V/s V. Nagesh (ITA No 5410/Mum/2008)". 2. On the facts and in the circumstances of the case, and in law, the ld. CIT(A) erred in directing the Assessing officer to allow deduction of Rs. 1,50,000/- under the head house property even though assessee has neither raised this ground during the assessment proceedings not filed a revised return." 2. The learned Counsel for the assessee, at the outset, submitted that insofar as the ground no.1, is concerned, the same is squarely covered by the decision of the Tribunal in assessee's own case for the assessment year 2006-07, passed in ITA no.566....
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.... have been delivered to the assessee and shares where no delivery was required to be taken. The first category has been shown as "income from capital gain" and the second category has been shown as "business income". He has also analysed the period of holding on the number of shares brought in the following manner:- No. of Shares Holding Period Percentage of Total 17,23,136 Upto 1 week 47.66% 11,24,636 Upto 1 month 31.11% 7,62,504 Upto 6 months 21.09% 5,098 More than 6 months 0.14% 36,15,374 6. The main contention of the assessee before the Assessing Officer were as under:- 1. That the appellant is a whole time director of the Company and is involved in day to day affairs of the Company; 2. That due to his active participation in day to day affairs of the Company, the profitability of the Company has improved considerably; 3. That neither there is large scale activity nor regularity of activity; 4. That the appellant did only 120 transactions when the stock exchange was open for transactions almost 250 days during the year; ....
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....n has accepted the similar transactions to be taxed under the head "capital gains" under section 143(3). In the assessment year 2006-07 and 2007-08, the learned Commissioner (Appeals) has also decided this issue in favour of the assessee which has been confirmed by the Tribunal. The relevant observations and the conclusion drawn by the Tribunal are as under:- 17. We have considered the rival submission. We have considered the rival submissions. The issue to be decided is as to whether the STCG on transaction of purchase and sale of shares undertaken by the assessee during the previous year is to be assessed under the head 'income from business' as claimed by the revenue or income under the head 'capital gain' as contended by the assessee. Before we deal with the facts of the case of the assessee, we will briefly narrate the principles applicable in deciding the above issue as laid down in several judicial pronouncements:- (a) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the nature of investments is mixed question of law and fact. CIT Vs. Holc....
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....The net profit after expenses on such transactions was Rs. 40,77,711. Both the aforesaid transactions were in respect of transaction of purchase and sale of shares where the holding period was less than 12 months. The profit on transaction and sale of shares where there was no delivery was offered to tax by the assessee as speculative income under the head business income. The income from other transactions where there was actual delivery was claimed by the assessee to be STCG. Such transactions were about 142 in number during the previous year. The Number of shares dealt with by the Assessee was 30,79,124. The holding period was as follows: No. of Shares Holding period % of total 770317 Upto 1 week 25% 874619 Upto 1 month 28% 1275061 Upto 6 months 42% 159127 More than 6 months 5% The factors which go in favour of the Assessee that the income in question is short term capital gain (STCG) are as follows: 1. The fact that in the earlier AY i.e., AY 05-06, on identical volume of transaction, the AO in Assessment u/s.143(3) of the Act, accepted the case of the Assessee ....
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....that on the same set of facts, the revenue in AY 05-06 accepted the plea of Assessee that gain on purchase and sale of shares is STCG though in that year also, the Assessee indulged in non-delivery based transactions. 2. The holding period being very short it is reasonable to presume that the purchase was made with an intention to resell. The submission of the Assessee on this aspect is that the holding period is much longer than AY 05-06 3. The scale of activity is substantial. The submission of the Assessee is that the same is because of increase in sensex from 6000 points to 11000 points. 4. The transactions were continuous and regular besides being systematic. The submission of the Assessee is that there were only 148 transactions carried out on 96 days during the previous year. 5. Borrowed funds had been used for purchase of shares. The submission of the Assessee has been that there is no bar to use borrowed funds to make investments. Besides the above, on the same set of facts, the revenue allow....
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....s. The Tribunal correctly accepted the position, that the principle of res judicata is not attracted since each assessment year is separate in itself. The Tribunal held that there ought to be uniformity in treatment and consistency when the facts and circumstances are identical, particularly in the case of the assessee. This approach of the Tribunal cannot be faulted. The revenue did not furnish any justification for adopting a divergent approach for the Assessment Year in question. Question (b), therefore, does not also raise any substantial question." 15. The above decision of the Hon'ble Bombay High Court is clearly applicable in this case. As we have already seen that the AO in AY 05-06 raised a specific query on the issue whether the STCG declared by the Assessee has to be assessed as business income and the AO after discussion accepted the plea of the Assessee and assessed income declared on purchase and sale of shares as giving raise to STCG. We have also seen that the facts and circumstances in the AY 05-06 are identical. Though the rule of res judicata is not applicable but the principle of consistency will definitely apply and on that basis the c....
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....ided in favour of the assessee after obtaining the remand report from the Assessing Officer. Apart from that, it was submitted that there was no new claim for deduction but wrong claim of deduction under section 36(1)(iii) was given up and correct claim under section 24(b), was made. It was further submitted that such a claim is not entertained at the stage of Assessing Officer, then the same can be done at the appellate stage in view of the decision of the Hon'ble Delhi High Court in CIT v/s Jai Parabolic Springs Ltd., [2008] 306 ITR 42 and the decision of Hon'ble Punjab & Haryana High Court in CIT v/s Ramco International, in ITA No.417 of 2008, judgment dated 8th December 2008, wherein the High Courts have duly considered the decision of the Hon'ble Supreme Court in Goetze India Ltd. (supra). The learned Commissioner (Appeals) allowed the assessee's claim for deduction of Rs. 1.50 lakhs from the income from house property on the ground that firstly, similar issue was decided in the earlier year i.e., in the assessment year 2007-08 and, secondly all the necessary decisions for allowing such claim is available on the record and such a claim can be entertained at the appellate s....