TaxTMI 
TaxTMI 
2016 (10) TMI 6
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....A) has erred in directing the Assessing Officer to treat the Short Term Capital Gain declared by the assessee at Rs. 44,97,330/- as such and not as business income without appreciating the fact that the magnitude of transactions are voluminous in very frequent interval which clearly establish that the motive for transactions was to earn profit by persuing an adventure in the nature of trade. 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has failed to appreciate the fact that the decision in the case of Gopal Purohit [ 122 TTJ (Mum)87] and in the assessee's own case have not been accepted by the Department. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate the guidelines laid down in CBDT Circular No. 4/2007 dated 15-06-2007. 4. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored." 3. The brief facts of the case are that assessee has filed her return of income declaring capital gain and income from other sources. 4. During the course of assessment proceedings u/s. 143(3) read with Section 143(2) of the Act , it was obse....
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.... chargeability to tax. The A.O. by relying on several case laws observed that in assessee's case scale of activity is definitely substantial as quantum of transactions are substantial , there is very high regularity in the trading and the shares have been purchased and sold at regular intervals in an organized manner indicating business activity. The holding period is very short in all the transactions whereby most of the shares were held for less than 180 days and the motive of the assessee is to earn profit and shares were not purchased by the assessee for investment but were purchased and sold with the sole intention of earning profit. He held that the dividend income declared by the assessee was only Rs. 19,21,018/- which also included dividend earned out of shares held for a period of more than one year which has been indicated as long term capital gain whereas the short term capital gain offered for tax was Rs. 44,97,330/-. During the year under consideration, the assessee has purchased shares to the tune of Rs. 90,36,251/- and sold the same during the current year. The assessee is thus actively engaged in the stock market operations directly and the assessee has also declare....
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....itted that the learned CIT(A) has accepted the facts in the earlier year and granted relief to the assessee. The long term capital gains are accepted by the AO even in the impugned assessment year while the AO erred in treating the short term capital gain arising from the sale of shares as income from business. The assessee rerlied on the decision of Hon'ble Bombay High Court in the case of CIT v. Gopal Purohit (supra). The ld. CIT (A) considered the submissions of the assessee and observed that the AO has brought to tax short term capital gains of Rs. 44,97,330/- earned by the assessee on sale of shares as income from business . It was observed by the learned CIT(A) that in the assessment year 2006-07 on similar set of facts and circumstances, the ld. CIT(A) in assessee's own case decided the issue in favour of the assessee vide appellate order dated 16th February, 2010 and the principle of consistency has to be maintained unless the facts/legal position differs . It was observed by the learned CIT(A) that recently, the Hon'ble Bombay High Court in the case of CIT v. Darius Pandole [2011] 330 ITR 485 (Bom) wherein the Hon'ble High Court emphasized that with respect to income from....
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....y the decision of the Tribunal for the assessment years 2006-07 and 2007-08 in ITA No. 3520/Mum/2010 vide orders dated 18-02-2015 and ITA No. 6227/Mum/2012 vide orders dated 17-03-2016 respectively in assessee favour. 10. We have considered the rival contentions and also perused the material available on record including the afore-stated Tribunal orders. We have observed that the assessee has purchased and sold the shares for a period of not more than one year for which no borrowings were made and the investments have been made out of her own funds and no interest was paid. The average holding period of the shares was less than 180 days and the shares were reflected as investment in books of accounts and were valued at cost . We have observed that the Tribunal in assessee's own case in ITA No. 6227/Mum/2012 for the assessment year 2007-08 vide orders dated 17th March, 2016 has decided the issue in favour of the assessee where it was held that the gains arising from the transaction of shares held for a period of not more than one year was held to be short term capital gain. The similar view has been taken by Tribunal in assessee's own case in ITA no.3520/Mum/2010 for assessment yea....
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....it was concluded that the capital gain was earned with profit motive within a short span of period, thus, the intention of the assessee was to gain profit by dealing in shares, thus, the conclusion drawn in the assessment order was affirmed. The assessee is in further appeal before this Tribunal. 2.3. As asserted by the ld. counsel for the assessee, that the impugned issue on identical fact is covered by the decision of the Tribunal dated 18/02/2015, we are reproducing hereunder the factual matrix from the aforesaid order for ready reference and analysis:- "This is an appeal filed by the Revenue against the order of CIT(A), dated 16-2-2010 for the Assessment Year 2006-07, in the matter of order passed u/s.143(3) of the I.T. Act, wherein following grounds have been taken by the Revenue :- 1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in directing to treat the STC Gain on sale of shares of Rs. 13,60,155/ - as a STC Gain instead of business income made by AO in his assessment order, ignoring the fact that:- a) The assessee has deployed his fund with an intention of earning profit of such funds and there was no intention of the ....
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....on the CBDT's circular bearing No.4/2007 dated 15.6.2007 and after having given other reasonings treated the long term capital gain of Rs. 14,10,430/- and short term capital gain of Rs. 15,25,348/- as business income in the hands of the appellant. The A.R of the appellant has contended before me that in the earlier Asst. year the appellant was treated as an investor and not a trader of the shares and accordingly profit and gains arising on sale of those investment were offered for taxation under the head capital gains and has been assessed as such. The A.R of the appellant has also produced copy of the assessment orders passed u/s.143(3) for earlier two years viz. A.Y. 2004-05 & 2005-06. The A.R of the appellant has relied on the Hon'ble Bombay High Court's judgement in the case of CIT vs. Gopal Purohit delivered on 6th January, 2010' and has prayed that income derived by the appellant from investment activity be treated as long term and short term capital gains respectively and the same should not be treated as income from business. Based on the finding recorded by ITAT in the case of CIT vs. Gopal Purohit 122 TTJ Mumbai 87, "it is open to an assessee to maintain t....
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....the above order of CIT(A), the Revenue is in further appeal before us. 4. We have considered rival contentions, carefully gone through the orders of the authorities below and found from the record that the assessee was consistently investing in shares. Capital gains offered by the assessee either as long term or short term was accepted by the department in all the earlier assessment years u/s.143(3). The assessee has also placed on record the assessment order framed u/s.143(3) for the A.Y.2005-06 & 2006-07. After giving detailed finding at para 4, the CIT(A) found that assessee has earned long term capital gains of Rs. 14,10,430/- on sale of shares and mutual funds which is liable to exemption u/s.10(38). The CIT(A) has also directed AO to verify the transaction of shares and mutual funds held for less than twelve months, which are delivery based and treat the same as giving rise to short term capital gains. The findings recorded by CIT(A) have not been controverted by ld. DR. Accordingly, we do not find any reason to interfere in the order of CIT(A) for allowing assessee's claim of long term and short term capital gains earned on sale of shares and mutual funds. 5. In the re....