TaxTMI 
TaxTMI 
2017 (3) TMI 887
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....ve upheld the order of the Assessing Officer. 3). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 2. Briefly stated facts of the case as culled out from the records are that the assessee is an individual engaged in the business of trading of diamonds. Return of income showing total income of Rs. 42,32,100/- was filed on 26.09.2008. Case was picked up for scrutiny assessment and on 14.12.2010 order u/s 143(3) of the Act was framed after denying claim of exemption of long term capital gain of Rs. 36,00,950/- treating it as business income from trading of shares and accordingly assessed the income at Rs. 78,33,050/-. Assessee went in appeal before ld. Commissioner of Income Tax(A) but could not succeed as ld. Commissioner of Income Tax(A) confirmed the order of Assessing Officer by treating the long term and short term capital gain as business income. 2.1 Aggrieved, assessee came in appeal before the Tribunal and vide order in ITA No.1539/Ahd/2011 the Co-ordinate Bench restored the matter to the file of ld. Commissioner of Income Tax(A) for fresh adjudication by obse....
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....es and appellant shown the short term capital gain of Rs. 39,95,535/- and long term capital gain of Rs. 36,00,950/- . However, The A.O. treated both the capital gains as business income considering the volume, frequency of the transactions and period of holding etc. 5.3. Thereafter, the CIT(A) bifurcated share transactions into two categories and held that whenever the appellant held the shares for the period of more days the same shall be treated as investment and whenever shares are held for less than 30 days income arising there-from should be held as business income. 5.4. On Revenue's appeal the Hon'ble ITAT set-aside the matter with the directions to this office to give the clear finding and to decide whether the appellant was an investor and accordingly income was assessable under the head capital gains or he was a trader and accordingly income was liable as business income. During the course of assessment proceedings and appellate proceedings, the appellant has argued that the appellant has the main activities of Diamond trading and to give funds on interest and letting out the property besides investment in equity shares. The appellant did not have any backgroun....
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....s.) 31.03.2005 51,82,321/- 39,64,049/- 31.03.2006 99,54,663/- 46,08,548/- 31.03.2007 93,19,537/- 66,01,705/- 31.03.2008 1,32,92,384/- 80,82,638/- So, it is very much apparent from the above table that the valuation at cost as per AS-13 is much higher than the valuation of cost or market price whichever is lower as per AS-2. But the appellant has taken the valuation at cost of the shares which itself proves that the intention of the appellant was investment and not the business. If it was not the intention he could have valued as per AS-2 and claimed heavy losses rather to pay the capital gain taxes. 5.5. Moreover, the appellant has earned the huge dividend income during the preceding years as is apparent from the following chart. Dividend received 31/03/05 Rs.39,64,049/- 31.03.06 Rs.46,08,548/- 31.03.07 Rs.66,01,705/- 31.03.08 Rs.80,82,638/- The intention of the appellant since beginning was very clear from the aforesaid discussion that the shares were held to be as investment and not in stock in trade. The appellant has earned the gain of Rs. 37,52,281/- on sale of those shares which were held for more than 366 days and upto 68....
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....tio of Hon'ble Mumbai High Court in the case of CIT Vs. Gopal Purohit whereby the appeal of the revenue was dismissed stating that the appellant has followed a consistent practice in regard to the nature of activities, the manner of keeping records and the presentation of shares as investment at the end of the year, in all the years. The revenue submitted that a different view should be taken for the year under consideration, since the principle of res judicata is not applicable to the assessment proceedings. 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 appellant. This approach of the Tribunal cannot be faulted. The revenue did not furnish any justification of adopting a divergent approach for the assessment year in question. The A.R. of the appellant heavily relied upon the aforesaid judgment as identical to the facts of the present case. The A.R. also relied upon in number of other judgments. 5.9. However, the view of the appellant is supported by various decisions on identical issue dealt in the same fashion and held that the income on investment in share has to b....
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....e one of the relevant consideration but cannot be the main consideration for deciding whether the assessee in this case is engaged in a business or not. We have to look into all the surrounding circumstances. This is a fact on record that the assessee in this case is engaged in the employment and has derived the salary income. Out of the surplus fund, he invested into the shares and the units and those shares and units has duly been shown by the assessee as investment in his balance sheet in the earlier year as well as during the year. In the earlier year also, the assessee derived the income on the sale of the shares, which has been returned by the assessee as capital gain and revenue has duly accepted the same. The assessee was not holding the shares of the units as a stock in trade. This fact is also not denied by the revenue. The period of holding itself has been treated by the legislature to be a relevant consideration for determining whether the capital gain derived is a long term capital gain or a short term capital gain. There is no provision under the Income-tax Act which has provided that in case the assessee is holding the shares for a lesser period than the one prescrib....
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....ts involved in the case of Gopal Purohit Vs. JC1T 20 DTR 99 (Mumbai) were also the same as in the case of the assessee. In all those cases, the Tribunal took the view that period of holding cannot be the basis to determine whether the share transaction entered into by the assessee is a business income or capital gain. In this case also, we noted that the assessing officer has built up his case mainly on the basis o period of holding and on that basis, he took the view that the shares held for a short period or for a number of days would not be capital gain. In our opinion, no interference is called for in the order of the CIT(A). The CIT(A) has rightly taken the view that the decision of this Tribunal in ITA No.616/2008 in the case of ACIT Vs. Dineshbhai C. Patel (HUF) is clearly applicable in the case of the assessee. The decision of the coordinate bench which has been approved by the Hon"ble jurisdictional High Court is binding on us. We cannot take a different view. We noted that the Nagpur Bench of this Tribunal in the case of Dineshbhai C. Patel ,,I (supra) has followed the decision of Gopal Purohit Vs. JCIT (supra), that decision has ,also been approved by the Hon"ble jurisdi....
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....ing stock, nor AO disturbed the working of the assessee except treating the gain as business income, We are of the opinion that income declared by the assessee as short term capital gain can not be treated as business income. Eventhough both the parties relied on various case law on the issue, but issue is to be decided on facts and considering the conduct of the assessee in earlier years and later years and the fact that the assessee separately dealt with trading activity and investment activity, the short term capital gain has to be accepted as such and can not be considered as business income. Accordingly this ground is allowed." (3) ACIT Vs. Naishadh V. Vachharajani (ITAT Mumbai) ITA No.6429 (Mum) 2009 & C.O. No.l36/Mum/2010 dtd. 25.2.2011 held as under:- "The assessee, a marine consultant, offered income by way of LTCG, STCG, speculative profit & profit from futures trading. The AO held that as the volume of transactions was high (222), the period of holding of the STCG shares was short (2 -5 Months) & there was speculation & F&O profit, the LTCG & STCG was assessable as business profit. On appeal, the CIT and Tribunal upheld the assessee's claim on the basis that (a) ....
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.... The gains earned by the assessee deserve to be assessed as capital gains because: (a) the assessee was holding the shares in its books as an investor; (b) the assessee did not have any office or administration set up; (c) the shares were acquired out of own funds and family funds and not through borrowings; (d) there was not a single instance where the assessee had squared-up transactions on the same day without taking delivery of the shares; (e) In the previous and subsequent assessment years, the AO had vide scrutiny assessments treated the assessee as an investor." 8. We further observe that ld. Commissioner of Income Tax(A) concluded his findings after adjudication of facts and reliance placed on various judicial precedence decided the appeal in assessee's favour by observing as follows :- "5.10. In the aforesaid judgments and decisions, it is clear that there cannot be a single parameter to decide the nature of transactions as investment or business income. To take such decision, various factors have to be considered taking them together. As discussed above, the Gujarat High Court has also laid down certain test to determine the nature of the transactions and if ....