TaxTMI 
TaxTMI 
2018 (10) TMI 1094
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....he Ld. CIT(A) ought not to have treated the Short Term Capital Gain of Rs. 1,29,033/- under the head 'Business Income' instead of 'Capital Gains'. 3. The Short Term Capital Gain of Rs. 1,29,033/- on sale of shares requires to be taxed under the head 'Capital Gains' and not as 'Business Income'. 4. Without prejudice to the above, if the gain on sale of shares is treated as business income then expenses proportionate to the gains of Rs. 1,29,033/- requires to be allowed. 3. Briefly stated, the facts of the case are that the assessee filed his return of income for the AY 2006-07 on 17.11.2006 declaring total income of Rs. 94,47,687/-. Then, in compliance to the notice u/s 153A(1)(a), the assessee filed a return of income declaring total income of Rs. 94,54,381/-. During the course of assessment proceedings, the Assessing Officer (AO) noticed that the assessee has claimed Short Term Capital Gains (STCG) against the transaction of scrips amounting to Rs. 13,47,000/- and the quantity of such scrips was 153310. After verification of the details, the AO noticed that out of 153310 units, 55181 units were sold within 30 days and only 8604 scrips were sold after 180 days. The AO thus ca....
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....of transaction is very large, (xi) the assessee has stated that he has earned dividend of Rs. 38,799/- and Long Term Capital Gains (LTCG) of Rs. 1,87,561/- on shares. He has not stated how much dividend has been earned from the shares sold on which STCG has been claimed as earned. It is unlikely that there is any chance to earn dividend on these shares as these were retained by the assessee for very short period. The dividend of profit ratio is only 2.8%. On the basis of the above reasons, the AO treated the STCG of Rs. 13,47,000/- and LTCG of Rs. 1,87,561/- aggregating to Rs. 15,34,561/- as income from business. The assessee has debited expenses of Rs. 91,075/- pertaining to sale/purchase of shares in the capital account. The AO allowed these expenses and brought to tax the aggregate of Rs. 14,43,486/- as income from business. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). It is observed by the Ld. CIT(A) that the assessee has disclosed LTCG of Rs. 1,87,561/- and STCG of Rs. 13,47,000/- and has earned dividend income of Rs. 38,799/-. The assessee has shown capital balance of Rs. 4.90 crores, out of which investment in shares stood at Rs.....
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....he status of taxability of Capital Gains based on Orders u/s 143(3), (iii) The status of taxability of Capital Gains based on Oders u/s 153A r.w.s. 143(3), (iv) Analysis of Capital Gains vis-à-vis Investment in Shares & Capital, (v) Period-wise holding of Short Term Capital Gains shares, (vi) Date-wise Terms Capital Gains, (vii) Date-wise Long Term Capital Gains, (viii) Statement of Number of transaction of Capital Gains, (ix) Statement of Number of Purchase transactions, (x) Statement of Capital balance vis-à-vis Investments, (xi) Comparison with CBDT Instruction No. 1827 dated 31.08.1989, (xii) Comparison of facts between Appellant and Gopal Purohit's case, (xiii) IT Acknowledgement for return filed u/s 153A along with computation of income, (xiv) Balance Sheet, Income & Expenditure a/c and Capital a/c, (xv) copies of assessment order (a) AY 2003-04 - order u/s 143(3) r.w.s. 254 dated 20.12.2010, (b) AY 2004-05 - order u/s 143(3) dated 10.11.2006, (c) AY 2007-08 - order u/s 143(3) dated 16.12.2009. The Ld. counsel also files a legal P/B containing (i) CBDT Circular No. 6/2016 dated 29.02.2016 in relation to determining tax, (ii) Copy of ITAT order in the case of Sh....
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....and entire data of each transaction was available, finding recorded Tribunal will have to be held as perverse and (ii) 30 days holding period could not have been taken as a fixed criteria for determining nature of transaction. In Gopal Purohit (supra), the Hon'ble High Court has mentioned the following: "2. The Tribunal has entered a pure finding of fact that the assessee was engaged in two different types of transactions. The first set of transactions involved investment in shares. The second set of transactions involved dealing in shares for the purposes of business (described in paragraph 8.3 of the judgment of the Tribunal as transactions purely of jobbing without delivery). The Tribunal has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate port folios, one relating to investment in shares and another relating to business activities involving dealing in shares. The Tribunal held that the delivery based transactions in the present case, should be treated as those in the nature of investment transactions and the profit received there from should be treated either as short term or, as the case may be, long t....
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....nal followed the order of ITAT in the case of Janak S. Kangwala v. ACIT 11 SOT 627, wherein it is held that it is the intention of the assessee, which is to be seen to determine the nature of transaction conducted by the assessee. Though the investment in shares is on a large magnitude but the same shall not decide the nature of transaction. Similar transaction of sale and purchase of shares in the preceding years have been held to the income from capital gains both on long term and short term basis. The above order of the Tribunal has been confirmed by the Hon'ble Bombay High Court in CIT v. Naishadh Vachharajani in ITA (L) No. 1042 of 2011. 7.2 In the instant case, the assessee has entered repeatedly in the scrips which he had already disposed of as listed at para 7.3 & 8 infra. The same is done in a systematic and organized manner. Therefore, the case of the assessee is distinguishable from the above case-laws relied on by the Ld. counsel. It is a settled law that the doctrine of res judicata or estoppel by record does not apply to AO's decisions. A finding or decision of the income tax authorities in one year may be departed from in a subsequent year. It has been held so in ....