TaxTMI 
TaxTMI 
2021 (10) TMI 12
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....he above grounds be set aside and that on the AO be restored." 2. Briefly stated, the assessee firm had e-filed its return of income for A.Y. 2012-13 on 29.09.2012, declaring an income of Rs.nil (after claiming carry forward of business loss of Rs. 8,08,58,145/-). The return of income filed by the assessee firm was initially processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had declared loss from share transactions amounting to Rs. 6,18,51,987/- under the head Short Term Capital Loss (STCL). Also, it was noticed by him that the assessee had carried out trading in shares and had declared a net business loss of Rs. 1,90,06,158/-. On a perusal of the records, it was observed by the A.O that the assessee had carried out purchase and sale transactions of shares on a large scale. It was noticed by the A.O that while for the loss from F&O transactions was declared by the assessee as a business loss, the transactions in shares where the average period of holding of the shares was less than one year w....
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.... the view taken by the Tribunal in the assessee's own case for the preceding years, viz. A.Y.2007-08 and A.Y. 2008-09 as well as that arrived at by his predecessor in the case of the assessee for A.Y. 2010-11 in appeal No. CIT(A)-44/ACIT 32(2)/ITA-18/2012/13, therein decided the issue in favor of the assessee and concluded that the gain/loss arising on sale of shares during the year under consideration was assessable under the head 'Short Term Capital Gain'. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee at the very outset submitted that the issue was squarely covered by the orders of the Tribunal in the assessee's own case for the preceding years i.e A.Y. 2007-08 and A.Y. 2008-09. 6. Per contra, the ld. Departmental Representative (for short 'D.R') candidly admitted that the issue involved in the present appeal was squarely covered by the orders of the Tribunal in the assessee's own case for the aforementioned years. 7. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the materia....
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....emain similar as that in AY 2010-11 and hence respectfully following the above referred decision of my Ld. Predecessor in appellant's own case for AY 2010-11, it is decided the gain/loss arising on sale and purchase of shares under consideration is assessable under the head 'Short Term Capital Gain' and the Ld. AO is directed accordingly. Therefore, the Ground No. 1 raised in appeal is ALLOWED." As observed by us hereinabove, involving identical facts the issue in question in the present appeal before us i.e as to whether the profit/loss arising from the share transactions carried out by the assessee firm was to be considered under the head 'Çapital gain' as claimed by the assessee or was to be brought to tax under the head 'business income', had been adjudicated by the Tribunal in the assessee's own case for A.Y 2008-09 in ITA No. 4646/Mum/2011, dated 11.03.2015, wherein after exhaustive deliberations the Tribunal had observed as under : "5. We have considered rival contentions and found that the AO has treated capital gains as business income on the plea of frequency, regularity and volume of transaction. By the impugned order, the CIT(A) confirmed ....
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....ned that assessee has utilized borrowed funds, but during the course of hearing reference was made to P&L account to show that assessee does not bear any interest liability except a paltry sum debited to P&L account which is an amount of Rs. 18,541/-, and represents interest on cash/credit account. So far as it relates to amount borrowed by the partners it was shown by Ld. AR that assessee firm has charged interest of Rs. 3,10,215/- from Mr. Binal S. Koradia and Rs. 65,429/- from Mrs. Amisha Vinal Koradia At the same time interest of Rs. 2,13,318/- has been paid by assessee firm to Mr. Binal S. Koradia(HUF). Thus it is seen from the accounts of the partners that interest has been charged by the assessee where the partners were utilizing capital of the firm. Similarly interest is paid to the partner where firm has utilized capital of the partner. Thus, there is no impact on the activity of the assessee regarding sale and purchase of shares so far as it relates to amount borrowed by partners. It is also observed by the A.O that partners have borrowed huge capital but he has not brought on record any single instance to substantiate such observation. On the contrary from the accounts i....
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....1 SOT 200; Manmohak Properties P. Ltd., 39 taxmann.com 105; Koradia Construction P. Ltd., 39 taxmann.com; Circular No.4/2007, dated 15-6-2007; Karan R Bahl, 37 taxmann.com 29; Rajan R Bahl, 12 taxmann.com 447; Nashik Capital Financial Services Ltd., 33 taxmann.com 190, Shah-La Investment & Financial Consultants P. Ltd., 2 SOT 371; Mafatlal Fabrics Ltd., 17 taxmann.com 50; Devji Nenshi Palani, 28 taxmann.com 209; Veena Karla 37 taxmann.com 208 and Manoj Kumar Samdaria, 52 taxmann.com 247 (SC), and contended that in view of these decisions, the AO was justified in treating the gains offered on sale of shares as business income. It was argued by ld. CITDR that the dominant judicial, administrative opinion and legal position is that although there is no bar on an assessee for maintaining two portfolios, viz., an investment portfolio and a trading portfolio. However, while accounts in respect of the said activities/portfolios should not only be separately maintained, but, in addition a systematic criteria needs to be adopted and consistently applied or followed to bifurcate the various transactions into each of the portfolios, at the very beginning of entering of these transactions and ....
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....tally different insofar as shares were held by assessee as investment whereas in the aforesaid case, shares were shown as stockin-trade, moreover, assessee itself has offered gain as business income in the preceding year. As per ld. AR the case law relied by the ld. DR in case of Manmohak Properties P. Ltd. (supra), the issue was related to validity of order passed by CIT(A) u/s.263. However, no finding was given relating to assessment of capital gain on sale of shares, hence, such case cannot be relied in assessee's case. With respect to Koradia Construction Pvt. Ltd. (supra), ld. AR submitted that this decision of Mumbai Bench supports the case of the assessee insofar as the findings given in the aforesaid case equally applicable to the assessee since the gain on sale of shares reflected as investment was held to be liable to be assessed under the head 'income from capital gains'. As per ld. AR even the Circular No.4/2007 dated 15-6-2007 also supports the case of the assessee since the assessee has offered income under the head 'income from capital gains' on shares which are held as "investment'. In case of Karan R Bahl (supra), ld. AR contended that no finding was given and simp....