TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 776
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....half and reversing the order of the Commissioner of Income Tax (Appeals) are arbitrary, unreasonable and perverse?" 2. We have heard Mr. J.P. Khaitan, learned Senior Advocate assisted by Mr. Sanjay Bhawmik, Mrs. Swapna Das and Mr. Siddhartha Das, advocates for the appellant assessee and Mr. Tilak Mitra, learned Senior Standing Counsel for the respondent. 3. The Assessee was engaged in the business of stock broking, investment in shares and mutual funds from which income by way of dividend was earned. The assessee claimed short-term capital loss on sale of units of mutual fund of Rs. 1,68,19,921/-. The assessee received dividend in respect of the said units of mutual fund of Rs. 1,50,79,850.06/-. 4. The assessee had furnished the details pertaining to the purchase of units of mutual fund, giving the date of purchase, record date, dividend received, dates of sale and the loss on sales of the units of mutual fund. The Assessing Officer referring to Section 94(7) of the Act, as amended by Finance (No. 2) Act with effect from 01.04.2005 stated that the assessee acquired the units within a period of 3 months prior to the record date and sold them within a period of 9 months after the ....
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.... record date and sold the same within 9 months after the record date and, therefore, the Assessing Officer was justified in disallowing the loss arising on the sale of units to the extent of dividend income. 5. The assessee while supporting the order passed by the CIT(A) submitted that the gestation period of 3 months as per Section 94(7)(b) of the Act, had expired before the amendment was made by Finance (No. 2) Act, 2004 in respect of the units of mutual fund under consideration except in the case of units of M/s. Reliance Vision Fund in which the assessee incurred loss of Rs. 16,53,820/- and the dividend received was Rs. 11,33,530/- that too, before the close of the relevant financial year. Further, it was submitted that the assessee effected the sales of the shares prior to the amendment. 6. The learned Tribunal upon considering the submissions, agreed with the submissions made on behalf of the assessee that mere volume of transactions, transacted by the assessee would not alter the nature of transaction and also agreed with the submission that in the preceding assessment years, the assessee had earned income from long term capital gain and short term capital gain and the dep....
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....eliance on the decision of the Hon'ble Supreme Court in Radhasoami Satsang Versus Commissioner of Income Tax 193 ITR 321, the Tribunal held that the said decision will not apply to the facts of the case and accordingly, the decision given by the CIT(A) was reversed and the order passed by the Assessing Officer was restored. 7. As pointed out earlier, the learned Tribunal had agreed with the submissions of the assessee that the volume of transactions, transacted by the assessee would not alter the nature of transactions. The tribunal also agreed that in the preceding years, the assessee had earned income from long term capital gains and short term capital gains which has been consistently accepted by the department. The assessee had therefore contended that for the assessment year under consideration, the same approach has to be maintained as the principle of consistency has to be applied. To support such contention, the decision in Radhasoami Satsang was relied upon. Though the tribunal accepted legal position that volume of transactions is not a determinative factor for the nature of transactions, it was swayed by the facts and figures with regard to the short-term capital gains ....
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....riod of holding ranging from 41 to 158 days. Further from the records placed before this Court, we find that for the assessment year 2000-2001 the assessee had long term capital gains of Rs. 1,46,40,322/- with overall capital gains of Rs. 1,57,57,800/- for the assessment year 2001-2002 long-term capital gains of Rs. 34,65,696/- with overall capital gains of Rs. 42,75,672/- and for the assessment year 2003-2004, the assessee had long term capital gains of Rs. 31,70,843/- with overall capital gains of Rs. 40,71,537/-. 10. Thus, we are of the view that the learned tribunal had failed to take into consideration the relevant materials based on which the CIT(A) had come to conclusion that the assessee was bona fide investor in shares and has to be allowed to compute the income arising from the purchase and sales of shares to income arising from investment chargeable to tax as income from capital gains. 11. In Commissioner of Income Tax Versus Merlin Holding Private Limited (2015) 375 ITR 118 (Cal), the Hon'ble Division Bench of this Court held that an investor can have shares transactions with a motive of making investment as well as trading if they are separately shown in books of acc....