NEW MILLENIUM TECHNOLOGY MANAGMENT PVT. LTD.,KOLKATA vs. A.C.I.T., CIRCLE-6(2), KOLKATA

The facts in brief are that the assessee filed return of income on 12/11/2015 declaring total income of Rs.57,37,380/-. The case of the assessee was selected for scrutiny under CASS for scrutiny and notice Assessment Year: 2015-16 New Millenium Technology Management Pvt. Ltd. P a g e | 2 issued u/s 143(2) and 142(1) along with questionnaire was served upon the assessee. The Assessing Officer on the basis of details filed by the assessee observed that the assessee company has earned profit of Rs.52,91,943/- on purchase and sale of shares and showed the same as short term capital gain (STCG) by paying tax u/s 111A of the Act at the rate of 15%. The Assessing Officer also observed that the assessee has also maintained another trading portfolio, income wherefrom has been shown as income from business. The Assessing Officer accordingly prepared a table of name of the scrips, shares held and the period of holding at para 6 of the assessment order and called upon the assessee to explain as to why the STCG should not be treated as business income for the reasons that the assessee has held these shares for a very short period and the frequency of transactions were also very high, which was replied to by the assessee by submitting that the assessee is maintaining two portfolios from the preceding sever financial years. One is a trading portfolio and the second is an investment portfolio and both of them are being treated and shown separately in the balance sheet of the assessee. One under the head “income from business accruing from sale and purchase of shares in trading profession” and second as “gain on sale of shares accruing from the sale and purchase under investment portfolio”. The contentions of the assessee did not find favour with the Assessing Officer.

The assessee also referred to CBDT Circular No. 4/2007 dated 15/06/2007 which clarified that the assessee can maintain two portfolios as done by the assessee and income may be assessed under both the heads. Assessment Year: 2015-16 New Millenium Technology Management Pvt. Ltd. P a g e | 3 the Assessing Officer that the period of holding is immaterial as it depends upon the sale of scrips which is held in a particular portfolio where the same is to be shown as business income or capital gain. Finally the Assessing Officer rejected the contention of the assessee and treated the STCG of Rs.52,91,943/- as business income vide order dt. 31/08/2017 passed u/s 143(3) of the Act.

The ld. CIT(A) simply confirmed the findings of the Assessing Officer. The ld. CIT(A) has not disputed that the assessee has maintained separate books bifurcating the shares into shares held as stock-in-trade and shares held as investment but rejected the contentions and arguments of the assessee on the ground that at the time of making the transactions of purchase and sale , the intention of the assessee as to which share has to be held as stock-in-trade and which to be treated as investment portfolio is not clear.

The ld. D/R relied on the orders of the authorities below.

We have heard rival submissions and perused the material available on record During the course of hearing, the ld. A/R placed before us a comparative chart from Assessment Year 2011-12 to 2015-16, substantiating his averments that right from the beginning he has been maintaining two portfolios. After examination of the said chart, we find that in two Assessment Year i.e., Assessment Year 2012-13 & 2015-16, which means a preceding Assessment Year and the succeeding Assessment Year, the treatment of the assessment qua the income from shares has been accepted even in the scrutiny proceedings. The chart is extracted for ready reference:-

We observe that the only basis on which the ld. CIT(A) has confirmed the action of the Assessing Officer in treating the STCG as business income is the frequency of transactions and the period of holding which in our opinion is not the determinating factor to decide such issue. We have also examined the balance sheet filed by the assessee for the year and observe that the two portfolios maintained by the assessee were clearly mentioned separately, one under the head stock-in-trade and the other under the head “current investments”. We have also examined the details of the shares held by the assessee as investment and stock-in-trade. During the year, we do not find any change of facts and circumstances over the preceding or succeeding financial years and, therefore, in our considered opinion/view, the revenue cannot be allowed to disturb the position which has been accepted by the revenue in the case of the assessee in the earlier and subsequent years. For this proposition we rely on the judgment of the Hon’be Apex Court in the case of Radhasoami Satsang vs. CIT reported in [1992] 60 Taxman 248 (SC) wherein it was held as under:- “14. On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter—and if there was no change it was in support of the assessee—we do not think the question should have been reopened and contrary to what had been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken…………”

In view of the above discussion and respectfully following the decision of the Hon’ble Apex Court in the case of Radhasoami Satsang (supra), Assessment Year: 2015-16 New Millenium Technology Management Pvt. Ltd. P a g e | 6 we set aside the order of the ld. CIT(A) and direct the Assessing Officer to treat the sum of Rs.52,91,943/- as Short Term Capital Gain.

In the result, appeal of the assessee is allowed.

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध अिधकरण अपीलीय आयकर कोलकाता/DR,ITAT, Kolkata, , , 6. गाड" फाईल /Guard file.