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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM Smt. Kiran D. Khandelwal,
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2010-11.
The only grievance of assessee relates to treatment of short term capital gain of Rs.25,54,555/- as business income.
Rival contentions have been heard and record perused.
Briefly stated facts of the case is that the assessee is an individual deriving income from salary, house property, capital gains and income from other sources. The assessee had shown short term capital gain of Rs.25,54,555/- arising from transactions in shares which was treated as business income by the Assessing Officer on the plea of high volume and 2 Smt. Kiran D. Khandelwal frequency of transaction of purchase and sale. By the impugned order CIT(A) confirmed the action of AO against which assessee is in further appeal before us.
Contention of learned A.R was that department had accepted assessee’s claim of short term capital gains in earlier years, therefore, rule of consistency should be followed when the facts and circumstances are same during the year under consideration. For the purpose on the other hand, learned D.R placed reliance on the decision of lower authorities. Learned AR placed reliance on the following decisions :- i) CIT Vs. Gopal Purohit, 336 ITR 287; ii) Dr. Priyanka Doctor Vs. ACIT, ITA No.1454/Mum/2012, dated 22- 4-2014; iii) Dr. Rahul Doctor Vs. ACIT, ITA No.827/Mum/2012, dated 5-12- 2014; iv) Darshak Dadbhawala Vs. ACIT, ITA No.3522/Mum/2012, dated 5-12-2014 vi) ACIT Vs. Mrs. Kinnary Sanghavi, 56 Taxmann.com 288; vii) Hitesh Satishchandra Doshi Vs. JCIT, 140 TTJ 32; and viii) Janak s. Rangwalla Vs. ACIT, 11 SOT 627.
We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders and cited at bar by ld. AR and ld. DR during the course of hearing before us in the context of factual matrix of the case.We found that during the year the assessee has LTCG in 5 scrips and STCG in 60 scrips. The AO accepted LTCG but treated the STCG as business income. We also found that for A.Y.2007-08, scrutiny assessment u/s.143(3) was completed. In earlier and subsequent years also orders u/s.143(1) were passed. In all 3 Smt. Kiran D. Khandelwal these years, the capital gains declared by the assessee was accepted as short term or long term depending on the period of holding. Only in this isolate year, the AO has changed the treatment of income which is contrary to the accepted legal position by the jurisdictional High Court in the case of Gopal Purohit (336 ITR 287), SLP against the same preferred by the department has been dismissed by the Hon’ble Supreme Court vide order dated 15/11/2010. The frequency and repetition of the purchase and sale transactions play important role, but the same is not conclusive and other factors like main business / profession of assessee, intention while purchasing shares, holding the same as investment, earning of dividend income thereon etc., are required to be seen for reaching to the conclusion regarding assessee being investor of trader in shares. We found that Assessee had acquired the shares with intention of holding as investment. Therefore, gains arising on its sale is liable to be assessed as capital gains rather than business income. Even the principle of res judicata is not applicable in income tax proceedings but the principle of consistency requires that the view taken in one year should be followed in subsequent years unless the facts or the legal position justify departure there from; reliance can be placed in this respect on the authorities of the Hon’ble Bombay High Court in ‘CIT vs. Darius Pandole’ [(2011 330 ITR 485 (Bom.)] and in ‘CIT vs. Gopal Purohit [(2011) 336 ITR 287 (Bom.).
The shares held as investment for more than 12 months were accepted by the AO as long term investment, under these facts and circumstances,
4 Smt. Kiran D. Khandelwal we do not find any merit for not accepting the capital gain earned in respect of shares held for less than 12 months as short term capital gains. 8. In view of the above discussion, we direct the AO to treat gain so earned on sale of shares as short term capital gains in place of business income. 9. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on this 23/11/2016