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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH
सुनवाई की तायीख / Date of Hearing : 25.10.2016 घोषणा की तायीख /Date of Pronouncement : 25.10.2016 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the Revenue on 25.4.2013 is against the order of the CIT (A)-8, Mumbai dated 22.2.2013 for the assessment year 2009-2010. In this appeal, Revenue raised the following grounds which read as under:- “1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition made by the AO of Rs. 60,57,182/- treating business loss as short term capital loss.
2. On the facts and in the circumstances of the case and in law, the impugned order of the Ld CIT (A) is contrary to law and consequently merits to be set aside and that of the Assessing Officer be restored.” The only issue raised in this appeal relates to deletion of addition of Rs. 2. 60,57,182/- treating the business loss as short term capital loss. Briefing the relevant facts, Ld Counsel for the assessee submitted that the assessee, for the first time, entered into transactions relating to purchase and sale of shares and they were shown as stock-in-trade in the books of accounts. In the process, assessee earned loss and the same was shown as business loss. In the assessment, AO treated the same as short term capital loss. However, in the first appellate proceedings, CIT (A) considered the facts of the case, the entries in the books of account, the Circular No.4 of 2007 of CBDT and also appreciated the other aspects of holding period, number of transactions etc and granted relief to the assessee. CIT (A) relied heavily on the order of the Tribunal in the case of Smt. Harsha N. Mehta vs. DCIT (2011) 43 SOT 332 (Mumbai) for the proposition that the frequency, holding period / number of scrips, volume, being less, cannot be treated as short term capital gains. Paras 2.3(c) to 2.3(e) of the CIT (A) are relevant in this regard. Accordingly, CIT (A) granted relief to the assessee.
Before us, Ld DR for the Revenue relied heavily on the order of the AO and mentioned that the order of the CIT (A) requires reversal.
On the other hand, Ld Counsel for the assessee brought our attention to the above referred facts of the case, number of transactions, volume, turnover, number of scrips, holding period etc and demonstrated that the order of the CIT (A) is fair and reasonable and it does not call for any interference. He also submitted that in the subsequent assessment years there is no change in the claim of the assessee and the AO accepted the claim without any additions. Further, bringing our attention to the Board Circular No.6 of 2016, dated 29.2.2016, Ld Counsel for the assessee demonstrated as per the para 3(a) of the said Circular, AO is not permitted to change the head of income from „business income‟ to the capital gains unless there is any material to contribute against the claim of the assessee. According to para 4 of the said Circular, only bogus claims or sham transactions alone are exempted from the Rule mentioned in para 3(a) of the said Circular 6/2016 (supra).
On hearing both the parties and on perusal of the order of the CIT (A) in general and para 2.3 of his order in particular, we find, the order of the CIT (A) is fair and reasonable and it does not call for any interference. For the sake completeness of this order the said para 2.3(e) is extracted as under:- “2.3(e) Therefore, in the present case, the appellant has shown share transaction as business and also claimed the loss incurred in share trading transactions as business loss. The AO is not correct in coming to a conclusion that loss of Rs. 60,57,182/- is short term capital loss and not business loss particularly when high frequency and voluminous transactions with low holding period is there. In view of this the addition made by the AO is accordingly deleted.”
In our view, the CIT (A) came to the above conclusion relying on the coordinate Bench decision in the case of Smt. Harsha N. Mehta (supra). Further, we