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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI ASHWANI TANEJA (ACOUNTANT MEMBER)
O R D E R Per ASHWANI TANEJA, AM
This appeal is filed by the assessee against the order of the Commissioner of Income-tax-12, Mumbai [hereinafter called the Ld.CIT(A)] dated 12-02-2013 passed against assessment order u/s 143(3) dt 29-11-2010 for A.Y. 2008-09 on the following grounds:
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in not appreciating that the Appellant was carrying on the business of investment in shares for e last ten years and was assessed to Income-tax under the "Capital Gains" and not under the head Profits and Gains of the business'.”
The only effective ground raised by the assessee before us is that the capital gain earned by the assessee on account of purchase and sale of shares has been shown by the assessee under the head ‘’Income from capital gain’ which has been wrongly assessed under the head ‘income from profits and gains of business / profession’.
The facts of the case are that during the year under consideration, the assessee had shown short term capital gain of Rs. 15,31,166 on sale of shares. During the course of assessment proceedings, it has been noted by the AO that assessee was dealing in number of scrips with high frequency as well as low holding period and, therefore, it constituted business of the assessee; therefore, the resultant gain was brought to tax under the head ‘income from business’. The assessee filed appeal before Ld. CIT(A), where the order of AO was upheld.
Being aggrieved, assessee filed appeal before us and submitted that since assessment year 1999-2000, the assessee has been dealing in shares and has been showing the same as part of investment and resultant gain is taxable under the head ‘income from capital gain’. In A.Y. 2001-02 & 2002-03, identical income was assessed u/s 143(3) under the head ‘income from capital gain’. In the remaining years also the claim of the assessee has been accepted as such albeit no assessment has been made u/s 143(3) by the AO. Reliance has been placed on the judgement of Hon’ble Bombay High Court in the case of CIT vs Dilip V Variya dt 09-01-2013 in of 2011 and CIT vs Gopal Purohit 336 ITR 287 (Bom).
Per contra, the Ld. DR merely submitted that since assessee had large volume of transactions, his income should be assessed under the head ‘Income from business’ and principles of res judicata does not apply to income-tax proceedings.
We have gone through the facts of the case, heard both the parties and also gone through the orders of lower authorities as well as judgements of Hon’ble Bombay High Court placed before us. It is noted by us at the very outset that the assessee has been showing identical income under the head ‘Income from capital gain’ since A.Y. 1999-2000 till date. The amount of shares has always been disclosed under the head ‘Investments’ and these are stated to have never been disclosed as part of ‘stock-in-trade’. This income has always been assessed under the head ‘capital gains’. Our attention was drawn to assessment orders passed u/s 143(3) for A.Ys 2000-01 and 2002-03 wherein identical income has been assessed under the head ‘Income from capital gains’. It was further submitted that the AO did not choose to scrutinise other returns of remaining assessment years. It indicates that stance of the assessee has always been accepted and no fault has been found therein. Our attention was drawn on upon judgement of Hon’ble Bombay High Court in the case of CIT vs Dilip V Variya wherein in the identical circumstances, Hon’ble High Court observed as under:- “3) The dispute in the present case is whether the income earned from the sale of shares is admissible as business income under the head capital gain. It is the case of the revenue that the Assessing officer taking into account the volume and turn over coupled with period of share holding and the value of transaction in shares concluded that the respondent assessee was carrying on share trading business. Thus, the income was liable to tax.
4) However, both the Commissioner of Income Tax (Appeals) as well as Tribunal have recorded a finding of fact that the respondent assessee was carrying business of investment in shares for last 30 years and for the last 25 years was assessed to tax under the head capital gains and not under the head of profit and gains of business by the revenue. The revenue never treated the shares as stock in trade of the respondent assessee. This finding that the respondent assessee is not carrying on business of shares trading is a concurrent finding of fact arrived at and both by the CIT (Appeals) and the Tribunal. The appellant revenue has not been able to show that this finding of fact is perverse. In the circumstances, no question of law arises.”
It is further noted that identical view has been adopted by Hon’ble Bombay High Court in the case of CIT vs Gopal Purohit (supra). We do not find any justification on the part of the revenue to suddenly take a contrary stand in the year before us. Thus, we direct the AO to accept the stand of the assessee and assessee this income under the head ‘Income from capital gains’ as has been assessed in all the preceding years.
As a result, appeal filed by the assessee is allowed. Order pronounced in the court on this 13th day of July, 2016.