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2016 (12) TMI 1549 - ITAT MUMBAIIncome from sale of shares - lower authorities treating the short term capital gain and long term gain arising out of sale of shares as business income - taxing the same at normal rate of income-tax, instead of special rates prescribed u/s 111A / 112 of the Act and also denied benefit of exemption u/s 10(38) - Held that:- It is an undisputed fact that in AY 1999-2000 the assessee included its shares as part of ‘investment’ and since then the assessee has been consistent in approach by showing the same under the head ‘investment’ and claiming the income from sale of shares as assessable under the head ‘Income from capital gains’. But the AO breached the consistency approach in the year before us despite the fact that in all earlier and subsequent years the stand of the assessee has been accepted. This approach is not permissible under the law. On the other hand, the assessee has offered the impugned income as assessable under the head ‘capital gains’ in accordance with law and facts and in line with its consistent approach. Thus, after taking into account all the facts and circumstances of the case, and especially in view of the circulars of the Board, we do not find legality in the actions of the lower authorities in assessing the impugned income under the head ‘business’. Thus, the impugned income arising from sale of shares is directed to be assessed under the head ‘capital gains’, i.e. short term capital gain or long term capital gain, as the case may be. The AO is also directed to provide all consequential benefits as have been mentioned in grounds of appeal, after verifying requisite facts, viz. granting of exemption u/s 10(38) wherever applicable, charging of tax on special rate prescribed u/s 111A/112 and setting off of brought forward short term capital losses of AY 2009-10, in accordance with law and facts of this case. - Decided in favour of assessee.
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