TMI Blog2013 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... AO treated the short term capital gain as business profit. The CIT(A) allowed the assessee’s appeal upheld the short term capital gain also upheld by Tribunal. In the assessment year 2006-07 long term capital gain has been accepted by the AO. Only short term capital gain was disputed by the AO. The CIT(A) allowed assessee’s appeal. And the revenue went in appeal before the Tribunal which has been dismissed. In the assessment year under consideration the material fact also remained that the AO accepted the claimed long term capital gain in the order framed u/s 143(3). The CIT(A) keeping in view the past history of the case has also accepted the assessee’s claim of short term capital gain. The revenue in its appeal before the Tribunal has not raised any ground on the issue of capital gain. Thus as decided in the case of CIT vs. M/s. Escorts Ltd. (2011 (2) TMI 579 - DELHI HIGH COURT) where the nature of transactions have been accepted in the past, the CIT could have had no occasion to take recourse to revisionary powers u/s 263 on the fundamental aspect of the transactions in issue on which a view has been taken in earlier years. As per the past history of the case and in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the Assessing Officer to consider the issue of loss in derivative trading. 2. The relevant facts are that the assessee has been dealing in shares and securities. It maintains dual portfolios, one in trading and another for capital investment. During the year the assessee claimed business profit of Rs. 2,72,70,650/- from the dealing in shares. It claimed short term capital gain of Rs. 45,51,449/- and long term capital gains of Rs. 13,55,68,839/- totaling to Rs. 14,01,20,388/- on the sales of shares and securities held as investments. In its return of income it declared an income of Rs. 17,04,020/- as short term capital gain after setting off the current year s business loss of Rs. 28,47,433/- from the total short term capital gain of Rs. 45,51,449/-. It also declared in its return the long term capital gain of Rs. 13,55,68,839/- and dividend income of Rs.1,32,74,683/-. The assessment u/s 143(3) was framed determining the taxable income of Rs. 1,72,34,811/-. The AO treated the entire short term capital gain as business income and accepted the long term capital gain as such. The assessee preferred appeal against the assessment of the short term capital gain as business inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of assessment proceedings vide letter dated 25.9.2009. Thus it is wrong to allege by the Ld. CIT that sufficient inquiries or any inquiry was not made by the AO before accepting the claimed long term capital gain and the loss in derivative trading. He submitted further that mainly because the Ld. CIT was having another view contrary to the view taken by the AO, provisions u/s 263 of the Act cannot be invoked. He pointed out that long term capital gain of Rs. 13,55,68,839/- claimed is on shares held as investments from the assessment years 2004-05 to 2006-07. The assessee had declared the transactions as investments in those assessment years and it was accepted as such by the AO in those assessment years. The gain or loss on some of shares sold in the assessment year 2006-07 out of the purchases in assessment years 2004-05 and 2005-06 held as long term investments and long term capital gain declared thereon has been accepted. He submitted that during the year under consideration the assessee derived income in the form of dividend and long term capital gain and short term capital gain on sale of investments. Besides the capital gain (long term and short term), the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue has not raised any ground on the issue of capital gain. The Ld. AR placed reliance on the following decisions :- 1. CIT vs M/s. Escorts Ltd. (Delhi High Court order dated 1.2.2011, ITA No. 14 / 1999) 2. CIT vs. Gulmohar Finance Ltd. (2008) 170 Taxman 483 (Delhi) 3. Malabar Industries Co. (243 ITR 83) 4. CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC) 5. CIT vs. Anil Kumar Sharma (2010) 194 Taxman 504 (Delhi) 6. CIT vs. Sunbeam Auto Ltd. (2010) 189 Taxman 436 (Del) 7. ITO vs. D.G. Housing Projects Ltd. (Delhi) High Court order dated 1.3.2012 ITA No. 179/2011 8. CIT vs. Hero Auto Ltd. (Delhi High Court order dated 12.3.2012, ITA No. 146/2012) 9. CIT vs. Gabriel India Ltd. (1993) 71 Taxman 585 (Bom) 5. The Ld. DR on the other hand tried to justify the revisionary order in question. He submitted that frequency of the transactions has not been examined by the AO. He has simply accepted the claimed gain and loss. 6. In the rejoinder the Ld. AR submitted that all the details of the transaction as required from time to time by the AO were furnished by the assessee before the AO as it is evident from page No. 169 to 173 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Delhi High Court in the case of CIT vs. M/s. Escorts Ltd. (Supra) has been pleased to hold that where the nature of transactions have been accepted in the past, the CIT could have had no occasion to take recourse to revisionary powers u/s 263 of the Act on the fundamental aspect of the transactions in issue on which a view has been taken in earlier years. As per the past history of the case and in accordance with the principle of consistency, we are of the view that the only view which the AO could have taken was to accept the long term capital gain as such. Having gone through the queries raised by the AO in the notice u/s 142 (1) of the Act issued during the course of assessment proceedings and reply thereto submitted by the assessee before him, copies thereof have been made available at page Nos. 146 to 147 of the paper book, we find that necessary queries were raised by the AO on the issues which remained the subject matter of the revisionary order. The Ld. CIT was thus not right in his finding that sufficient enquires or any inquiry was not raised by the AO on the issues before accepting the claimed long term capital gain and loss in derivative trading. We also find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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