2016 (3) TMI 1119 - AT - Income Tax

Gain arising from sale of shares - capital gain or business income - Held that - There is categorical finding that the Department had been accepting the stand that the assessee was consistently investing in shares and the capital gains, offered by the assessee was assessed either as long term gain or short term gain while passing order u/s 143(3) of the Act. Identical was the situation for A.Ys.2005-06 and 2006-07 framed u/s 143(3) of the Act and the same were found exempted u/s 10(38) of the Act. These findings of the ld. Commissioner of Income Tax (Appeals) as well as of this Tribunal were not contradicted before us, thus, in the absence of any contrary material, on the principle of consistency, the Department is not expected to take a Uturn and assess the income as business income. So far as the contention of the ld. DR and also the observation of the ld. Commissioner of Income Tax (Appeals) that there was a profit motive, we are not impressed by this submission, because, every investor invest the money for gain and not for loss. In the basis of principle of judicial discipline, consistency has to be followed and once in a particular year, if any view is taken, in the absence of any contrary material, no contrary view is to be taken as finality to the litigation is also a principle which has to be followed. Before us, no contrary facts or any adverse material was brought on record by the Revenue, therefore, on the principle of consistency also, the assessee is having a good case in her favour. - Decided in favour of assessee.

Summary

Issues:
1. Assessment of gain from sale of shares under "profession and gains arising from business or profession" instead of "short term capital gains."

Analysis:
The appellant contested the order of the ld. First Appellate Authority, Mumbai, dated 03/08/2012, regarding the assessment of gain from the sale of shares. The assessee declared income of &8377; 33,36,300/- in the return, showing short term capital gains of &8377; 29,64,051/- from the sale of shares. The Assessing Officer treated the gain as business income due to the frequency and volume of trade, alleging a profit motive. The ld. Commissioner of Income Tax (Appeals) affirmed this view, leading to the appeal before the Tribunal. The appellant argued that a similar issue was decided in their favor for A.Y. 2006-07 by the Tribunal. The Tribunal noted the appellant's consistent investment in shares, with previous assessments accepting the capital gains as either long term or short term, exempted under section 10(38) of the Act. The Tribunal emphasized the principle of consistency and cited relevant case law supporting the maintenance of a consistent approach in the absence of contrary material. The Tribunal ultimately allowed the appeal, emphasizing the absence of adverse material or contrary facts presented by the Revenue.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the assessee's claim of long term and short term capital gains on the sale of shares and mutual funds. The Tribunal emphasized the importance of consistency in assessments and noted the absence of contrary material to support a different treatment of the income. The Tribunal's decision was based on the principle of judicial discipline and the lack of adverse material presented by the Revenue. The appeal of the assessee was allowed, and the order was pronounced on 17/03/2016 in the presence of representatives from both sides.