2013 (7) TMI 351 - AT - Income Tax

Capital gain or business income - income from transfer of shares - A.O. held it as business income - CIT directed to charge it under capital gain - Held that - Assessee offered similar income from transfer of shares under the head Capital gain in the preceding years which came to be accepted by the Assessing Officer as such - Revenue failed to highlight any distinguishing feature in the facts of the current year vis- -vis the earlier years decided by the AO. - Following decision of CIT v. Gopal Purohit 2010 (1) TMI 7 - BOMBAY HIGH COURT - Decided against Revenue.

Summary

Issues:
- Determination of income as chargeable to tax under the head "Capital gain" instead of Business income for multiple connected assessees for the assessment year 2006-2007.

Analysis:
The Appellate Tribunal, ITAT Mumbai, heard three appeals by the Revenue concerning different but related assessees for the assessment year 2006-2007. The appeals were consolidated due to similar facts. The primary issue revolved around the treatment of income from the transfer of shares as either Capital gain or Business income. The Assessing Officer had treated the income shown by the assessees under the head "Capital gain" as Business income due to a large number of share transactions. However, the learned CIT(A) directed that the income be considered as chargeable to tax under the head "Capital gain." It was noted that in previous years, similar income from share transactions had been accepted as Capital gain by the Assessing Officer. The Tribunal referred to the principle of consistency highlighted in a judgment by the Hon'ble jurisdictional High Court, emphasizing uniformity in treatment when facts are identical. As no distinguishing features were highlighted for the current year, the Tribunal upheld the CIT(A)'s decision based on precedent, emphasizing consistency in treatment.

Regarding the other two appeals, the Departmental Representative acknowledged that the facts and circumstances were identical to the first appeal, except for the amount of gain assessed as Business income. Following the precedent and the principle of consistency, the Tribunal upheld the impugned orders for these two assessees as well. Ultimately, all three appeals were dismissed by the Tribunal based on the consistent treatment of income from share transactions as Capital gain in line with past assessments and the principle of uniformity in treatment when facts are identical.