2018 (3) TMI 1163 - HC - Income Tax

Claim of Short Term Capital Gain sought to be set off against Short Term Capital Loss - Held that - Revenue authorities including the CIT(A) and the ITAT carried out a detailed analysis of the transactions in question including the volume of holding, duration of holding and the dividend earned and other essential details. The lower authorities-including the AO considered the cumulative effect of these factors and also all the relevant authorities, starting from the judgment of the Supreme Court in Raja Bahadur Visheshwara Singh vs. Commissioner of Income Tax, (1960 (12) TMI 12 - SUPREME Court). In this background the assessee s assertion that the previous year s assessment-which had accepted the reporting of the transaction which he claims to be identical, is unpersuasive. The previous year s assessment order (for AY 2008-09) in fact did not lead any discussion on this aspect and appear to have merely accepted the assessee s contention. Those cannot by any stretch of imagination be conclusive. At any rate in such cases, one cannot apply the principle of res judicata or estoppel.

Summary

Issues Involved:
Characterization of income as Short Term Capital Gain or Business Income for assessment year 2010-11.

Analysis:
1. The primary issue in this case was whether the assessee's claim of Short Term Capital Gain of ?37,11,501/- set off against Short Term Capital Loss of ?45,60,673/- in the preceding year was unjustifiably denied by the lower appellate authorities. The Assessing Officer (AO) rejected the assessee's contentions and characterized the sum/income reported as business income towards capital gains and capital loss. The CIT(A) and ITAT also independently analyzed the facts and concluded that the income reported had to be characterized as business income based on detailed transactions, volume of shares traded, duration held, and dividends earned.

2. The Tribunal observed that the assessee engaged in numerous share transactions, including intraday transactions, and maintained separate portfolios for business and investment. The Tribunal found no justification to discard the findings of the lower authorities regarding the characterization of income. The petitioner argued that similar transactions in past years were accepted as capital gains, but the Court noted that the previous year's assessment did not discuss this aspect in detail and cannot be conclusive.

3. The petitioner further contended that the AO's emphasis on the duration of holding overlooked the fact that the shares were not taken delivery of and were transacted during the day. The assessee relied on a decision of the Bombay High Court to support their argument. However, the Court found that the Revenue authorities conducted a thorough analysis of the transactions, considering various factors and legal precedents, leading to the conclusion that no substantial question of law arose. The Court dismissed the appeal, stating that the issue pertained to the pure appreciation of facts, and all pending applications were disposed of accordingly.