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TMI Blog2012 (7) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ld for more than 12 months is assessable under the head 'long term capital gain' - appeal of the revenue is dismissed. - ITA No.906/Mum/2010 - - - Dated:- 24-2-2012 - B Ramakotaiah, V Durga Rao, JJ. For Appellant: Mr A K Nayak For Respondent: Mr Sanjay Parikh ORDER Per: V Durga Rao: This appeal filed by the Revenue is directed against the order of CIT(A)-2, Mumbai, passed on 13/11//2009 for the assessment year 2006-07. 2. The ground raised by the revenue is directed against the action of the CIT(A) in directing the AO to accept the claim of the long term capital gain on profit arriving on purchase and sale of shares. 3. Briefly the facts of the case are that the assessee is an individual employed with Tata Consulta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account showing shares as 'investment' is not determinative factor to decide the real nature of transaction. For this proposition the AO relied the AO relied on various judgements including the decision of the Supreme Court in the case of Tuticorin Alkali Chemical's case, 227 ITR 172 . The AO also placed reliance on the Board's Circular No. 4/2007 dt. 15/06/07. For treating the profit on sale of investment in shares as business income, the AO placed reliance on various judgments. Finally, the AO held that the assessee himself treated the purchase and sale of shares within 12 months as business activity and, therefore, the profit on arising out of purchase and sale of shares held for more than 12 months should also be assessed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of short term investments as short term capital gain as against business income offered by the assessee. He further submitted that shares on which long term capital gain was admitted were held as investment in the balance sheet of the assessee and the assessee has been consistently offering income on the profit on sale of shares held for more than one year under the head long term capital gain and the same has been accepted by the department in the earlier years. He pointed out that out of long term capital gain of Rs. 22,63,433/-, Rs. 16,77,933/- represents long term capital gain on account of sale of shares of TCS which were allotted to the assessee @ Rs. 1 per share by the employer under ESOP and there is no justification for treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment u/s.143(3). Further it is seen from the balance sheet that investment in shares was shown under the head investment and the investment in shares stood at Rs.29,17660/- as on 3L3.2006 as against the total investment of Rs.1,41,42,300/-. Thus the claim of the appellant that only a fraction of total investment was made in shares is correct. Further, admittedly all the shares were transferred in the name of the appellant as evidenced by the demat account and subsequently sold. A perusal of the long term capital gain working filed by the appellant chows that the break up is as below: On sale of units in mutual fund : Rs. 2,44,763 On sole of TCS shares obtained Under ESOP : Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of res judicata does not apply to the Income-tax proceedings as each year is an independent year of the assessment but in order to maintain consistency, it is a judicially accepted principle that same view should be adopted for the subsequent years, unless there is d material change in the facts. Their lordships of Hon ble Supreme Court in the Radhasoami Satsang v CIT[1992] 193 ITR 321 have categorically held as under: Strictly speaking, resjudicata does not apply to incometax proceedings. Though, each assessment year being 0 unit, what was in one year might not apply in the following year, where a fundamental aspect permeating through different assessment years has in fond as a fact one way or the other and parties have allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e number of shares within a short interval of purchase which proves that there was no intention of assessee to hold the shares as investment and earn dividend on the same as the intention was to earn profit only. 6. On the other hand, the learned counsel for the assessee besides relying upon the order of the CIT(A) reiterated the submissions as made before the CIT(A). 7. We have heard both the parties and perused the record as well as gone through the orders of the authorities below. The issue involved in this appeal is whether the income earned by the assessee on profit arriving on purchase and sale of shares is capital gain or business income ?. The AO held that the assessee himself treated the purchase and sale of shares within 12 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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