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TMI Blog2015 (2) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... hed to the conclusion that assessee has traded in shares since he was not having any business in India, whereas the fact is that assessee is an NRI, engaged in his business at Jeddah since more than 30 years. No merit in the action of the lower authorities for treating capital gain as business income. - Decided in favour of assessee - ITA No.9052/Mum/2010 - - - Dated:- 7-1-2015 - SHRI R.C.SHARMA AND SHRI VIJAY PAL RAO, JJ. For The Appellant : Shri Hari S. Raheja For The Respondent : Shri Sachidanand Dubey ORDER PER R.C.SHARMA (A.M.) : This appeal is filed by the assessee against the order of CIT(A), dated 11-11-2010, for the assessment year 2007-08, in the matter of order passed under Section 143(3) of the I.T. Act. 2. The only grievance of assessee relates to CIT(A) s action in confirming the AO s action of treating short term capital gains as business income. 3. Rival contentions have been heard and record perused. From the record, we found that assessee is an individual - non-resident Indian settled in Jeddah since more than 30 years. The assessee was having income from house property, dividend income, perquisites from private limited company an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O by treating capital gain as business income was deleted by the CIT(A) and the Revenue has not filed any appeal against the said order, meaning thereby department had accepted CIT(A) s action for treating same as capital gains. There is no change in the facts and circumstances as well as style and method of earning income during the year as compared to earlier and subsequent years. Assessee has not claimed STT while computing capital gains. Neither it is the case of the AO that assessee has valued the investment at the year end at cost or market price, whichever is lower. It is also not the case of AO that there was any repetitive investment in any script. In respect of the shares held as at the end of the year, the same were reflected as investments in the audited accounts. The average holding period varies from one month to eleven months. During the year assessee has earned dividend income of ₹ 41,13,545/- as against short term capital gain of ₹ 1,07,47,320/-. Thus, the dividend income itself constitute 40% of short term capital gain so earned, thus, showing the nature as that of investment. The intention of the assessee has always been to make investment and not tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t par. However, the issue of treatment of income from share transaction as capital gain or business income has in-fact arisen after the amendment brought with Finance Act - 2004 by insertion of provisions of section 111A and 10(38) as regards to levy of Transaction tax and exemption / concession on capital gain arising from securities entered in a recognized stock exchange. With a view to simplify the tax regime on securities transactions, a tax at the rate of 0.015 per cent. is levied on the value of all the transactions of purchase of securities that take place in a recognized stock exchange in India. This tax is collected by the stock exchange from the purchaser of such securities and paid to the exchequer. The provisions relating to the securities transactions tax are contained in Chapter VII of the Finance (No.2) Bill, 2004, and came into effect from 01.10.2004. Further, clause (38) has been inserted in section 10 of the Income-tax Act, so as to provide exemption from long-term capital gains arising out of securities sold on the stock exchange. A new section 111A has also been inserted and section l15AD is amended, so as to provide that short-term capital gains arising from sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where a issue has been decided consistently in earlier assessment years in particular manner, the same view should prevail in subsequent years unless there is a material change in facts, meaning thereby, there must be material change in the facts. 11. The Mumbai Bench of the Tribunal in the case of Shantilal M Jain vs ACIT vide order dated 27-04-2011 (ITA No. 269/Mum/2010) held that despite large volume of shares transactions, the Assessing Officer cannot ignore the rule of consistency to treat the gains on sale of shares as STCG. In that case, the assessee was engaged in the business of trading of investment in shares and securities offered ₹ 1.54 crores as short term capital gain and ₹ 2.91 crores from long term capital gain. The long term capital gain was accepted whereas short term capital gain was held to be business profit. Since in earlier assessment years the claim of the assessee was consistently accepted as short term capital gain, it was held that the rule of consistency as propounded by Hon'ble Bombay High Court in the case of Gopal Purohit (supra), it is fairly applicable and the income has to be treated as short term capital gain. Identically in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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