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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 ..... 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 and capital gain on sale of shares in India. Assessee was investing in shares since last 5-6- years and was claiming dividend income and capital gain thereon. In all the earlier years, the capital gain declared by the assessee was accepted, however, in the assessment year under consideration i.e. 2007-08, the AO held that assessee has no other business in India, therefore, fully engaged in the business of purchase and sale of shares, therefore, gain arising on sale of such shares was liable to be taxed as busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has sought to tax short term capital gain as business income whereas he has accepted the assessee's claim on long term capital gains. Not only in the earlier assessment years but also in the subsequent assessment years 2010-11 assessee's claim have been accepted while framing scrutiny assessment u/s.143(3). In respect of assessment year 2009-2010 addition made by the AO 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 subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en dealt with regard to the principle of consistency and the intention of assessee to hold investment, the frequency of transaction, etc. 6. Merely because the assessee liquidates its investment within a short span of time, which had given better overall earning to the assessee, would not lead to the conclusion that the assessee had no intention to keep on the funds as investor in equity shares, but was actually intended to trade in shares. 7. Here, it is pertinent to mention the intention of Government for introducing the security transaction tax and exempt the long term capital gain earned from sale of shares and levying 10 % tax on short term capital gain earned on sale of shares. It is noted that under the old provisions of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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 sale of such securities to an investor including FIIs shall be charged at the rate of ten per cent. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object and purpose of the particular provisions ITA No.introduction by the Finance Bill has been recognized by this Court in K.P. Verghese - vs ITO 1981), 131 ITR 597 (SC), at 609. Again in the case of R & B Falcon (A) Pvt. Ltd vs CIT (2008) 301 ITR 309 (SC), it was held that (Page 323):- Rules of executive construction in a situation of this nature may also be applied. Where a representation is made by the makers of legislation at the time of introduction of Bill or construction thereupon is put by the executive upon its coming into force, the carries great weight.'' 10. The Hon'ble Delhi High Court in ARJ Security Printers, 264 ITR 276 and Neo Pollypack Pvt Ltd. 245 ITR 492 (Del.) held that even when the doctrine of res judicata doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee is holding the shares in his books as investor. The decision in the case of Janak S Ranawala, 11 SOT 627 (Mum.) further supports the case of the assessee. Likewise, the decision from Hon'ble Madras High Court in CIT vs N.S.S. Investment Pvt Ltd. 227 ITR 149 (Mad), CIT vs. Associated Industrial Development Company, 82 ITR 526 (SC) supports the case of the assessee. In the present appeal, we note that the assessee made investment in shares with intention to earn dividend income on appreciation of price of shares. Therefore, it cannot be said that the assessee was doing business. 12. We have gone through the judicial pronouncements cited at bar by the ld. AR which are fully applicable to the facts of the instant case. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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