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TMI Blog2015 (8) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... eld under investment portfolio, which were valued at the end of the year in the audited balance-sheet at the cost of acquisition and the same were not held as stock-in-trade. The AO has also not controverted the fact that there were no multiple transactions of sale/ purchase of shares and the frequency and magnitude was also very low. The observations of the AO in this regard are baseless, which were rightly demolished by the CIT(A). The view taken by the CIT(A), treating the impugned income as long term capital gain, is sustainable in accordance with law and provisions of the Act and, thus, we uphold the same. - Decided against revenue. - ITA no. 3490/Del/2013 - - - Dated:- 14-8-2015 - SHRI J.S. REDDY AND SHRI C.M. GARG, JJ. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arguments of both sides and carefully perused the material available on record, inter alia, assessment order, impugned order of the CIT(A) and paper book of the assessee, spread over in 161 pages. 5. Ld. DR, supporting the assessment order, submitted that a Portfolio Manager is an agent of the investor and though he may carry on certain transactions in his own name, such transactions are in his capacity as an agent of the investor. Ld. DR further submitted that, therefore, such transactions are the transactions of the investor, carried out through an agent and the income from such transactions is liable to tax as the income of the investor, and would take its colour from the circumstances surrounding the actions of the investor. Ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the provisions of the Companies Act, 1956. Ld. AR further pointed out that the assessee utilised its own funds and not the borrowed funds for the purpose of investment in quoted shares, which were actually investments and, therefore, the CIT(A) was correct in directing the AO to treat the impugned income/ profit as long term capital gain instead of business income . 6.2. Ld. AR took us through the operative paras from 5.3 to 5.5 of the impugned order and submitted that there were no multiple transactions or multiple sales/ purchases of shares and the frequency and magnitude of sale/ purchase was also very low and observations of the AO in this regard are contrary to the facts of the case and hence the AO grossly erred in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tfolio thus the decrease in value as against cost has not been claimed as loss which otherwise would be available if the shares are held as stock in trade. There are no multiple transactions or multiple sales and purchase of shares and the frequency and magnitude was also very less in contrary to the observation of the AO. Therefore, in my opinion, the AO has erred in treating the long term capital gain on the sale of equity shares as business income of the appellant. While it is a fact that res-judicata is not applicable in income tax proceedings, the principal of consistency is accepted by now In Radhasoami Satsang Vs. CIT [1992] 1931TR 321 (SC), it was held that: We are aware of the fact that, strictly speaking, res judicata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities from holding such transactions as business activities in current year? 2. The Tribunal has entered a pure finding of fact that the assessee was engaged in two different types of transactions. The first set of transactions involved investment in shares The second set of transactions involved dealing in shares for the purpose of business (described in paragraph 8.3 of the judgment of the Tribunal has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate port folios, one relating to investment in shares and another relating to business activities involving dealing in shares. The Tribunal held that the delivery based transactions in the present case, should be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not a/so raise any substantial question 5.5. In my view, the case of the appellant company is squarely covered by the judicial pronouncement of the Hon'ble rv1umbai High Court and further confirmed by Hon'ble Supreme Court in the case of CIT vs. Gopal Purohit 5.6 In view of the discussion above and the facts of the case, I am of the considered opinion that the. AO has erred in not appreciating the facts correctly. The income of ₹ 13,79,138/- should be determined as long term capital gain and not business income. Therefore. the AO IS directed to delete to addition of ₹ 13,79,138/- as business income of the appellant. 7.1. In view of above, at the very outset, we note that the AO has not demolished ..... X X X X Extracts X X X X X X X X Extracts X X X X
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