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TMI Blog2015 (10) TMI 2005X X X X Extracts X X X X X X X X Extracts X X X X ..... h sides on this point, therefore, each case has to be decided on its own facts” The aforesaid observation of the Tribunal itself suggests that each case is to be decided having regard to the totality of its facts and circumstances. Therefore, in our view the decision in the case of Shri Chhitubhai N Patel(supra) relied upon does not help the assessee in the present case. We, therefore, hold that the gain/loss on purchase and sale of shares, may it be long term or short term, be assessed as business income and not as capital gain being canvassed by the assessee. - Decided against assessee. - ITA No.379 /MUM/2011, ITA No.5407/MUM/2012, C.O.NO.252/MUM/2012 - - - Dated:- 11-9-2015 - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Revenue : Shri Premanand J. For The Assessee : Shri Deepak Trashawala ORDER PER G.S. PANNU,AM: The captioned appeals, pertaining to assessment years 2007-08 and 2009-10 relate to the same assessee and involve a common issue, therefore, they have been clubbed and heard together and a consolidated order is being passed for the sake of brevity. 2. The only issue in the captioned appeals relates to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed orders of the Tribunal in the case of the assessee for assessment year 2005-06(supra) and 2006-07(supra) and held that the incomes earned on transactions of sale and purchase of shares is liable to assessed as business income . 4. In this background, Ld. Representative for the assessee has vehemently argued that the fact-position in assessment years under consideration is quite different from those considered by the Tribunal in assessment years 2005-06(supra) and 2006-07(supra). By adverting to the Paper Book filed for the assessment year 2007-08, it is contended that the details of the long term capital gain for the assessment year 2007-08 amounting to ₹ 22,86,675/- show that assessee has dealt with in only 5 Scrips and that there is no repetitive transactions. Similarly, reference has been invited to the statement showing short term capital gains for the year under consideration amounting to ₹ 1,16,989/-, whereby it is contended that transactions have been done in 35 Scrips only and the same does not show any intention to trade in shares. It is also pointed out with reference to Profit and loss account for the assessment year 2007-08, placed at page 14 of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. I say that the Income Tax matters were fully attended to under the personal guidance of Previous Director Shri. Late Darshanjit Singh. He had undergone an Angioplasty Operation of his heart on 17th February, 2008 and was thereafter advised a complete rest. Due to his medical condition, he was unable to give his full attention to the Income Tax matters and besides himself no one in the Company was conversant with the facts of the case. I say that after the prolonged illness for which he was also hospitalized on various dated, the said Shri. Darshanjit Singh expired on 12th November, 2010. 6. The Honourable Tribunal passed the orders for the Assessment Year 2005- 2006 on 29-10-2010 and for Assessment Year 2006-2007 on 22-12-2010. Shri. Darshanjit Singh passed away on 12-11-2010. Hence, I say that the Assessee did not have the benefit of Shri. Darshanjit Singh s guidance when the cases for the Assessment Year 2005-2006 and Assessment Year 2006-2007 came up before the Honourable Tribunal. 7. I say that the consistent approach of the Assessing Officer in assessing the Income from the sale of shares as Capital Gain or Income from Business depending upon the treatment gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistent approach of the Revenue prior to assessment year 2005-06 be considered and the claim of the assessee treating the gains of purchase and sale of shares as capital gains be upheld. In support of the aforesaid approach, reliance has been placed on the decision of Mumbai Bench of the Tribunal in the case of Shri Chhitubhai N Patel, ITA NO.5238/Mum/2009 dated 20/12/2012, wherein also under somewhat similar circumstances the Tribunal upheld the plea of the assessee of treating the gain on sale and purchase of shares as capital gains. 6. On the other hand, Ld. Departmental Representative appearing for the Revenue has defended the action of the Assessing Officer by pointing out that the same is in consonance with the decision of the Tribunal in assessee s own case for the assessment years 2005-06 (supra) and 2006-07(supra). Ld. Departmental Representative pointed out that though the objects of the assessee are export of garments but no such activity has been carried out and that the only significant activity shown in the Balance sheet is sale and purchase of shares/ securities. Ld. Departmental Representative also referred to the financial statements for the various years plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 7.1 The case of the Assessing Officer is that the assessee has not carried out any business activity and that the activity of sale and purchase of shares by itself was a trading activity carried out by the assessee. According to him assessee has indulged in the activity of sale and purchase of shares as a business venture with a motive of trading in shares/securities. Thus, the long term/short term capital gains declared by the assessee has been assessed as business income. 7.2 In this context, in assessment year 2005-06, similar dispute has arisen between the assessee and the Revenue and Tribunal vide its order dated 29/10/2010(supra) has upheld the stand of the Assessing Officer of treating the transaction of dealing in shares as a business activity. The relevant discussion in the order of the Tribunal dated 29/10/2010 reads as under:- 5. We have noted that as regards assessee s contention that investments were made to earn dividends, a factual proposition on which almost entire web of argument rests, the actual dividend earning during entire year was ₹ 3,28,981 on an investment of ₹ 3,89,24,520. This works out to less than 1% yield on investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earn dividend income. We have also noted, as evident from a perusal of statements of long term and short term capital gains at pages 14 to 17 of the paperbook, that there are several transactions of sale and purchase in respect of the same scrip, which reflects the systematic activity of sale and purchase for the purpose of realizing gains on profits. In some of the cases, holding period of shares is just a few days (such as 1, 5,6,8, and 9 days). There can not be investments for such short period, and these transactions can only be in the nature of share trading transactions. The assessee has also used borrowed funds, even if not entirely, for investments in shares. The assessee is also engaged in trading in futures and options which shows that the assessee was engaged in the kind of activities which belong to the same genus as the trading in shares and securities. The purchase of shares out of committed funds received as customer advances can ordinarily be only in the nature of deployment of funds to make profits by dealing in shares rather than investing in shares. All these factors taken together clearly show that the claim of the assessee to the effect that these shares were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment and the principles of res-judicata are not applicable in the income tax assessments. So however, it has also to be appreciated that a fact-situation or a finding with regard to an issue, which permeates through more than one assessment year, deserves to be applied uniformly. In this back ground of the matter, the moot question is as to whether the adjudication rendered by the Tribunal in assessment year 2005-06(supra) after analysing the entire factual matrix with regard to the nature of activities of sale and purchase and sale of shares carried out by the assessee, and which has been further upheld in assessment year 2006-07(supra), can be revisited by a subsequent Bench without there being any cogent and compelling reasons for making a departure. Ostensibly, the plea of the assessee for making a departure from the orders of the Tribunal for assessment years 2005-06 and 2006-07 deserves to be examined in the light of the applicable factual position. In this regard, we find that the pattern in which assessee has undertaken its activity of purchase and sale of shares is quite in consonance with the activities undertaken in Assessment Years 2005-06 and 2006-07 (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments. Therefore, at this stage, this Bench cannot re-appreciate the whole issue all over again and depart from the findings of the Bench for Assessment Year 2005-06(supra), which has duly considered the fact position prevailing prior to the assessment year 2005-06. As a consequence, we, therefore, do not find any cogent and credible reason to depart from the precedents by way of the orders of the Tribunal for Assessment Years 2005-06 and 2006-07 (supra), wherein the assessee s transaction of purchase and sale of shares have been held liable to be assessed as business incomes. Thus, on this aspect, assessee fails. 7.7 Before parting, we may refer to the reliance placed by the Ld. Representative appearing for the assessee on the decision of our Coordinate Bench in the case of Shri Chhitubhai N Patel(supra). In the said case, Tribunal was deciding the head under which the income from purchase and sale of shares was liable to be assessed i.e. whether capital gains or business income, in relation to assessment year 2006-07. The Revenue had pointed out that in assessment year 2004-05 assessee had himself admitted the income from purchase and sale of shares as business income an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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