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TMI Blog2012 (8) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... urable CIT(A), Aurangabad, erred in not appreciating the fact that the assessee had carried on continuously and systematically trading in shares with a view to earn an income which amounts to income from business or profession and not short term capital gains. (3) The Honourable CIT(A), Aurangabad, erred in not appreciating the fact that while determining the nature and character of assessee's transactions in shares principles and aspects of substantial nature of transaction, magnitude of purchase and sale, ratio between purchases and sales with its holding as per Circular No.4/2007 was duly considered in assessee's case. (4) On the facts and circumstances of the case as to whether the case in which no scrutiny was made in ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relied on Instructions No. 1827 and Circular No. 4/2007 dated 15/6/2007. The A.O. has also relied on various decisions in support of his contention. As regards the first contention of the A.O. about substantial turnover and frequent transactions, it has been held in the case of Janak S. Rangwala Vs. ACIT 11 SOT 627 (Mum) that magnitude of transaction does not alter character of transaction. Similar ratio has been laid down in the case of Sureshkumar Seksaria Vs. ACIT (2010) 1 ITR 783 (Trib)(Mum). The reliance placed by the A.O. on Instruction No. 1827 and Circular No. 4/2007 is also misplaced as in these instruction and circular, it has been stated that various factors together shall determined the nature of transaction. The said instruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial short term and long term capital gain in the preceding assessment year Le. A.Yrs. 2005-06, 2006-07 and 2007-08 and the same has been accepted and assessed by the A.O. as capital gain. In view of the above facts, I am inclined to agree with the contention of the appellant that he has earned capital gain and not business income. 7.2(i) Further the issue has been analyzed in various decisions. The Hon'ble ITAT 'G' Bench Mumbai has laid down in the cases of Nagindas P. Sheth-HUF Vs. ACIT 21(3), Mumbai-51, ITA No. 961 and 1836/Mum/2010. (2011) - TIOL - 228 ITAT, Mumbai A.Y. 2006-07 that where the transactions in shares are delivery based, the appellant has used own funds for purchase of shares and where the assessee did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The A.O. has accepted the long term capital gain, however has treated short term capital gain as business income. The CIT(A) has also confirmed the order of the AO. relying on the CBDT Instruction No. 1827 and stating that the principle of res judicate is not applicable to the Income-tax proceedings. On the above facts the Hon'ble ITAT, Mumbai has held that the Rule of consistency as propounded by Hon'ble Bombay High Court in the case of CIT Vs. Gopal Purohit (2010) 34 DTR 52 (Bom) will squarely be applicable to the fact of the present case. It has been held that the A.O. and CIT(A) have erred in treating the short term capital gain of ₹ 1,54,03,274/- as business income. 7.3 In view of the above facts and discussion and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as treated the surplus on sale of shares claimed by the assessee as short term capital gains, as business income as the assessee has indulged in bulk turnover by entering into frequent transactions and has earned substantial income. The Assessing Officer also relied on Instruction No.1827 and Circular No.4/2007 dated 15.06.2007. The Assessing Officer also relied on various decisions in support of his contention. With regard to substantial turnover and frequent transactions, it has been held in the case of Janak S.Rangwala vs. ACIT 11 SOT 627 (Mum) that magnitude of transaction does not alter character of transaction. Instruction No.1827 and Circular No.4/2007 was found misplaced as in these Instruction and Circular, it has been stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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