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TMI Blog2017 (10) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for statistical purposes. Income from transaction of sale of shares - Capital gain or business income - Held that:- A.O. in preceding assessment year 2008-09 has assessed the income from sale of share transaction as business income. Therefore, on rule of consistency, the A.O. should not take a different view on identical facts. The Ld. CIT(A) in detail considered this issue by considering various tests i.e., intention of the assessee at the time of purchase of shares, borrowed funds used by assessee, frequency of the transaction in assessment year under appeal and holding of the shares as stock-in-trade etc., and thus, he has come to the conclusion that transactions are in the nature of business transactions and the income as business income. The cumulative effect of the fact was thus, for treatment of income from transaction in shares, as business income. - ITA.No.5978/Del./2014 And ITA.No.5760/Del./2014 - - - Dated:- 17-10-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Shri Subhash Verma, Sr. D.R. For The Assessee : Shri Vijay Kumar Gupta, Advocate ORDER PER BHAVNESH SAINI, J.M. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, prior to completion of the assessment for A.Y. 2008-09. The A.O. therefore, noted that there is a change in the method of accounting just to set-off his taxable income from liquor trading business. The A.O. also noted that assessee has shown capital investment of ₹ 4,50,43,763 in the share trading account which is much more than the capital investment in the liquor trading business. It is noted that as per Board circular and decisions of the Tribunal and the Courts, some of the principles have been laid to decide whether transaction is business or investment which are like - The volume and frequency of the transaction, whether assessee used own funds or borrowed funds, whether assessee earned tax free dividend income and has paid STT, the value of closing stock etc., The A.O. considering the above test held that assessee is an investor and not a trader and the loss of ₹ 1,83,81,003 from the equity trading was treated as short term capital loss and the assessee is not be allowed the set off loss from the business profit of liquor trading. 3.2. The A.O. further noted as regards long term capital gains on sale of property that assessee has shown long term capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and submitted that additional evidence may be admitted on the issue of computation of short term capital gains. The assessee also filed written submissions to explain the nature of business activities from trading in shares etc., 4.1. Remand report from the A.O. was called for. The Ld. CIT(A) on going through the additional documents noted that none of the agreements are registered and discussed various other material and also noted that no justification has been provided as to why these evidences/documents were not produced during assessment proceedings. No justification was made for non-production of the documents because these documents were with the assessee and no reasons have been explained why the assessee has not made any efforts to collect the relevant papers. The A.O. asked for the documents on 19th December, 2011 and A.O. completed the assessment on 30th December, 2011. Therefore, sufficient time is given to produce the relevant documents of the purchase. The Ld. CIT(A) considering these facts, rejected the application under Rule 46A of the I.T. Rules. The Ld. CIT(A) thereafter, proceeded to decide both the issues on merits. 4.2. The Ld. CIT(A) considering the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted, it was held that assessee did not produce any documents to prove cost of acquisition, therefore, capital gain was taken at the same amount of ₹ 4.95 crores and decision of the A.O. was upheld. 5. The Revenue is in appeal challenging the order of the Ld. CIT(A) in holding capital gain of ₹ 1,83,81,003 as business loss. 5.1. The assessee in its appeal challenged the order of the Ld. CIT(A) in rejecting the application under Rule 46A of the I.T. Rules, 1962 and in taking the cost of acquisition at NIL of land sold during the period as against indexed cost of acquisition claimed by assessee for a sum of ₹ 1,28,30,783. 6. The Learned Counsel for the Assessee submitted that A.O. did not grant sufficient time to produce the documents to prove cost of acquisition of properties on which capital gain was earned. The assessee could not trace-out the documents at assessment stage and it took sufficient time in obtaining the documents from M/s. Whirlpool of India Limited. The same were therefore, produced before the Ld. CIT(A) for admission as additional evidences which were relevant to the matter in issue. Therefore, the same should be admitted by Ld. CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 to furnish the purchase documents of the relevant property. Since these documents could not be collected, therefore, the same could not be filed before A.O. The A.O. passed the order on 30th December, 2011 and as such it could not be treated that reasonable and sufficient time have been given to the assessee to procure the documents of purchase of the property to produce at assessment stage. The A.O. has given only 11 days time to the assessee to file the documents of the purchase for the purpose of computing the long term capital gains. Therefore, no sufficient time have been given to the assessee to produce the documents of purchase of property at assessment stage. This is sufficient reason to admit the additional evidence at the first appellate stage. It may also be noted here that the purchase documents are relevant for the purpose of computing the long term capital gains and prove the cost of acquisition of the property. Therefore, these additional evidence goes to the route of the matter and affect quantum of taxable income of the assessee. Since these documents are relevant and goes to the route of the matter and are crucial for the decision making process, therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the High Court as to whether the transaction in question is business income or capital gains. The A.O. in preceding assessment year 2008-09 has assessed the income from sale of share transaction as business income. Therefore, on rule of consistency, the A.O. should not take a different view on identical facts. The Ld. CIT(A) in detail considered this issue by considering various tests i.e., intention of the assessee at the time of purchase of shares, borrowed funds used by assessee, frequency of the transaction in assessment year under appeal and holding of the shares as stock-in-trade etc., and thus, he has come to the conclusion that transactions are in the nature of business transactions and the income as business income. The cumulative effect of the fact was thus, for treatment of income from transaction in shares, as business income. Since no infirmity have been pointed out in the order of the Ld. CIT(A) in holding the share transaction to be assessed as business income, we do not find any reason to interfere with the orders of the Ld. CIT(A) in allowing this ground of appeal of the assessee. Therefore, departmental appeal fails and is accordingly dismissed. 10. In the r ..... 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