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TMI Blog2015 (5) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding assessment year for which similar activity has been held to be assessable under the head capital gain. There is also no substantial difference in the activities carried out by the assessee in individual capacity vis-ŕ-vis in the capacity of HUF. The assessee did not utilize the borrowed funds for making investment as the entire investment is made out of own capital of the assessee. Keeping in view all these facts, which have been accepted by Ld. CIT(A) by detailed discussion in the case of HUF and also in view of facts of the present case and position depicted in the charts, we are of the opinion that Ld. CIT(A) did not commit any error concluding that such income of the assessee was assessable under the head “capital gain" - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... rips 31 3. Purchase amount 15,22,33,241 4. No. of shares sold 5,06,222 5. No. of scrips 31 6. Sale amount 23,44,14,593 ITA No.3359/Mum/2011: Sr.No. Particulars 1. No of shares bought 16,57,741 2. No. of Scrips 63 3. Purchase amount 30,10,97,079 4. No. of shares sold 16,57,741 5. No. of scrips 61 6. Sale amount 36,59,93,159 2.3 The individual assessee in respect of A.Y 2007-08 has been assessed by the AO vide order dated 27/11/2009, passed under section 143(3) of the Act, wherein the income returned by the assesee from sale and purchase of share have been assessed under the head capital gain. Copy of this order is filed at page 126 to 128 of the paper book. The share dealing of the individual assessee in respect of A.Y 2006-07 to 2010-11 are described in the following chart reproduced at page-7 of the order of Ld. CIT(A). ITA NO.3357/MUM/2011: Assessment Year Capital Gain Cost of Investments at the year end No. of scrip in Portfolio Market Value of Investment at the year-end 2006-07 829004 2511109 8 5065984 2007-08 3726560 10368709 11 10160267 2008-09 82044891 36723532 16 29963560 2009-10 (4652527) 22095682 13 10284405 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale and purchase of shares being higher, the AO came to the conclusion that the income earned by these assessees from sale and purchase of shares would amount to income assessable under the head business income and accordingly, AO assessed the income arising out of sale and purchase of shares as business income. 3. Aggrieved, assessee filed an appeal before Ld. CIT(A). It was submitted that assessee is earning income from investment in shares from year to year and the number of transactions is also not high. No borrowed funds have been utilized for the purpose of investment in shares. Thus, it was pleaded that keeping in view the facts of the case, which have not been rightly appreciating by the AO, the income has wrongly been assessed under the head "business income" and the same is assessable as income giving rise to assessable under the head "capital gain". 3.1 In the case of HUF, it was brought to the notice of Ld. CIT(A) that several observations of AO in the assessment orders were wrong which Ld. CIT(A) has accepted and allowed the relief to the assessee with the following observations: "DECISION WITH REASONING: "5.1 I have considered the submissions of the representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the transaction. The transaction in whole has to be taken into consideration and the magnitude of the transaction does not alter the nature of transaction. Though the principle of res judicata does not apply to the Income-tax Proceedings as each year is an independent year of the assessment but in order to maintain consistency, it is a judicially accepted principle that same view should be adopted for the subsequent years, unless there is a material change in the facts. Their Lordships of Hon'ble Supreme Court in the Radhasoami Satsang v. CIT [1992] 193 ITR 321have categorically held as under : "... Strictly speaking, res judicata does not apply to income-tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year". The same view has been taken by the Hon'ble Delhi High Court in CIT v. Neo Poly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assesee." The above decision of the Hon'ble Mumbai Tribunal supports the case of the appellant especially when there are no borrowed funds utilized for investment in shares. 5.5 In the light of above jurisdictional decisions and for the other factual findings given above, I direct the AO to accept the claim of the appellant by accept by accepting the short term capital gain admitted by the appellant." 3.2 In the case of individual noting the fact that similar income in respect of immediate preceding year was assessed by the AO as giving rise to income assessable under the head "capital gain", Ld. CIT(A) following the decision of Tribunal inter alia including in the case of Gopal Purohit vs. JCIT, 29 SOT 117 has allowed the relief to the assessee. 4. Ld. CIT-DR, after narrating the facts, reading from the assessment order passed in the case of HUF submitted that the activity of sale and purchase of shares carried out by the assessee was in the nature of business as it has been carried out in a regular manner and volume and turnover is also high. Period of holding is also low, therefore, the income earned by the assessee can only be characterized as income earned out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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