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TMI Blog2021 (10) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Vimal Punmiya, A.R For the Revenue : Shri Gurbinder Singh, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-49, Mumbai, dated 06.05.2019, which in turn arises from the order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short Act ), dated 24.03.2015 for A.Y. 2012-13. The revenue has assailed the impugned order on the following grounds before us: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in treating the short term capital loss of ₹ 6.18,51,987/- as income under the head 'capital gains instead of treating it as business income/loss , ignoring the fact of the high volume traded and the fact of the short length of holding of these shares. 2. The appellant prays that the order of The Ld. ClT(A) on the above grounds be set aside and that on the AO be restored. 2. Briefly stated, the assessee firm had e-filed its return of income for A.Y. 2012-13 on 29.09.2012, declaring an income of Rs.nil (after claiming carry forward of business loss of ₹ 8,08,58,145/-). The return of income filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case in re-characterizing the STCL of ₹ 6,18,51,987/- as a business loss. Before the CIT(A) the assessee relied on the order passed by the ITAT in its own case for A.Y. 2007-08 and A.Y. 2008-09, wherein in the backdrop of identical facts that were involved in the case of the assessee for the aforementioned years the Tribunal had vide its respective orders passed in ITA No. 4646/Mum/2011, dated 03.05.2013 for A.Y 2007-08 and ITA No. 5595/Mum/2010, dated 11.03.2015 for A.Y. 2008-09, had decided the issue in favor of the assessee and held that there was no justification on the part of the A.O in treating the Short term capital gain/loss as income from business or profession. Also, reliance was placed by the assessee on the order passed by the CIT(A) in its own case for A.Y 2009-10 and A.Y. 2010-11, wherein too the issue was decided in its favor. Backed by the aforesaid facts, the CIT(A) following the view taken by the Tribunal in the assessee s own case for the preceding years, viz. A.Y.2007-08 and A.Y. 2008-09 as well as that arrived at by his predecessor in the case of the assessee for A.Y. 2010-11 in appeal No. CIT(A)-44/ACIT 32(2)/ITA-18/2012/13, therein decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of records, it is observed that the Ld. ClT(A)-44. Mumbai vide order dated 12.12,2014 in Appeal No. CIT(A)-44/ACIT.32(2)/ITA-181/2012-13, in appellant's own case for AY 2010-11 after following the decision of the Hon'ble ITAT in appellant's own case for earlier year, has allowed the appeal of the appellant on this issue and has held as under: I have through the facts of the present year and also the decision of the Hon'ble Mumbai Tribunal in above referred case in ITA No. 5595 5625/Mum/2010 dated 3.5.2013 and I find that the facts and circumstances are identical. Therefore, respectfully following the decisions of the Hon'ble Mumbai Tribunal, it is decided that the sale and purchase of shares is gain assessable under the head Short Term Capital Gain. The ground of appeal is decided in favour of the assessee. The facts and circumstances of the issue under consideration remain similar as that in AY 2010-11 and hence respectfully following the above referred decision of my Ld. Predecessor in appellant's own case for AY 2010-11, it is decided the gain/loss arising on sale and purchase of shares under consideration is assessable under the head 'S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fall in the stock market. For proving so a chart has been filed, according to which there was a fall in the BSE index. It is for that reason the assessee has suffered loss in the initial transactions. From the sale and purchase entered into by the assessee it has been described that on three days assessee has purchased those shares and on 10 days those shares were sold. A substantial portion of the shares purchased are unsold and are outstanding in the balance sheet under the head investment . From the transactions entered into by the assessee it cannot be said there was a frequent sale and purchase of shares. The reason of sale is supported by fall of BSE index. Thus according to facts and circumstances of the case, it cannot be said that assessee has entered into activity of sale and purchase of shares with a view to trade. 7.1 Though the AO in the assessment order has mentioned that assessee has utilized borrowed funds, but during the course of hearing reference was made to P L account to show that assessee does not bear any interest liability except a paltry sum debited to P L account which is an amount of ₹ 18,541/-, and represents interest on cash/credit account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of shares entered into by the assessee during the year under consideration cannot be held to be an activity giving rise to an income assessable under the head income from business or profession. The investment was made by the assessee in the activity of sale and purchase of share was with an intention to invest and shares unsold have been shown under the head investment . The sale at the short period was supported by just cause i.e. fall in price of shares. Therefore, we reverse the finding recorded by Ld. CIT(A) and hold that the gain earned by the assessee was from sale and purchase of shares is gain assessable under the head short term capital gain . The grounds of appeal filed by the assessee is allowed. 6. On the other hand, Ld. DR relied on the decision of Hon ble Bombay High Court in the case of Gopal Purohit, 188 Taxman 140 (Bom); Wallfort Financial Services Ltd., 41 SOT 200; Manmohak Properties P. Ltd., 39 taxmann.com 105; Koradia Construction P. Ltd., 39 taxmann.com; Circular No.4/2007, dated 15-6-2007; Karan R Bahl, 37 taxmann.com 29; Rajan R Bahl, 12 taxmann.com 447; Nashik Capital Financial Services Ltd., 33 taxmann.com 190, Shah-La Investment Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar shares with same demat account, broker, mixed funds, having maintained no separate accounts prove that it is only in share trading business during the year under consideration. 7. Ld. AR submitted that most of cases cited above by ld. DR favours the plea taken by the assessee, which have also been upheld by the Tribunal in assessee s own case in the immediately preceding assessment year. In respect of decision in the case of Gopal Purohit, ld. AR submitted that the ratio laid down by the jurisdictional High Court squarely applies in assessee s case insofar as assessee has two separate portfolios maintained and only delivery based transaction were offered for Taxation under the Head Income from Capital Gains . The same are reflected in books of account under the head investment only. In respect of Wallfort Financial Services Ltd. (supra), ld. AR contended that facts are totally different insofar as shares were held by assessee as investment whereas in the aforesaid case, shares were shown as stockin-trade, moreover, assessee itself has offered gain as business income in the preceding year. As per ld. AR the case law relied by the ld. DR in case of Manmohak Properties P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because assessee liquidates its investment within short span of time which had given better overall earning to assessee. It would not lead to conclusion that assessee had no intention to keep on funds as investor in equity shares, but was actually intended to trade in share. For this purpose reliance was placed the decision of Tribunal in the case of DCIT V /s E-Cap Partners [2014] 45 taxmann.com 342 (Mumbai-Trib) and Manish Karwa V /s ACIT [2014] 45 taxmann.com 351 (Ind. Trib). As per ld. AR the Tribunal held assessee as investor in earlier year, therefore, assessee has to be considered as investor in subsequent year, for this purpose reliance was placed on the decision of DCIT Vs. KRA Holding Trading P. Ltd. {2012} 26 taxmann.com 48(Pune Trib.). In view of the above discussion and after going through the order of the Tribunal in assessee s own case for the immediately preceding assessment year, wherein facts and circumstances were the same, we direct the AO to treat the profit on sale of shares as short term and long term capital gains depending on the period of holding of shares. We direct accordingly. As the facts and the issue involved in the case of the assessee for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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