Income-tax Appellate Tribunal - E Bench Mumbai Before S/Shri Rajendra,Accountant Member and C.N. Prasad,Judicial Member ITA/6408/Mum/2013, Assessment Years: 2010-11 Income tax officer Shri Shekhar Jeetendra Kothari Wd-21(2)(2), C-10/Room No.507, Vs. 199/2, LeelaNivas, Ground Floor, 5th Floor, Bandra Kurla Complex, Gujarat Society,Sion(W), Mumbai-22. Bandra, Mumbai-400 051. PAN:AAEPK 3150 D (Appellant) ( Respondent) Revenue by:Shri Sathya Moorthy-DR Assessee by: Shri Bhupendra Shah Date of Hearing: 19.07.2016 Date of Pronouncement: 18.10.2016 , 1961 254(1) Order u/s.254(1)of Income-tax Act ,1961(Act) PER RAJENDRA, AM- Challenging order,dated 02/08/2013 of CIT (A)-32,Mumbai, Assessing officer(AO) has filed present appeal. Assessee,an individual, filed his return of income on 29/07/2010, declaring total income at Rs. 5,00,507/-.The AO completed assessment, under section 143 (3) of Act,on 21/11/ 2012,determining his income at Rs.68.08 lakhs. 2.The solitary ground of appeal is about treating income from share trading business as Short-Term Capital Gains (STCG) and not under head income from business.During assessment proceedings, AO found that assessee had declared income from STCG at Rs. 62.36 lakhs and LTCG at Rs. 1.23 lakhs. He called for details of capital gains earned by assessee. After considering data submitted by assessee, she held that income earned by assessee was from business and not from capital gains, that assessee treatment to shares was to be considered for deciding issue, that he had not held shares as asset.Applying various parameters, she held that assessee was holding shares as stock in trade, that 31 were bought and sold during year under appeal, that he had bought shares amounting to Rs. 5.11 crores and had sold shares of Rs. 4.52 crores, that he had earned dividend income of Rs. 2.35 lakhs, that he had initial capital of Rs. 94.90 lakhs, that major source of income for assessee was from purchase and sale of shares. Finally, she made addition of Rs. 62.60 lakhs towards income and by assessee from purchase and sale of equity shares. 6408/M/13-Shekhar Kothari 3.Aggrieved by order of AO, assessee preferred appeal before First Appellate Authority (FAA). Before him it was argued that AO had owed detailed submission made by him and cases relied upon, that all shares dealt in by assessee were listed on stock exchange and STT had been paid, that once STT was paid same was covered by concessional rate of 15% under section 115A of Act that dealing with 79 scrips during holy could not be basis for taking same as business income, that there was no bar for buying shares again after selling, that there was no restriction on frequency of transaction, that share sale from one month to one year equally qualified for being STCG, that assessee could have both activities i.e investment as well as speculation, that AO had disregarded Demat statement and photo copies of bank accounts, that in earlier year STCG on similar facts was accepted by then AO. assessee relied upon several case laws. After considering submission of assessee and assessment order, FAA held that while deciding head of income with regard to share transactions several parameters had to be looked into i.e. motive of investor, delivery of shares, frequency of transactions, composition of portfolios and holding period of shares, that assessee had not borrowed any funds were utilised same for purchasing shares, that in his books of accounts he had reflected transaction is investment and not as stock in trade, that assessee had no separate setup/admitted of office for dealing into shares, that he was involved into jewellery making business, that for assessment year 2009 10 income of assessee was assessed under section 143 (3), that in that year STCL declared by assessee had been allowed to be carry -forward for subsequent years, that rules of consistency, as pronounced by honorable Bombay High Court in case of Gopal Purohit (228 CTR 522) were squarely applicable to facts of case. Finally, he allowed appeal filed by assessee. 4.During course of hearing before us, Departmental Representative(DR) supported order of AO. Authorised Representative (AR) relied upon upon order of FAA. 5.We have heard rival submissions. It is found that assessee had not borrowed any money for making investment in shares,that his own capital for year under consideration was more than 90 lakhs,that in earlier years share trading activity was considered by then AO under head capital gains, that for year under consideration facts were 2 6408/M/13-Shekhar Kothari same,that AO did not bring out any difference in facts of earlier years as compared with facts for year under appeal.The rule of consistency stipulates that AO should not deviate from path adapted by his predecessor if facts are similar in subsequent years. In case under consideration, after deliberating upon various parameters, FAA had arrived at conclusion that activities carried out by assessee would not fall in category of business. In our opinion, order of AO does not suffer from any legal or factual infirmity. Therefore, upholding his order we decide effective ground of appeal against AO. As result,appeal filed by AO stands dismissed Order pronounced in open court on 18th October, 2016. 18 , 2016 Sd/- Sd/ (C.N. Prasad ) ( Rajendra) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 18.10.2016. Jv.Sr.PS. Copy of Order forwarded to : 1.Appellant 2. Respondent 3.The concerned CIT(A) 4.The concerned CIT 5.DR E Bench, ITAT, Mumbai 6.Guard File //True Copy// BY ORDER, Dy./Asst. Registrar ITAT, Mumbai. 3 Income tax officer Wd-21(2)(2), Mumbai v. Shekhar Jeetendra Kothari