Shree Padmasagar Exports Pvt. Ltd. v. Dy. CIT

INCOME TAX ACT, 1961

--Head of income--Business income or capital gainsBusiness of investment and finance----Where assessee, irrespective of the period, had been treating the income arising from sale and purchase of share as STCG, lower authorities could not dispute the same as 'business transaction' Magnitute of transaction would not alter nature of transaction.--Assessee was engaged in business of investment and finance. Assessee filed its return of income declaring certain income under short term as well as long term capital gains. AO observing that in most of the cases, sale-purchase of shares transactions had been completed in a period within open month to three month and activity of sale and purchase of shares had been carried from systematically, treated in come from STCG as business income. Held: Assessee had been treating the income arising from the sale and purchase of the share as STCG, therefore, lower authorities could not dispute the same as 'business income'. In view of decision in CIT v. Gopal Purohit (2011) 336 ITR 28 (Bom-HC), magnitude of the transactions does not alter the nature of the transactions. Therefore, magnitude of transactions carried out by the assessee should not be very material in coming to the conclusion that income in question was income from business. Though the res judicator was not applicable but the principal of consistency would definitely apply and on that basis the claim of the assessee should be held proper. Accordingly, the order of authorities below was reversed and ground raised by assessee was allowed.