DEEPAK PRAVINCHANDRA SHAH, MUMBAI V. ADDL CIT 13(1), MUMBAI

ITA 6953/MUM/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92717 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Business income; Rule of consistency; Transactions in derivatives; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6953/M/2008 ASSESSMENT YEAR: 2005 - 06 M/S. DEEPAK PRAVINCHANDRA SHAH, 1 ST FLOOR, DECOR HOUSE, 212/216 , SHERIFF DEVJI STREET, MUMBAI - 400 003 PAN: AACPS 5197E VS. THE ADDL. CIT 13(1), MUMBAI . (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PRAKASH K. JOTWANI, A.R. REVENUE BY : SHRI LO VE KUMAR, D.R. DATE OF HEARING : 07.05. 201 5 DATE OF PRONOUNCEMENT : 05.06. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 17.09.2008 OF THE COMMISSIONER OF INCOME TAX (A PPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2005 - 06 . 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT AS PER THE INSTRUCTIONS OF HIS CLIENT HE DOES NOT PRESS GROUND 1 & 2 WHICH, OTHERWISE, ARE GENERAL NATURE. HENCE THE SAME ARE ACCORDINGLY DISMISSED BEING NOT PRESSED. 3. GROUND NOS.3 & 4 ARE RELATING TO THE ISSUE AS TO WHETHER THE INCOME EARNED BY THE ASSESSEE FROM SALE AND PURCHASE OF SHARES IS TO BE ASSESSED AS CAPITAL GAINS OR BUSINESS INCOME. ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 2 4. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTICED THAT THE ASSESSEE HAD DISCLOSED SHORT TERM CAPITAL GAINS OF RS. 48 , 64 , 832/ - CLAIMED TO HAVE BEEN EARN ED AF TER 01.10.04. A FTER SET OFF OF SHORT TERM CAPITAL LOSS PRIOR TO 01.10.2004 OF RS.3 , 06 , 778/ - AND OTHER EXPENSES OF RS. 11, 17 , 091/ - , THE ASSESSEE HAD RETURNED NET SHORT TERM CAPITAL GAINS OF RS.34 , 40 , 863/ - . THE AO FURTHER OBSERVED THAT THE ASSESSEE HAD ALSO CLAIMED LONG TERM CAPITAL LOSS PRIOR TO 30.09.04 AT RS. 1 , 19 , 697/ - . THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS AFTER 01.10.04 AT RS.3 , 75 , 069/ - . THE AO OBSERVED THAT THE ASSESSEE HAD OFFERED SHORT TERM CAPITAL GAINS AT A CONCESSIONAL RATE OF 10 % AS PER THE PROVISIONS OF NEWLY INSERTED SECTION 111A OF THE INCOME TAX ACT. HE FURTHER OBSERVED THAT AS PER THE AMENDED PROVISIONS , THE SHORT TERM CAPITAL GAINS AFTER 01.10.04 WERE LIABLE TO BE CHARGED TO TAX AT THE RATE OF 10%. BEFORE 01.10.04, THE SH ORT TERM CAPITAL GAINS WERE CHARGED AT NORMAL RATES. HE, THEREAFTER, OBSERVED FROM THE DETAILS OF SHARE TRANSACTIONS THAT THE ASSESSEE HAD DONE NUMEROUS SALE AND PURCHASE TRANSACTIONS IN SHARES AND FURTHER THAT INTEREST BEARING BORROWED FUNDS WERE ALSO US ED FOR THE SAID PURPOSE. THE ASSESSEE IN THE REVISED WORKING HAD ALSO FURNISHED A LOSS OF RS.2 , 95 , 052/ - FROM SPECULATIVE TRANSACTIONS . T HAT THE MOTIVE OF THE ASSESSEE FOR PURCHASE OF SHARES WAS NOT INVESTMENT BUT TRADING IN SHARES. THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS, ALSO SUBMITTED REVISED COMPUTATION OF SHORT TERM CAPITAL GAINS AT RS.44,70,799/ - AND LONG TERM CAPITAL GAINS AT RS . 7,56,814/ - . THE PERIOD OF HOLDING IN CASE OF MANY SCRIPTS WAS VERY SHORT AND THERE WERE VOLUMINOUS TRANSA CTIONS. HE THEREFORE HELD THAT THE ASSESSEE COULD NOT BE TREATED AS INVESTOR IN SHARES BUT AS A TRADER. HE ACCORDINGLY ASSESSED THE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE AS BUSINESS INCOME OF THE ASSESSEE. 5. IN APPEAL, THE LD. CIT(A) UPHELD THE FINDING OF THE AO. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE H AS SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS BEEN OFFERING THE INCOME FROM SALE AND PURCHASE OF SHARES AS CAPITAL GAINS EVEN PRIOR TO 01.10.04. HE HAS DRAWN OUR ATTENTION TO ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR THE A.Y. 2 001 - 02 WHEREIN THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL LOSS AND SHORT TERM CAPITAL LOSS HAD BEEN ACCEPTED AND EVEN THE CAPITAL LOSS WHICH COULD NOT BE ADJUSTED AGAINST THE BUSINESS INCOME AND INCOME FROM OTHER SOURCES WAS ALLOWED TO BE CA RRIED F ORWARD TO THE SUBSEQUENT YEAR. THE LD. A.R. HAS FURTHER BROUGHT OUR ATTENTION TO ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR THE A.Y. 2003 - 04 WHEREIN THE ASSESSEE HA D BEEN SHOWN TO BE IN BROKERAGE , SPECULATION BUSINESS AND HAVING INCOME FR OM CAPITAL GAINS AND OTHER SOURCES. THE AO HAD ACCEPTED SHORT TERM CAPITAL LOSS AND LONG TERM CAPITAL LOSS CLAIMED BY THE ASSESSEE. THE LD. A.R. HAS FURTHER SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION SECURITY TRANSACTION TAX WAS INTRODUCED BY W AY OF CHAPTER - VII OF FINANCE (2) ACT, 2004 W.E.F. 01.10.2004. BY THE SAME FINANCE ACT, SECTION 10(38), SECTION 111A AND 88E WERE INSERTED BRINGING IN A SPECIAL SCHEME FOR TAXATION OF TRADING AND INVESTING IN RESPECT OF SECURITIES W.E.F. 01.10.2004. AS PE R THE SAID SCHEME, ALL THE TRANSACTIONS OF SECURITIES ON STOCK EXCHANGE DONE ON OR AFTER 01.10.2004 WOULD ENTITLE SECURITIES TRANSACTION TAX. ALL LONG TERM CAPITAL GAINS ARISING ON SUCH SECURITIES WERE MADE EXEMPT UNDER SECTION 10(38) AND SHORT TERM CAPIT AL GAINS ARISING ON SALE OF SECURITIES ON WHICH SECURITY TRANSACTION TAX HAD BEEN PAID WERE ENTITLED TO A CONCESSIONAL RATE OF TAX AT THE RATE OF 10% UNDER SECTION 111A. THE TRADERS WERE ALSO COMPENSATED FOR THE ADDITIONAL SECURITY TRANSACTION TAX PAID BY WAY OF REBATE UNDER SECTION 88E. THE LD. A.R. HAS SUBMITTED THAT MERELY BECAUSE THE SCHEME OF TAXATION WAS ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 4 AMENDED/CHANGED DURING THE MID OF THE YEAR UNDER CONSIDERATION, THE AO THEREFORE VENTURED INTO THE SHARE TRANSACTION ACTIVITY OF THE ASSESSEE AND T REATED THE ASSESSEE AS TRADER , WHEREAS , IN THE EARLIER ASSESSMENT YEARS , WHERE SUCH BENEFIT OF CONCESSIONAL RATE OF TAX WAS NOT AVAILABLE TO THE ASSESSEE , THE ASSESSEES CLAIM OF INVESTOR IN SHARES HAD CONTINUOUSLY AND CONSISTENTLY BEEN ACCEPTED. THE LD. A.R. HAS FURTHER BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR A.Y. 2006 - 07 I.E. SUBSEQUENT YEAR TO THE ASSESSMENT YEAR UNDER CONSIDERATION, WHEREIN , THE CLAIM OF THE ASSESSEE OF SHORT TERM CAPITAL GAINS HAD BEEN ACCEPTED BY THE AO. THE L D. A.R. HAS FURTHER BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR THE A.Y. 2007 - 08 , WHEREIN THE CLAIM OF THE ASSESSEE OF SHORT TERM CAPITAL GAINS HAD AGAIN BEEN ACCEPTED. SIMILARLY, IN T HE SCRUTINY ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT FOR A.Y. 2008 - 09 , THE CLAIM OF THE ASSESSEE OF CAPITAL GAINS HAS AGAIN BEEN ACCEPTED BY THE DEPARTMENT. FOR THE A.Y. 2009 - 10 ALSO , THE AO HAD ACCEPTED THE CLAIM OF SHORT TERM CAPITAL LOSS OF THE ASSESSEE TREATING THE ASSESSEE AS AN INVESTOR. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE ASSESSEE FROM THE BEGINNING HAD BEEN TREATING ITSELF AS AN INVESTOR IRRESPECTIVE OF THE REBATE/ CONCESSION , IF ANY , GIVEN SUBSEQUENTLY TO THE INVESTORS IN SHA RES AND SECURITIES. HE HAS FURTHER RELIED UPON A CHART TO SHOW THAT THOUGH THE TOTAL NUMBER OF TRANSACTIONS DURING THE YEAR WAS 676, HOWEVER, THE 142 TRANSACTIONS WERE RELATED TO THE SHARES WHICH WERE PURCHASED ON DIFFERENT DATES BUT WERE SOLD ON THE SAME DATE. HE HAS FURTHER SUBMITTED THAT EVEN THE ASSESSEE HAD ALSO EARNED THE LONG TERM CAPITAL GAINS OF RS.7,56,814/ - AND THAT EVEN THE SHORT TERM CAPITAL GAINS WERE EARNED FOR INVESTMENTS RETAINED FOR LESS THAN 30 DAYS TO EVEN UP TO 330 DAYS. THE LD. A.R. HAS FURTHER SUBMITTED THAT PRIOR TO THE YEAR UNDER CONSIDERATION , THE ASSESSEE WAS TREATED AS AN INVESTOR AND EVEN IN THE SUBSEQUENT YEARS THE ASSESSEE HAS BEEN TREATED AS AN INVESTOR. HE HAS FURTHER SUBMITTED THAT BY ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 5 TREATING THE ASSESSEE AS A TRADER FO R THE YEAR UNDER CONSIDERATION ONLY BECAUSE CERTAIN TAX BENEFITS IN RESPECT OF CAPITAL GAINS HAVE BEEN PROVIDED IN V IEW OF THE AMENDED PROVISIONS, THE ASSESSEE HAS BEEN DENIED THE BENEFIT OF CARRIED FORWARD LOSS OF CAPITAL GAINS. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE DEPARTMENT IS SUPPOSED TO MAINTAIN CONSISTENCY IN ITS STAND. BY TREATING AN ASSESSEE AS INVESTOR IN A YEAR AND A TRADER IN ANOTHER YEAR AND THEN AGAIN TREATING HIM AS AN INVESTOR IN SUBSEQUENT YEAR WOULD NOT ONLY CREATE UNCERTAINTY IN T HE MIND OF THE ASSESSEE BUT ALSO DISENTITLE HIM FROM THE ELIGIBLE CLAIMS. IN THE YEAR IN WHICH THE ASSESSEE WOULD BE TREATED AS A TRADER, THE ASSESSEE WOULD LOSE THE BENEFIT OF SET OFF OF CAPITAL LOSS OF THE EARLIER ASSESSMENT YEAR. THEN BY TREATING THE ASSESSEE AS AN INVESTOR IN SUBSEQUENT ASSESSMENT YEAR , THE ASSESSEE WOULD BE DENIED THE BENEFIT OF CLAIM OF SET OFF OF LOSS FROM SALE AND PURCHASE OF SHARES AS THE SAME BEING TREATED AS BUSINESS INCOME/LOSS OF THE ASSESSEE IN EARLIER ASSESSMENT YEAR. HE H AS SUBMITTED THAT THOUGH PRINCIPLE OF RESDJUDICATA IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS, HOWEVER, THE DEPARTMENT IS NOT SUPPOSED TO CHANGE ITS STAND EVERY YEAR AS PER ITS CONVENIENCE AND PUTTING THE ASSESSEE TO LOSS AND DISADVANTAGE IN EITHER OF THE SITUATIONS AS DISCUSSED ABOVE. THE LD. A.R. HAS THEREFORE SUBMITTED THAT THE ASSESSEE WAS ESSENTIALLY AN INVESTOR AND WAS REQUIRED TO BE TREATED SO BY THE REVENUE , WHILE COMPUTING THE INCOME FROM SALE AND PURCHASE OF SHARES FOR THE YEAR UNDER CONSIDE RATION. 7. THE LD. D.R., ON THE OTHER HAND, HAS DRAWN OUR ATTENTION TO THE OBSERVATIONS MADE BY THE AO WITH REGARD TO VOLUME AND FREQUENCY O F TRANSACTION S AND THE INTEREST PAID BY THE ASSESSEE ON THE FUNDS BORROWED FOR THE PURPOSE OF INVESTMENT IN SHARE S. HE, THEREFORE, HAS CONTENDED THAT THE PROFITS EARNED BY THE ASSESSEE FROM SALE AND PURCHASE OF SHARES WERE CORRECTLY TAXED BY THE AO AS BUSINESS INCOME. ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 6 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE RELATING TO THE FACT THAT THE ASSESSEE IN EARLIER YEARS HA S BEEN TREATED BY THE DEPARTMENT AS AN INVESTOR. THE ASSESSEE, AS DISCUSSED ABOVE , HAS BEEN CONTINUOUSLY ALLOWED THE SET OFF OF SHORT TERM CAPITAL LOSS AND LONG TERM CAPITAL LOSS IN THE EARLIER ASSESSMENT YEARS. THE ASSESSEE H AD BEEN DEALING IN TWO TYPES OF TRANSACTIONS IN SECURITIES. THE ASSESSEE HA D SHOWN INVESTMENTS AND HA D CLAIMED CAPITAL GAINS RELATING TO THE SHARES WHICH HAVE BEEN PURCHASED THROUGH DELIVERY BASED TRANSACTIONS IN D - MAT ACCOUNT. THE ASSESSEE HA D ALSO BEEN ENGAGED IN TRADING IN SHARES WHICH WERE SPECULATIVE IN NATURE. INCOME OR LOSS ARISING OUT OF SUCH SPECULATIVE TRANSACTIONS HAD BEEN SEPARATELY AND SPECIFICALLY SHOWN AS SPECULATIVE PROFIT/LOSS IN COMPUTATION OF INCOME AS WELL AS IN THE BALANCE SHEET. TH E ASSESSEE HA D CLAIMED CAPITAL GAINS IN RESPECT OF DELIVERY BASED SHARES TRANSACTIONS AND HA D RETURNED SPECULATIVE PROFIT/LOSS IN RESPECT OF NON DELIVERY BASED TRANSACTIONS IN DERIVATIVES. IT IS ALSO A FACT ON THE FILE THAT BY THE AMENDMENT BROUGHT BY FIN ANCE ACT, 2004 , BY INSERTION OF PROVISIONS OF SECTION 111A AND SECTION 10(38), THE LEVY OF TAX HAS BEEN REDUCED TO 10% ON SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS HAVE BEEN MADE EXEMPT. UNDER THE OLD PROVISIONS OF THE ACT, PROFITS OR GAINS ARI SING TO AN INVESTOR FROM THE TRANSFER OF SECURITIES WERE CHARGED DEPENDING ON THE PERIOD OF HOLDING OF THE SAID SECURITIES. SHORT TERM CAPITAL GAINS WERE TAXED AT APPLICABLE RATES ( NORMAL RATES) AND LONG TERM CAPITAL GAINS WERE TAXED AT THE RATE OF 20% AF TER ADJUSTING FOR INFLATION BY INDEXING THE COST OF ACQUISITION. FOR LISTED SECURITIES, THE TAX PAYER HAD AN OPTION TO PAY TAX ON LONG TERM CAPITAL GAINS AT THE RATE OF 10% BUT WITHOUT INDEXATION. IN CASE OF TRADER IN SECURITIES, HOWEVER, THE CAPITAL GAI NS WERE TAXED AS ANY OTHER NORMAL BUSINESS INCOME. THUS, TAX LIABILITY ON THE INCOME FOR SALE AND PURCHASE OF SHARES AS REGARDS TO SHORT TERM CAPITAL GAINS AND BUSINESS INCOME WAS AT PAR. THE ISSUE OF ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 7 TREATMENT OF INCOME FROM SHARE TRANSACTION AS SHORT T ERM CAPITAL GAINS OR BUSINESS INCOME HAS IN FACT ARISEN AFTER THE AMENDMENT BROUGHT WITH FINANCE ACT, 2004 W.E.F. 01.10.2004. IT IS AN ADMITTED FACT ON THE FILE THAT PRIOR TO THE AMENDMENT WHEN THE TAX OF SHORT TERM CAPITAL GAINS , AS DISCUSSED ABOVE , WAS AT PAR WITH THAT OF BUSINESS INCOME, THE DEPARTMENT HAS BEEN CONSISTENTLY ACCEPTING THE TREATMENT OF INCOME BY THE ASSESSEE AS CAPITAL GAINS. MERELY BECAUSE THE RATE OF TAX HAS BEEN REDUCED IN RESPECT OF SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAIN S HAVE BEEN EXEMPT DURING THE YEAR BY WAY OF AN AMENDMENT TO THE PROVISIONS AS DISCUSSED ABOVE , THAT ITSELF , CANNOT BE A GROUND FOR THE AO TO DEPART FROM ITS CONSISTENT STAND OF TREATING THE ASSESSEE AS AN INVESTOR AND THEREBY TO CHARGE THE INCOME EARNED B Y THE ASSESSEE FROM SHARE TRANSACTIONS AS BUSINESS INCOME. MOREOVER, AS DISCUSSED ABOVE, THE ASSESSEE HAD BEEN MAINTAINING TWO PORTFOLIOS I.E. HE WAS TREATING THE DELIVERY BASED PURCHASES AS INVESTMENTS AND THE NON DELIVERY BASED TRANSACTIONS AS SPECULATI VE. AS DISCUSSED ABOVE, AT THE TIME OF PURCHASE OF SHARES EVEN DURING T HE YEAR BUT PRIOR TO 01.10.2004, THE ASSESSEE WAS NOT GUIDED OR INFLUENCED BY LOWER TA X RATE IN CASE OF SHORT TERM CAPITAL GAINS AS THE RATE FOR BUSINESS INCOME AND SHORT TERM CAPITAL GAINS WAS AT PAR. THE ASSESSEE, HOWEVER, WAS TREATING HIMSELF AS AN INVESTOR AND KEEPING THE DELIVERY BASED SHARES AS INVESTMENTS IN HIS ACCOUNT IRRESPECTIVE OF THE PROBABLE TAX IMPLICATION AS THERE WERE NO SUCH TAX IMPLICATIONS AS DISCUSSED ABOVE. THE I NTENTION OF THE ASSESSEE , WHILE PURCHASING THE SHARE , IS THE IMPORTANT AND GUIDING FACTOR AS TO WHETHER THE SAME WAS PURCHASED WITH AN INTENTION OF INVESTMENT OR FOR TRADING. THE FACTS OF THE CASE AS DISCUSSED ABOVE, CLEARLY REVEAL THAT THE ASSESSEE HAD T REATED THE DELIVERY BASED SHARE TRANSACTIONS AS INVESTMENTS IN HIS ACCOUNT. AS DISCUSSED ABOVE, IF DURING THE M ID OF THE RELEVANT FINANCIAL YEAR , CERTAIN TAX BENEFITS HAVE BEEN GIVEN IN RESPECT OF CAPITAL GAINS , THAT CANNOT, IN ANY WAY, LEAD TO AN ASSUMPT ION OR PRESUMPTION THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 8 PURCHASE OF SHARES WAS THAT OF A TRADER AND NOT OF AN INVESTOR. THE TREATMENT OF THE INVESTMENT IN THE ACCOUNT BOOKS OF THE ASSESSEE WAS ALSO A RELEVANT GUIDING FACTOR. THE AO HAS ALSO NOT POINTED OUT AS TO IN WHAT MANNER THE ACTIVI TY OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HA D BEEN CHANGED FROM INVESTOR TO THAT OF A TRADER ESPECIALLY WHEN THE DEPARTMENT HA D CONSISTENTLY BEEN TREATING HIM AS AN INVESTOR. IT IS ALSO PERTINENT TO MENTION HERE THAT AS DISCUSSED ABOVE, IN SUBSEQUENT ASSESSMENT YEARS THE DEPARTMENT HAS AGAIN ACCEPTED THE ASSESSEE AS AN INVESTOR. IT IS ONLY FOR THIS YEAR UNDER CONSIDERATION THAT THE ASSESSEE HAS BEEN TREATED AS A TRADER BECAUSE OF CERTAIN TAX BENEFIT S GRANTED TO AN INVESTOR IN SECURITIES BY WAY OF AMENDMENT IN THE RELEVANT PROVISIONS OF THE INCOME TAX ACT. THOUGH THE PRINCIPLE OF RESJUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDINGS BUT THE PRINCIPLE OF CONSISTENCY REQUIRES THAT THE VIEW TAKEN IN O NE YEAR SHOULD BE FOLLOWED IN SUBSEQUENT YEARS UNLESS THE FACTS OR THE LEGAL POSITION JUSTIFY DEPARTURE THERE FROM; RELIANCE CAN BE PLACED IN THIS RESPECT ON THE AUTHORITIES OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. DARIUS PANDOLE [(2011 330 ITR 485 (B OM.)] AND IN CIT VS. GOPAL PUROHIT [(2011) 336 ITR 287 (BO M.). 9. IN VIEW OF OUR ABOVE DISCUSSION OF THE MATTER, WE ARE OF THE VIEW THAT THE ASSESSEE IS TO BE TREATED AS AN INVESTOR FOR THE YEAR UNDER CONSIDERATION ALSO. WE HOLD ACCORDINGLY. THE A O, THEREFORE, IS DIRECTED TO TREAT THE INCOME FROM SALE AND PURCHASE OF SHARES AS SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS ACCORDING TO THE PERIOD OF HOLDING AS PER THE PROVISIONS OF LAW. 10. GROUND NO.5 IS RELATING TO LEVY OF INTEREST UNDER SECTION 234 OF THE ACT WHICH BEING CONSEQUENTIAL DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 11. GROUND NO.6 IS GENERAL AND THEREFORE DOES NOT REQUIRE ANY ADJUDICATION. ITA NO.6953/M/2008 M/S. DEEPAK PRAVINCHANDRA SHAH 9 12 . IN VIEW OF OUR DISCUSSION MADE ABOVE, THE APPEAL OF THE ASSESSEE IS HEREBY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.06. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 05.06.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.