COMMISSIONER OF INCOME TAX Vs. GIRISH MOHAN GANERIWALA

JUDGEMENT

(1.) THE assessee-respondent is the managing director of Rajasthan Polyesters Limited. Besides income from salary, he has derived income from dividend and money lending business, During the previous year relevant to the assessment year 1993-94 he sold 62900 shares of Rajasthan Polyesters Limited for a total price of Rs. 33,60,174. According to the assessee, these shares were held as investment for a period of more than 12 months and, therefore, the profit made on the sale of the shares was a long-term capital gain. THE Assessing Officer did not accept his contention and observed that the assessee had been purchasing and selling shares since the assessment year 1991-92 onwards. After referring to the amendment in the Income-tax Act, 1961 (for short "the Act") as made by the Finance Act, 1994, relating to the taxation of capital gains arising from the transfer of rights shares/rights pronouncement, the Assessing Officer assessed the profit shown by the assessee on the sale of shares as his business income. THE assessee filed an appeal before the Commissioner of Income-tax (Appeals) who after considering the material and perusing the case law came to the conclusion that the assessee was not a dealer in shares but was making investment in shares. THE Commissioner of Income-tax (Appeals) found that the income from the sale of shares was liable to be assessed under the head "Capital gains". THE Department felt aggrieved by the order passed by the Commissioner of Income-tax (Appeals) and filed an appeal before the Tribunal which was dismissed on June 8, 2001. It is against this order that the present appeal has been filed by the Revenue under Section 260A of the Act.

(2.) WE have heard counsel for the appellant and perused the orders passed by the Appellate Tribunal and also the order of the Commissioner of Income-tax (Appeals) and are of the view that no substantial question of law arises in this case for this court to entertain the appeal. The Commissioner of Income-tax (Appeals) has discussed the entire issue in detail taking note of the amendments made by the Finance Act, 1994. He also considered the law laid down by the apex court in CIT v. H. Holck Larsen [1986] 160 ITR 67 and followed the same. It is not in dispute that the Department in the previous assessment years had treated such transactions in the hands of the assessee as his income from capital gains and did not dispute that the income derived from the sale of shares was business income. The findings in the previous years, no doubt, do not operate as res judicata but that does not mean that in every subsequent year it is open to the Assessing Officer to take a different view in the matter. Of course, he can take a different view if some fresh material is placed before him. The Commissioner of Income-tax (Appeals) and also the Tribunal have found that no fresh material was placed before the Assessing Officer. On a consideration of the entire material on the record, the authorities below have found that the shares held by the assessee were by way of investment only and that he was not dealing with them. Learned senior counsel appearing for the Department could not point out any legal or factual infirmity in the order of the Tribunal or in the order of the Commissioner of Income-tax (Appeals). The totality of all facts has been examined and correct principles have been applied by the Commissioner of Income-tax (Appeals) in coming to the conclusion that the assessee was only investing in shares. There has thus been no misapplication of any principle of law so as to warrant interference by this court under Section 260A of the Act. Consequently, the appeal is dismissed.