BHARAT BHUSHAN PARSOON, J. - (1.) BY way of this order, we shall dispose of ITA Nos.39, 226 and 227 of 2012 as common questions of fact and law are involved in these appeals. For convenience and clarity, facts have been taken from ITA No.39 of 2012.
(2.) THE assessee dealing in shares and securities filed its return for the assessment year 2006 -07 declaring an income of Rs.1,27,80,378/ -. After processing the return, the case was selected for scrutiny. Notices under Sections 143(2) as also 142(1) of the Income Tax Act, 1961 (for short, the Act) were issued. From information supplied by the assessee, it was found that the assessee was normally deriving its income from the following sources: (i) Dividends received from mutual funds and equity shares; and, (ii) Interest from investment of capital in partnership firm. During regular course of its business, the assessee made an investment of Rs.3 crores during the year in Tata Service Industries Fund (Dividend Plan) on 5.4.2005 for the purpose of earning dividend but this investment was prematurely redeemed on 21.12.2005 for Rs.4,24,70,700/ -. The assessee had booked this profit as a short -term capital gain. The Assessing Officer (hereinafter mentioned as the AO), from the record, had found that the assessee had shown no intention of holding this investment for the full term and rather not even for a year and that the assessee redeemed the investment with a purpose to earn more profits. The AO came to the conclusion that the assessee had made profits from its investment without waiting long enough for the investment to yield benefits in the form of dividends. Consequently, the AO treated the investment shown by the assessee as its stock -in -trade and the revenue generated i.e. Rs.1,24,70,700/ - was taken as business income of the assessee vide an order dated 30.12.2008.
(3.) THE Commissioner of Income Tax (Appeal), Ludhiana [hereinafter mentioned as the CIT(A)] disagreeing with the AO took the purchase of shares as an investment. Addition made in the income, taking it to be income from business, was deleted. In the appeal against this order of CIT(A) preferred by the revenue before the Income Tax Appellate Tribunal (hereinafter mentioned as the ITAT), the revenue had taken the following ground: "That the learned CIT(A) -II has erred in law and on facts in directing the Assessing Officer to consider the income of Rs.1,24,70,700/ - as short term capital gain instead of business income assessed by the Assessing Officer." ;