Question couldn’t be raised for first time before HC if same wasn’t framed during appellate proceedings.

PCIT v. Envision Investment & Finance (P.) Ltd. [2019] 104 taxmann.com 126 (Bombay)

Assessee acquired shares of RNRL, Reliance Capital Ltd., Reliance Communications Ltd, and Reliance Industries Ltd. Profit arising from sale of those shares was shown as Long Term Capital Gain (LTCG). Assessing Officer (AO) treated the entire gain as profit arising out of the business activities of the assessee.

The CIT (Appeals) and the Tribunal, however, gave partial relief to assessee holding that the shares sold after the period of one year would give rise to long-term gain.

Aggrieved by the order of ITAT, revenue filed appeal before the High court. Revenue raised question of applicability of Explanation to section 73 of the Income-tax Act before the High Court and contended that activity of buying and selling of shares by assessee was speculative in nature.

The High court held that the assessee’s activities of buying and selling of shares being speculative in nature with special reference to Explanation to section 73 was not an issue at all before the appellate authorities. Thus, the revenue couldn’t be permitted to raise a contention for the first time in this appeal.

It was also held the Tribunal had noted relevant facts applying correct parameters to come to a conclusion that in relation to shares held by assessee in excess of one year intention was to invest in shares and not to engage itself in business of buying and selling of shares. Thus, revenue’s appeal was to be dismissed