Tribunal treats securities income as capital gains, directs AO to exclude certain receipts from taxable income.

The Tribunal allowed the appeal, treating the income from securities transactions as capital gains and directing the AO to verify and exclude the reimbursement and FD maturity receipts from taxable income.

---

---

Issues Involved:
1. Classification of income from securities transactions as capital gains or business income.
2. Inclusion of travel, stay, food expenditure reimbursements, FD maturity receipts, and bank transfers as income.

Summary:

Issue 1: Classification of Income from Securities Transactions
The assessee contended that he is a salaried employee who invested in the securities market for investment purposes, not as a trader, and thus the income should be treated as capital gain/loss. The AO, however, treated the securities transactions as business activities, applying the provisions of section 44AD(1) of the Income Tax Act, estimating a deemed income of Rs. 2,26,864 at 8% of the turnover of Rs. 28,35,802. The CIT(A) upheld this view, dismissing the appeal on the grounds that the assessee failed to maintain and audit books of accounts as required.

Upon appeal, the Tribunal noted that the assessee is primarily a salaried employee of the World Health Organization, and his regular income source is salary. The Tribunal referred to CBDT Circular No. 6/2016, which allows for the treatment of income from listed shares held for more than 12 months as capital gains. The Tribunal concluded that the AO could not dispute the income offered by the assessee under the head capital gain without providing reasons. Hence, the Tribunal allowed the assessee's ground, treating the income as capital gain.

Issue 2: Inclusion of Reimbursements and FD Maturity Receipts as Income
The AO added Rs. 16,06,387, comprising Rs. 3,37,731 (reimbursement of expenses) and Rs. 12,68,656 (FD maturity receipts), to the assessee's income, treating them as unexplained investments. The CIT(A) upheld this addition, stating that the assessee failed to disclose these receipts in the return of income.

The Tribunal, however, observed that the assessee provided evidence that the amount of Rs. 12,68,656 was the maturity amount of fixed deposits and Rs. 3,37,731 was reimbursement of expenses from the employer. The Tribunal accepted these additional evidences and directed the AO to verify the claims. The Tribunal held that these receipts are not taxable and allowed the ground for statistical purposes, directing the AO to grant relief after verification.

Conclusion:
The Tribunal allowed the appeal, treating the income from securities transactions as capital gains and directing the AO to verify and exclude the reimbursement and FD maturity receipts from taxable income.

---