TaxTMI 
TaxTMI 
2011 (3) TMI 607
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....n because of which the Assessing Officer treated the income from sale of shares as business income was that the assessee was in the business of sales/purchase of shares. Certain other income from the sale of shares was shown as business income. The CIT(A) while reversing this order of the Assessing Officer and treating the profits on sale of shares as capital gain found that the shares in question were of Jubilant Oranosys Ltd (JOL). 96200 shares of this company were purchased by the assessee in the year 2000-01 and were shown under investment portfolio. The assessee received additional 3956 shares on merger of Aniochem India Ltd. with the assessee in that year. These shares were also shown under investment portfolio. Subsequently, in the f....
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....ssessee into two portfolio had only been disputed by the Revenue. The assessee, even otherwise, entitled to have these two portfolios as per given Accounting Standard 13 issued by the Institute of Chartered Accountants of India on „Accounting for Investments‟ which provides that the company is required to value its „short term investments‟ i.e. investment which have been made with a view to resell at a profit in a short period of time at cost or fair market value whichever is lower, whereas long term investments are required to be valued at cost, unless there is a permanent diminution in their values. 4. Such a practice was even in consonance with the judgments of the Apex Court and the High Courts. After a....
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....s can simultaneously be maintained is supported by the following reasons:- "Further, in my considered view, nothing prohibits the appellant from simultaneously holding some shares of on investment account and some others as stock in trade. The Madras High Court in the case of CIT v. N.S.S. Investments P. Ltd. 277 ITR 149 while dismissing appeal question referred by Revenue that whether the Tribunal was right in holding that the profit on sale of shares was to be treated as capital gains observed as under:- "A company can hold some shares as stock-in-trade for the purpose of doing business of buying and sale of such shares, while at the same time it can also hold some other shares as its capital for the purpose of earning dividend ....
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....mmercial transaction entered into with a view to earn profit, it would furnish a valuable guidance. (b) The second test why and who for what purpose of the sale was effected subsequently. (c) The third test is as to how the assessee dealt with the subject matter of transaction during the time and assets was with the assessee, whether it has been treated a stock in trade or been shown in the book of accounts of account and balance sheet as an investment. This inquiry, through relevant, is not conclusive. (d) The fourth test is how the assessee himself has returned the income from such activities and how the Department has dealt with the same in the course of preceding and succeeding assessments. The factor, though not conclusive....
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....s. Right from the very beginning it has been valuing its shares held in the investment account on cost basis and not on the basis of cost or market value which is lower at the end of relevant accounting year. This valuation at the close of the accounts at a particular year is an consonance with AS-13 issued by the Institute of Chartered Accountant, providing, the valuation of investment. Contrary to this, AO except, raising a suspicion has not bring any evidence on record that these shares were not held in the investment portfolio. We could appreciate the apprehension of the AO to some extent if after the sale of 209500 shares during the present accounting year and number of shares held in the investment portfolio was below the shares in th....