2012 (8) TMI 306

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....l Mrs. Paurami Sheth appearing for the revenue in these two Tax Appeals. Inspite of service, nobody appears for the respondent. 3. The following substantial question of law arises for the consideration of this Court:- "Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT (A) in directing to tax the income earned from trading in shares under the head 'LTCG/STCG' as shown by the assessee instead of taxing it under the head 'Income From Business & Profession' ?" 4. A notice was issued under Section 153C of the Income Tax Act (for short 'the Act') on the basis of communication received by the Assessing Officer from the DGIT, Ahmedabad. In response to the notice, returns of income were filed ....

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.... the appeals. However, the question with regard to assessment Year 2005-2006 and 2006-2007 were left open as according to the Department, large number of transactions took place which required separate consideration. Both these Tax Appeal relate to the Assessment Years 2005-2006 and 2006-2007 respectively. 6. The Apex Court in Commissioner of Income-Tax (Central) Calcutta v. Associated "Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are stock-....

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.... in the books of account and balance sheet as an investment. This inquiry, though relevant, is not conclusive. [d] The fourth test is as to 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. This factor, though not conclusive, can afford good and cogent evidence to judge the nature of transaction and would be a relevant circumstance to be considered in absence of any satisfactory explanation. [e] The fifth test, normally applied in cases of partnership firms and companies, is whether the Deed of Partnership or the Memorandum of Association, as the case may be, authorises such an activity. [f] The last but not the....