2015 (5) TMI 225

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Rs. 41,46,235/- ought to have been treated as business income rather than short term capital gain as claimed by the assessee. 3. The assessee is involved in investment business and had during the AY 2005-06 converted a part of its stock in trade into investment and maintained a separate account on that score. The realisation on account of its investment was offered in capital gains under two heads, i.e., long term capital gain and short term capital gain. For the assessment year in question, the claim for long term capital gain was accepted by the Assessing Officer but the claim for short term capital gain was disallowed. The Assessing Officer reasoned in this regard as follows: - "4.5 In the instant case, except one condition i.e. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....vt. Ltd dated 22.10.2013. The Court had held that conversion of stock in trade under the head of investment by itself was inconclusive as to whether the transaction in question was done by way of investment or business. The ITAT reasoned as follows: - "5. At the time of hearing before us, it is stated by the learned counsel that originally the assessee company was incorporated to do the finance business and after restrictions imposed by Reserve Bank of India, the company stopped its main business and started dealing in shares. However, during the accounting year relevant to assessment year 2005-06, i.e., on 30th September, 2004, the assessee company turned into investor of shares and securities by converting the closing stock of the imme....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....AT and Hon'ble Jurisdictional High Court dismissed the revenue's appeal. He further pointed out that the Assessing Officer wrongly held that the intention of the assessee was to act as a trader as in the past. He submitted that after the conversion of stock-in-trade as investment, the intention of the assessee is to hold the investment and realize the investment. He also stated that the volumes of purchase and sale transactions are not high and the same are only in a few scripts. Learned counsel relied upon the decision of Hon'ble Bombay High Court in the case of Gopal Purohit wherein the Revenue's SLP was' rejected by Hon'ble Apex Court. He also referred to the decision of Hon'ble Jurisdictional High Court in th....