TaxTMI 
TaxTMI 
2015 (9) TMI 1300
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....ss of financers and advancing loans. 3. The assessee filed its return of income declaring Rs. 1,33,77,935/-. The case was selected for scrutiny and notice u/s.143(2) was issued. The assessing officer completed assessment by treating capital gains as business income. Aggrieved by the assessment order, the assessee went into appeal before the Ld. CIT(A). Ld. CIT(Appeals) vide order dated 28th February, 2011 in Appeal No. 243/2008-09, held that except short term capital gains of Rs. 19,30,207/- remaining capital gains are to be assessed as capital gains and not as business income with certain directions. 4. The ld. A.O while giving effect to the order of the order passed by the Ld. CIT(A), did not allow the set off of long term capital loss and consequently did not allow the carry forward of the said loss. The ld. A.O further set off the long term capital loss against the income not forming part of the total income. 5. The ld. CIT(A) vide his order dated 07.11.2012, allowed the carry forward of loss to the appellant instead of setting it off against the exempt income u/s.10(38) of the Act. 6. Aggrieved by this order of the Ld. CIT(A) the Revenue is in appeal before us. 7. The ld.....
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....T Act, 1961 Rs. 36,69,41,543/- V. Short term capital gain taxable at normal rate Rs. 1,02,62,977/- vi. Short term capital gain taxable u/s 111A Rs. 2,90,61,626/- Appellant also declared dividend income exempt u/s 10(34)/35 Rs. 3,51,49,900/- In the computation of income brought forward unabsorbed losses were also declared as under: i) Business losses Rs. 64,14,925/- ii) Speculative losses Rs. 47,51,109/- Interest income received from the activity of advancing loans amounting to Rs. 18,47,672/- was returned as income from business as in the past. c) The Assessing Officer while completing assessment treated capital gains as business income for the reasons stated by him in the assessment order brushing aside detailed submissions made by the assessee company and reproduced in the assessment order. Alternately he treated the entire income as speculative within the meaning of Explanation to Sec. 73. d) At no point of time the AO required the assessee to reconcile and explain the discrepancies between total turnover of stocks traded and the figures emanating from response to queries. e) The assessee has al....
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....nd income from such shares. The AO merely because of the total volume of transaction is substantial, is guided to hold the income as business income. However, he failed to recognize that the volume of transaction includes the appreciation in shares also and such appreciation has been offered for tax. If volume of transaction is the criteria, what is to be examined is how frequently the transaction is done, whether the transaction is settled in the course of the day of trading itself or in the settlement period itself so as to avoid payment of full purchase price. Here the assessee has been holding the shares by taking delivery and making full payment for such investment. In such circumstances, the transactions are to be treated as giving rise to the capital gain and cannot be branded as trading of making investment so as to determine whether the transaction was for dealing in shares or making investment for earning dividend and appreciation from such investment. h) The ld. CIT(A) decided the issue as under: "Considering the totality and peculiarity of the facts of this case, we find that assessee is neither fully acting as a trader nor as fully investor. Demarcation is quite haz....
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....rt term. The ld.A.O was also directed to verify the claim of the assessee with regard to holding period less than 30 days and gain out of it, after proper verification and to allow the claim of appellant. 13. It has been recorded by the ld. CIT(A) that the accounts of the company are prepared in accordance with Schedule VI of the Companies Act, 1956 which do not require preparation of a separate trading account. 14. The ld. CIT(A) had passed the order with specific directions and to allow the set off in accordance with the provisions of sec.74 of the Act. However the ld. A.O failed to comply with the direction into and has worked out the computation without application of law. Section 74 of the Income Tax Act, 1961, which read as under: "74. (1) Where in respect of any assessment year, the net result of the computation under the head "Capital gains" is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and a) In so far as such loss relates to a short term capital asset, it shall be set off against income, if any, under the head "Capital gains" assessable for that assessment year i....