2015 (10) TMI 750

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.... the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that the gains from the purchase and sale of shares and mutual funds are to be treated as Long Term Capital gains, ignoring that the volume and frequency of transactions and the assessee's conduct in the past indicates that the assessee is engaged in the business of sale and purchase of shares ? (B) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in setting aside the disallowance made by the Assessing Officer under Section 14A of the Income Tax Act 1961 r.w.r 8D of the Income Tax Rules 1962 by relying on its decision in the case of Godrej & Boyce Mfg. Co.Ltd., [2010][328 ITR 81], wherein it is ....

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....ssee to maintain two portfolios of shares i.e. one comprising of shares and securities in which the assessee trades and the other which is an investment. It is also stated therein that any profit or gain arising out of shares held as investments would be subjected to tax as capital gains. The impugned order also notices the fact that the respondent - assessee was valuing its shares held as stock-in-trade as per the accepted principle of cost or the market value of the share/unit whichever is less, while those held as investments, were always valued at cost. Moreover, it noted the fact that for earlier years the claim of the stock-in-trade under the head 'capital gains' was accepted. It held that on principle of consistency also the ....

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....d that the twin test applied by the Assessing Officer and the CIT (A) to hold that the respondent-assessee is a trader in shares and mutual funds is not correct. As pointed out above, as per CBDT circular No.4/2007 dated 15 June 2007 it is open to the respondent-assessee to hold the securities in two portfolios i.e. one investment portfolio and another trading portfolio. There is no bar under the Act which prevents the assessee from investing partly as investment and partly for trading in the same scrip. Besides, the second test namely that it is at the sole discretion of the respondent to determine whether a particular scrip is to be treated as an investment or a scrip in which he trades, is permissible in terms of the Circular No.4/2007 d....