TaxTMI 
TaxTMI 
2010 (5) TMI 830
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....e AO are that the profit and loss account of the assessee was credited as profit on sale of investment . But assessee was found to have treated the profit as long term capital gain exempt u/s. 10(38) of the I. T. Act. The AO issued a show cause notice asking why such profit should not be treated as business income of the assessee . The reply of the assessee was that it is a non-banking finance company which makes long term investments as well as trading in short term holdings. The Company has its own funds for either purposes. The AO found no substance in this reply of the assessee. The AO further observed that Form No. 3CD describes the nature of business of the assessee as investment and trading in shares and securities, investment in ....
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....ares have the character of an adventure in the nature of trade. Accordingly, the gain was treated as profit and not capital gain exempt u/s 10(38) of the Act. In the light of such facts and circumstances of the case the income to the tune of Rs. 69,56,024/- was held as business income of the assessee and taxed it accordingly at normal rate applicable. In appeal, the Ld. CIT(A) confirmed this action of the AO. Aggrieved by the said order, now the assessee is in appeal before us. 3. At the time of hearing before us, the Ld. Counsel for the assessee while reiterating his same submissions as submitted before the lower authorities further submitted that the the assesee is an NBFC and has been engaged in holding investments in shares and grant....
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.... during the year under appeal that gave rise to the Capital Gain which is subject matter of the present appeal. He also submitted that the decisions cited by the A.O. and the Ld. CIT(A) being- (i) Investment Ltd. Vs- CIT - 77-ITR-533 (SC) and (ii) G. Venkataswami Naidu & Co. Vs- CIT - 35-ITR-594 (SC) on which great reliance has been placed by the Ld. CIT(A) are of no relevance in the facts of the present case. The decisions are otherwise also no affect in the present context of dealing in shares. There have been rapid strides in the development of trade, business and industry in the past decades from the period to which these decisions relate. The decision in the case of G. Venkataswami Naidu & Co. Vs- CIT reported in 35-ITR-594 (S....
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....tal Gain. With the development of trade and business and the capital market separate definitions of Long Term & Short Term was introduced for holding in shares. The amendments brought in clearly shows the legislative intention that the Govt. intended to boost long-term-investments in shares & securities and the capital markets. He also contended that the decisions relied on by the Ld. CIT(A) in particular those of (i) Gold Co. Ltd. -Vs.. CIT - 92- ITR-121 (Cal) and (ii) M. R. M. Plantation Ltd. Vs- CIT - 250-ITR-521 (SC) and (iii) Investment Ltd. Vs. CIT 77 ITR 533 (SC) have no application in the facts of the assessee's case.. 4. On the other hand, the Ld.DR relied on the orders of the lower authorities and prayed b....
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....,99,723/- 2,00,703/- 7,83,500/-" The assessee was maintaining two separate portfolios one for investment in shares and other for trading in shares is not disputed as is clear from the order of the Ld. CIT(A) in which both the portfolios have been reproduced as under from the assessment years 2002-03 to 2005-06 : "TRADING A/C. INVESTMENT A/C. Value of Holdings F.Y Opening Stock Closing stock At the opening of the year At the close of the year 2002-03 1,76,454 1,62,329 2,57,44,340 2,51,43,682 2003-04 1,62,329 17,95,345 2,51,43,682 2,51,43,682 2004-05 17,95,343 168 2,51,43,682 2,66,50,847 2005-06 168 ....
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....1960. In that case the assessee was admittedly a dealer in shares and the shares were purchased and sold in regularly. The shares in question were held by it as stock-in-trade. In the particular facts of the case the Hon'ble court finally held that loss in sale of shares of B. J. Co. Ltd. was a Capital loss and that loss in sale of shares of S. K. G. Sugar Ltd. was not a Capital loss. ii) In the case of M. R. M. Plantation Ltd. the assessee company itself had treated the profit arising from sale of house properties and rubber plantation as commercial profit and therefore the Hon'ble court held that it was not open to the company to content that the profits were Capital gain and should not be considered for the purpose of invoking the pro....