TaxTMI 
TaxTMI 
2016 (5) TMI 200
X X X X Extracts X X X X
X X X X Extracts X X X X
....hares as income from capital gains by relying on his own order for the A.Y 2006-07 & 2008-09 without appreciating that the decision of the CIT(A) for the A.Y 2006-07 & 2008-09 has not been accepted and an appeal to the ITAT has been preferred. 3. The CIT (Appeals) erred in allowing the appeal without appreciating the high volume of transaction in shares, and that the assessee company itself has treated loss on derivatives and mutual funds as "Business loss" in the earlier years in respect of which reliance is placed by the CIT(A). 4. The CIT (A) erred in not appreciating the fact that the principles of res-judicate do not apply in income tax proceedings for him to lay on his own orders for the A.Y's to 2006-07 & 2008-09. 5. For....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levant. Further, as per AO, assessee had invested borrowed funds for investment in shares. He held the sum of Rs. 29,83,788 as income under the head business and not as income from capital gains. 4. Aggrieved, assessee moved an appeal before the CIT(Appeals). Assessee relied on its own case for the AYs 2006-07 & 2008-09. Ld. CIT(Appeals) found that for AYs 2006-07 & 2008-09, the issue was decided in favour of the assessee. He held that for the impugned assessment year also, business income arising out of sale of mutual funds and shares could not be treated as income from business, but only under the head 'long term capital gains'. 5. Now, before us, ld. DR fairly admitted that the matter had travelled upto Tribunal in assessee's own case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'. The Revenue has not brought any documentary evidence or proof to contradict the conclusion arrived at by the CIT(A). Photocopy of the agreements entered by the assessee company with the Portfolio Manager (M/s. Kotak Securities Ltd) has been placed on record. On perusal of the same, it is evident that the Portfolio Manager is trading in shares/scripts/mutual funds and the assessee company does have any say. In the instant case assessee company had invested its funds with the Portfolio Management Scheme for maximization of wealth. The assessee company cannot be said to be systematically dealing in share to term the activities of the assessee as in nature of 'business'. 6.1 The learned AR has placed reliance on number of judicial views i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Hon'ble 'H' Bench of Mumbai Tribunal in the case of Mahendra C Shah v. Addl. CIT reported in (2012) 19 taxmann.com 350 (Mum) has held that 'prima facie there was enough evidence to show that the assessee was an investor in shares and, therefore, the surplus arising on the sale of shares should be assessed as short-term or long-term capital gains, depending on the period of holding and not as business income.' (iii) The Hon'ble Gujarat High Court in the CIT v. Niraj Amidhar Surti reported in (2012) 20 taxmann.com 579 (Guj) has ruled as under: "that in the light of the findings recorded by Commissioner (Appeals) that the assessee had held the shares in question for fourteen months which is a long period for the purpose of long-term ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Management Service for investment in shares, the same would become business income, we are of the opinion that the said issue has been dealt with at length by the Delhi High Court in the case of Radials International (supra), wherein, in similar facts, the question has been answered in favour of the assessee and against the Revenue. Detailed reasons for the same have been given in the said judgment with which we concur. Even otherwise, it is admittedly not a case where the assessee had engaged its own persons or had a separate business infrastructure to carry out its share transactions for the purpose of business. It is merely a case where the assessee has invested funds through the Portfolio Management Service. 11. In our opinion, inves....