TaxTMI 
TaxTMI 
2016 (7) TMI 171
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....eated the profit derived from share trading as business income whereby the assessee has treated the same as the long term capital gain exempt u/s 10(38). 3. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. Brief facts of the case, as obtaining from the assessment order, are that in the relevant assessment year, the assessee company was engaged in the business of purchase and sale of shares, debentures, stock bonds and securities. The assessee filed its return of income declaring total income of Rs. 17,38,820/-. The AO noticed that assessee had claimed exemption u/s 10(38) in respect of long term capital gain amounting to Rs. 97,96,248/- and short term capital gain was declared at Rs. 1,007/-. Further, long term capital gain [as per proviso to section 112(1)] amounting to Rs. 52,676/- was also declared. The AO observed that assessee was doing share trading, which was both delivery based and non-delivery based. The AO has observed that since the business of the assessee was trading in shares, therefore, he required the assessee to explain why capital gain declared on shares/ securities should not be tre....
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...., therefore, AO had rightly treated the profit from sale of shares as business income. 7. Ld. counsel for the assessee submitted that assessee was not trading in shares. The consistent practice of assessee was to hold shares as investment. In this regard ld. counsel referred to the balance-sheet of assessee wherein in Schedule 4, relating to investment, contained at page 48 of the PB, 838882 equity shares of Rasandik Engineering Industries India Ltd. were held as investment as on 31.3.2004 a well as on 31.3.2005. Ld. counsel further referred to the written submissions filed before ld. CIT(A), contained at page 23 of the PB, wherein details of share holding as on 31.3.2004 and 31.3.2005 was as under: Name 2003-04 2004-05 No. of Shares Amount No. of shares Amount Rasandik Engineering Industries India Ltd. 814396 7618277.00 838882 16232324.00 Jay Bharat Maruti Ltd. 100 2010.00 100 2010 Automotive Stampings and Assemblies Ltd. 60 370.00 60 252 Tata Motors Ltd. 1500 746015.00 1500 746015 Tata Steel Ltd. 300 117585.00 ....
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....n justifies departure therefrom. The observations of Tribunal are reproduced hereunder: "4. We have heard the ld. Departmental Representative and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. As such, we are proceeding to dispose of this appeal ex-parte qua the assessee. The entire dispute centres around the characterization of profit of Rs. 24.79 lac earned by the assessee from sale of shares held for a period of more than one year. In this connection, it is relevant to note that for the immediately preceding three assessment years, namely, 2005- 06, 2006-07 and 2007-08, the AO adopted similar approach as in the year under consideration but the CIT(A) overturned the assessment order on such point by holding similar income to be capital gain instead of business income assessed by the assessee. 5. Principle of consistency requires that the view taken in one year should be followed in subsequent years, unless the facts or the legal position justifies departure therefrom. The Hon'ble Bombay High Court in CIT Vs. Darius Pandole [(2011) 330 ITR 485 (Born.)} has held that income from sale of share....
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....ver, in order to find out whether the income arising from sale of shares is to be assessed as capital gain or business income, we have to find out the true intention of assessee keeping in view the facts and circumstances of each case. 14. In the present case the CIT(A) has analyzed the factual aspects as under: "1. The assessee Company is a Promotor group company of Rasandik Engineering Industries India Ltd. and therefore it holds shares on long-term basis. 2. Rasandik Engineering Industries India Ltd. is in Auto ancillary and therefore the assessee company has made investment on long- term basis in similar auto sector companies such as Jay Bharat Maruti Ltd. (100 shares) Automotive Stampings & Assemblies Ltd. (60 shares) and Tata Motors Ltd. (1500 shares). Besides these it has made investment in Tata Steel Ltd. (450 shares). The details are contained in Schedule 4 to the accounts. 3. The investment have been made from own fund over a period of time and are classified as long term investment in the books and accounts of the assessee company. 4. The investment is held in dematerialized form. The sales from the demat accounts are recogniz....
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....facts and circumstances of the case and in law, the order of the CIT(A) is erroneous, perverse, illegal and against the provisions of law which is liable to be set aside. 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting Addition of RS.1,01,510/- on account of expenses u/s 14A made by AO. 3. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting addition of Rs. 3,61,49,379/- as business income instead of L TCG & STCG. 4. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 19. Ground nos. 1 & 4 are general and require no adjudication. 20. Apropos ground no.3, brief facts are that assessee had filed return declaring loss of Rs. 20,06,475/-. The AO noticed that the assessee had declared long term capital gain (claiming exemption u/s 10(38) amounting to Rs. 3,23,56,173/- and short term capital gain amounting to Rs. 37,93,206/-. The AO has further noticed as under: "The perusal of the details filed by the assessee In respect of its claim of long term capital gains shows that the gain of Rs. 9841195/- ha....
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....ncome instead of LTCG & STCG. 3. On the facts and circumstances of the case and in law, the Ld. CIT" (A) has erred in deleting addition u/s 2(22)(e) of RS.15,34,349/- on account of loan received. 4. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing". 28. Ground no. 4 is general and requires no adjudication. 29. Apropos ground no.2, brief facts are that assessee had filed return declaring income of Rs. 38,86,420/-. The AO noticed that the assessee had declared long term capital gain (claiming exemption u/s 10(38) amounting to Rs. 62,04,497/- and short term capital gain amounting to Rs. 9,39,602/-. The AO has further noticed as under: "The perusal of the details filed by the assessee in respect of its claim of long term capital gains shows that the gain of Rs. 9841195/- has basically been derived from the sale of the scrip - Rasandik Engineering Industries India Ltd. It is the same scrip in which the assessee has also done non-delivery based speculative trading and declared speculation profits on the same. Therefore, when the assessee has itself declared business income from the trading in ....
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.... Mrs.Radhika kapoor-75%. Applying above parameters of section 2(22)(e) it is seen that assessee company has received loan from the company in which it seen that both of the shareholders are common in assessee company and company from which assessee company has received loan and both shareholder has substantial interest in both companies. So the applicability of the deeming provision is established. 35. He, therefore, made addition of Rs. 15,34,349/- as per the calculation given in para 5 of his order. 36. Ld. CIT(A) deleted the addition, inter alia, keeping in view the decision of Special Bench of the ITAT Mumbai in the case of Bhaumik Color Pvt. Ltd. Vs. ACIT (2008) TIOL 641, wherein it was held as under: "On the first question : Deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. On the second question: The expression shareholder referred to in Sec.2(22)(e) refers to both a registered shareholder and beneficial shareholder. If a person is a registered shareholder but not the beneficial shareholder than the provisions of Sec.2(22)(e) wi....