2011 (2) TMI 1476

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....e as investor in shares as against treatment by the Assessing Officer of assessee as a trade. 3. The assessee in this case has declared income from long term /short term capital gains and income from business and profession. The Assessing Officer in this case observed that assessee was holding shares mainly of group companies including of Dabur India Ltd. as investment since long back. The assessee was also engaged in purchase and sale of shares and mutual funds mostly of Blue Chip Companies as stock-in-trade. During the year under consideration, assessee has transferred the shares of certain company as held in stock-in-trade upto 31.3.2004 at cost price as on 1.4.2004 as under:- Sl.No.  Name of the company Quantity Amou....

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....the Board and later on the appellant has followed the same method of valuation at cost price on permanent basis. It is observed from the details submitted before the Assessing Officer that the shares held in stock in trade have been converted into investments w.e.f. 1st of April, 2004. The value of acquisition has been taken to be the market value as on 31st of March, 2004. It is submitted by the counsel of the appellant that the difference between purchase price of the scrip and the market value as on 31st of March, 2004 have been taken into account while working out the profits for the year ending as on 31st of March, 2004. It is clear from the balance sheet for the financial year 2003-04 that the market value of the shares as on 31st of ....

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....were sold by the appellant during the year. The appellant had taken the closing value as on 31.3.2004 as the cost of acquisition and without taking the benefit of indexation, the difference between the sale price and the cost of acquisition has been offered for taxation as short term capital gain. It is worth mentioning here that whereas the shares held by the company in the trading account were transferred to the investment portfolio, however, the trading in mutual funds continues to be business activity of the company. In view of the facts discussed above and decision of the Hon'ble ITAT in the case of ACIT vs. Bright Star Investment Pvt. Ltd. and M/s Sarnath Infrastructure Pvt. Ltd. it is held that the appellant is a regular investor and....