TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 252
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....see is covered in the definition of a "share dealer" and not an "investor". Thus, the AO treated the income from sale of shares as income from business or adventure in the nature of trade and has not accepted the claim of the assessee that the income is liable to be taxed as Long Term Capital Gains and Short Term Capital Gains. 2.1 The matter was carried before the CIT (A) which has uphold the action of AO in treating the profits from sale of shares as 'business income' is in order and thereby partly allowed the appeal of the assessee. 2.2 The matter was further carried before the ITAT by the assessee by contending that the CIT (A) and the AO has committed serious error by treating the long term capital gain / short term capital gain / loss as shown by the assessee is nothing but income from business or adventure in the nature of trade. The ITAT has after considering the two orders has held findings arrived at by the CIT (A) and AO are justified and accordingly dismissed the appeal of the assessee which has given rise to this appeal. 3. While admitting this appeal, following question was posed for consideration: "Whether on the facts and in circumstances of the case th....
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....tor into a dealer. 7. Similar question had arisen before this Court while deciding Tax Appeal No.1763 of 2005 and allied matters and relevant observations made therein are reproduced herein below: "4. The learned counsel for the appellant has further contended that the Tribunal while setting aside the judgement of the Commissioner of Income-tax (Appeals) has not properly considered the decision of this court relied on by the appellant in the case of Dy. C.I.T. v. Smt. Divyaben C. Shah delivered on 18.4.2001 in Tax Appeal No. 104 of 2001 with Tax Appeal No. 105 of 2001 which reads as under: Admittedly as per return short term capital gain was Rs. 4,31,938/- and Rs. 5,73,738/- as against the long term capital gain at Rs. 7,84,422/- and Rs. 6,86,333/for Assessment Yerar 1993-94 and 1994-95 respectively, which is clear from the record. It is also clear that the shares were not shown as stock-in-trade and there was no finding recorded that there was any conversion. The Tribunal after considering various judgments as also keeping in mind the finding recorded by the Commissioner of Income Tax, Appeals, arrived at a conclusion. In para 25, the Tribunal has pointed out the test to be ....
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....s and when these very shares came to be sold by the assessee during the year under consideration, no error and/or illegality has been committed by the CIT(A) as well as Income-tax Appellate Tribunal in deleting the additions made by the Assessing Officer and treating it as business income for the purpose of short term capital gain and long term capital gain.. 8. Reliance is placed on the decision of the Supreme Court in the case of Janki Ram Bahadur Ram v. Commissioner of Income-tax, Calcutta reported in (1965) 57 ITR 21 (SC) wherein it has been held by the Supreme Court as under: Held, on the facts, that the purchase and sale of the property was not an adventure in the nature of trade within the meaning of section 2(4) and the profit realised therefrom was not taxable under section 10 of the Indian Income-tax Act, 1922. The facts that the appellant made a profitable bargain when it purchased the property and that it had a desire to sell the property if a favourable offer was forthcoming could not without other circumstances justify an inference that the appellant included by purchasing the property to start a venture in the nature of trade. It is for the revenue to establ....
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.... the nature of a capital asset or stock-in-trade, is essentially a fact-specific determination and has led to a lot of uncertainty and litigation in the past. 2. Over the years, the courts have laid down different parameters to distinguish the shares held as investments from the shares held as stock-in-trade. The Central Board of Direct Taxes (`CBDT) has also, through instruction No. 1827, dated August 31, 1989 and Circular No. 4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the tax payers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to ....