TaxTMI 
TaxTMI 
2016 (11) TMI 1156
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....e Short Term Capital Gain of Rs. 38,48,344/- earned by the assessee on transfer of listed shares as income from business. 2. Without prejudice to the above, if at all the above income is treated as business income, the appellant be entitled to a deduction under section 88E of an amount equal to securities transaction tax paid by her in respect of these transactions." 2. Briefly stated relevant facts of the case are that the assessee declared short term capital gains of Rs. 38,48,344/- in the return of income. On finding the assessee is engaged in the share transaction activity, AO proposed to treat the same as business activity and proceeded to tax the same as „business income‟. Contents of para 9 of the assessment order are....
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....mentioned that the assessee shifted to the mutual funds, which reflected the intention of the assessee to embrace to investment activity undisputedly. In support of the same, Ld Counsel for the assessee read out the contents of para 7 of the said order of the Tribunal (supra). He also relied on another decision of the Tribunal in the case of Smt. Urmila S. Mehta vs. ACIT in ITA No. 9144/M/2010 (AY 2006-2007), dated 27.2.2013 for the proposition that when the facts are identical the rule of consistency is required to be honoured. For this proposition, he relied on the contents of para 12 of the said Tribunal‟s order (supra) dated 27.2.2013, wherein one of us (AM) is a party to the said order. 5. On the other hand, Ld DR relied on the ....
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....nvestments which was accepted by the Revenue as is clear from the order passes u/s 143(3) for the assessment years 2005-06 and 2007-08 by the department in the earlier years even in the scrutiny proceedings as is clear from the copy of the assessment orders for the AYs 2005-06 and 2007-08, which are placed at pages 10 to 15 of the assessee‟s paper book. The assessee has been consistently showing closing and opening value of shares and securities at cost, under the head investment in shares as is clear from the copy of balance sheet filed in the paper book. The assessee was not using any borrowed funds for the purpose of investment in shares and own funds were being routed for purchase and sale of shares, as it is clear from the copy o....
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....we are of the considered view that the department cannot dictate the manner and method of treating the activity of assessee in shares as trading activity in one year while accepting the same as investment in shares in other years which were even scrutinized u/s 143(3), as it is clear from the above table. Moreover, the case of the assessee is fortified by the CBDT circular bearing number 6 of 2016 dated 29.2.2016 which is reproduced below for better understanding:- Circular No.6 of 2016, dated 29.2.2016: Sub: Issue of taxability of surplus on sale of shares and securities - Capital Gains or Business Income - Instructions in order to reduce litigation - reg.- 1. Sub-section (14) of Section 2 of the Income-tax Act, 1961 ('Act'....
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....r 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 the aforesaid Circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following (a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income, b) In respect of listed shares and securities held for a period of more tha....
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....he considered view that the assessee was not carrying any trading activity into equity shares and securities and therefore, we are inclined to set aside the order of the Ld CIT (A) and direct the AO to treat the income from sale and purchase of shares as short term and long term capital gains." 7. From the above, it is evident that irrespective of the holding period, if the assessee treated the shares as stock-in-trade, the income arising on such shares would be treated as business income. In reverse, if the assessee treated the shares as an investment, the same should not be brought under the head „income from the business‟. This principle mentioned in the CBDT Circular (supra) is appreciated by the Tribunal in the aforesaid ....