AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 41
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....sent Tax Appeal with the following proposed question of law; "Whether in the facts and circumstances of the case, learned ITAT has erred in law and on facts in not considering surplus of Rs. 2,03,86,894/- earned by the respondent assessee from sale of shares as business income instead of short term capital gain?" [2.0] The facts leading to the present Tax Appeal in a nutshell are as under; [2.1] The respondent - assessee is an individual who derives income from salary income from business. He is also dealing in shares. The assessee filed the return of income for the Assessment Year 2008-09 declaring the total income of Rs. 1,93,12,540/-. The case of the assessee was selected for scrutiny assessment. Thereafter, notice under Section....
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....the assessee preferred Appeal before the learned CIT(A). The learned CIT(A) deleted the addition made by the Assessing Officer of Rs. 2,04,87,755/-, which was treated as business income, by accepting the contention on behalf of the assessee and by treating the profit from sale of shares of Rs. 2,04,87,755/- as short term capital gain instead of business income as assessed by the Assessing Officer. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) in deleting the addition made by the Assessing Officer of Rs. 2,04,87,755/- and treating the same as short term capital gain instead of business income as assessed by the Assessing Officer, revenue preferred Appeal before the learned tribunal, being ITA No.168/Ahd/20....
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....nstead of business income as assessed by the Assessing Officer by observing in paragraph 2.3 and 2.4 as under; "I have carefully considered the rival submissions. I have also gone through the assessment order and submissions of the learned A.R. After taking in view of material available on records and the legal position on this issue, I am inclined to agree with the submissions of the learned A.R. for the following reasons: (i) It is seen that appellant has claimed short term capital gain in respect of 54 transactions only. These transactions being small in number, it cannot be said that appellant was engaged in the business of trading of shares. (ii) As per the CBDT Circular No.4/2007 dated 15/06/2007, most important c....
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....ating to business activities involving dealing in shares. The tribunal had correctly held that the delivery based transactions in the present case, should be treated as those in the nature of investment transactions and the profit received should be treated as those in the nature of investment transactions and the profit received therefrom should be treated as short term capital gains or as the case may be long term capital gains, depending upon the period of holding. These cases are regularly followed by Hon'ble Ahmedabad ITAT also. As the record indicates that shares in question were registered in the name of appellant, thus it can be safely said that the transactions are delivery based, accordingly respectfully following the ratio of abo....
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....wed and also did not claim this interest expenditure against business income. This shows that gain of Rs. 2,03,86,984/- from sale of shares of Lok Housing & Construction Ltd. got its origination in the previous year when warrants were acquired by paying 10% of the cost of warrants." [3.1] Considering the fact the major amount of capital gain is in respect of script in the name of Lok Housing and Construction Ltd. of which the assessee has sold 4,37,000 shares and has earned a capital gain of Rs. 2,03,86,894/- and that the assessee applied for acquiring fully convertible warrants of the said Company on 26/02/2006 and paid 10% i.e. Rs. 4.60 per warrant for 95,000 warrants at the time of application and thereafter on 10/05/2006 warrants wer....