2015 (8) TMI 1373

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....red as Non Banking Finance Company with Reserve Bank of India. Assessee filed its return of income for A.Y. 2005-06 on 27.10.2005 declaring total income at Rs. 2,13,58,400/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 31.12.2007 and the total income was determined at Rs. 2,13,58,400/- but the profits on sale of shares was treated as "business income" instead of "short term capital gains" as considered by the Assessee. Aggrieved by the order of A.O, Assessee carried the matter before ld. CIT(A) who vide order dated 19.03.2010 decided the issue in favour of Assessee. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us and has raised the following effec....

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....ares its own funds. The company is not having any object clause as per the memorandum of association which authorizes it trading in shares. However, the appellant is authorized to invest, funds in shares and securities and immovable properties as a supplementary object. It is also noticed that investment in shares is shown by the appellant in the account under the head investment and not stock in trade. Thus, the appellant's intention of making investment was clear. The appellant has not incurred any interest on borrowings for such investment. There is no motive of trading in shares established by the Assessing Officer except referring to the volume and number of transactions, I also appreciate the arguments that the Assessing officer&#....

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....ns chargeable to tax @ 10% as per provisions of section 111A As far as appellant's transactions with Ms. Rupal Panchal in the year under consideration are concerned, it is noticed that the appellant has advanced Rs.3,33,68,400/- to Ms. Rupal N. Panchal on 11.03.2005 (by cheque) and same has been received back by cheque on 30.03.2005. The appellant has not received any shares from Mrs. Rupal N. Panchal in the previous year under consideration. In the circumstances, merely because the appellant has sold the shares which were purchased in booming period and it earned surplus by way of capital gain, the Assessing Officer was not justified in holding it as a business profit. He is directed to tax such surplus of Rs. 2,11,59,808/- as short te....