2013 (1) TMI 911

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....tal gain of ₹ 6,88,875/- as business income was correct. On the facts and the circumstances as well as in view of the correct legal position, the income of ₹ 6,88,875/- ought to have been treated as long term capital gain being except u/s.10(38) of the IT Act, 1961. It is therefore submitted that the addition so confirmed is totally incorrect and the same maybe deleted now." 3. Brief facts is that the assessee is an individual carrying on business of dealing in shares and securities and showing the income from sales of share as business income. In the computation of the income, the assessee has also shown "other income" at ₹ 11,31,722/- which included long term capital gain (LTCG) of ₹ 6,88,875/- and claimed the sam....

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....essee was maintaining separate investment portfolio and the same was separately shown in the audited accounts and consistently doing the same from March, 2006. The AO's finding that the assessee traded in certain shares for business purpose, and therefore cannot arbitrarily trade in certain shares as investment, has no substance or justification, and therefore not tenable. The learned counsel further submitted that the ITAT has consistently held that a trader if he had separate investment portfolio and separate income for shares trading and future options, speculations etc., then the sale of securities from investment has to be taxed as capital gain. He relied on the following decisions to support the case of the assessee: 1) CIT Vs. Gopa....

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....om the copies of the audited accounts filed by the assessee that the assessee is showing the investment in shares right in the final accounts from April, 2005 which has not been disputed by the AO, which strengthen the case of the assessee. This clearly showed intention of the assessee to maintain a separate investment portfolio and thus discharged its primary onus by showing that it was maintaining separate accounts for two transactions. The AO has no other better evidence other than the six purchases of shares of certain companies mentioned in the order. The Revenue authorities have also not pointed out the corresponding sales or the near thereto to show that the intention of the assessee was to make the profit and not the investment. In ....

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....ssee has not borrowed any funds for making investment. Rather it has enough fund to make investment, and therefore there is no question of paying out the interest. We find from the balance sheet of the assessee for the year 2007 that the assessee has total sources of funds to the tune of ₹ 1.20 crores, and therefore investment can very well made out of own funds. Therefore, the action of the AO and the CIT(A) in making disallowance under Section 14A read with Rule 8D is not justified and hence set aside. This ground of the appeal of the assessee is accordingly allowed. 9. The ground no.3 of the assessee's appeal is as under: 3. The ld.CIT(A) has further erred both in law and on facts in holding that the AO's action of making an add....