TaxTMI 
TaxTMI 
2017 (5) TMI 1048
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....hat the assessee has used the modus operandi to invest Rs. 80,32,765/- through his income from undisclosed sources." (B.) The return was filed by the assessee on 15.11.2007 showing income of Rs. 57,15,384/-. In the return of income, the assessee had shown short term capital gain amounting to Rs. 45,97,508/- on sale of shares and had also in addition shown long term capital gain amounting to Rs. 80,32,765/- on sale of shares. The Assessing Officer (in short "AO") vide assessment order dated 29.12.2009 u/s 143(3) of I.T.Act, 1961 (in short "Act") assessed the aforesaid amount of Rs. 45,97,508/- as business income and assessed the aforesaid Rs. 80,32,765/- as income from undisclosed sources. The assessee filed appeal before Ld. Commissioner of Income Tax (Appeal) [in short "CIT(A)"]. Vide appellate order dated 18.05.2011, the Ld.CIT(A) reversed the order of the AO on the issue of treatment of the aforesaid amount of Rs. 80,32,765/- as income from undisclosed sources, and held that the Assessing Officer was not justified in making addition to the income of the assessee as income from undisclosed sources on account of long term capital gains declared by the assessee. As far as aforesa....
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....hat case. The case law of Gopal Purohit (supra) relied upon by the assessee throws light on the basis to be adopted to differentiate between capital gains and business income. This case has been decided on the facts that the assessee in this case was a trader in shares and how to demarcate the business income from capital gains as explained in an earlier case of Sarnath infrastructure P Ltd (supra). The Hon'ble tribunal has stated that after considering above rulings and various provisions of the circulars issued by the CBDT, we cull out following principles which can be applied on the facts of a case to find out whether transaction(s) in question are in the nature of trade or are merely for investment purposes: (1) What is the intention of the assessee at the time of purchase of the shares (or any other item)? This can be found out from the treatment it gives to such purchase in its books of account. Whether it is treated as stock-intrade or investment? Whether shown in opening/closing stock or shown separately as investment or non-trading asset? In the case of the appellant, it has been shown as investment in his books of account and balance sheet filed on record. (2) W....
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....tinction he has kept in the records or otherwise, between two types of holdings. If the assessee is able to discharge the primary onus and could prima facie show that particular item is held as investment (or say, stock-intrade) then onus would shift to Revenue to prove that apparent is not real. In the present case, the appellant has adduced sufficient evidence to show that his holding is for investment which the Assessing Officer has not been able to disprove. (8) The mere fact of credit of sale proceeds of shares (or for that matter any other item in question) in a particular account or not so much frequency of sale and purchase will alone not be sufficient to say that assessee was holding the shares (or the items in question) for investment. The copy of the ledger account and the contract notes reflect the assessee to be an investor. (9) One has to find out what are the legal requisites for dealing as a trader in the items in question and whether the assessee is complying with them. Whether it is the argument of the assessee that it is violating those legal requirements, f it is claimed that it is dealing as a trader in that item? Whether it had such an intention (to carr....
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....d circumstances of the case; and the Ld.DR failed to point out any infirmity, mistake or illegality in the impugned order of Ld.CIT(A) on this issue and failed to make out any case for interference with the impugned order on this issue. The Ld.DR also failed to bring any decided precedents in favour of the Revenue to warrant any interference with the order of Ld.CIT(A) on this issue. Therefore, we uphold the order of the Ld.CIT(A) as far as treatment of aforesaid amount of Rs. 45,51,746/- as short term capital gain is concerned. As far as the balance amount of Rs. 45,761/- is concerned, the assessee has accepted its treatment as business income and there is no dispute before us regarding this amount. Hence, there is no need for us to adjudicate on the amount of Rs. 45,761/-. For statistical purposes, first ground of appeal is dismissed. (C.1.) Regarding the other issue of the aforesaid amount of Rs. 80,32,765/- shown by the assessee as long term capital gain but taxed by the AO as income from undisclosed sources; we find that the lower authorities [both AO and Ld.CIT(A)] have failed to carry out/cause necessary inquiries. Whether this amount is genuinely claimed by the assessee as....