TaxTMI 
TaxTMI 
2017 (9) TMI 1152
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....abbit may be passed to the tribunal to bring on record the relevant facts and details relating to the sale transactions. We accept the said statement as we find that the tribunal has not dealt with. Factual aspects. It is clarified that we have not decided the issue, expressed any opinion on merits and laid down any ratio. It will be open to the parties to rely upon judgements in support of their contentions. Accordingly on 2nd issue we frame the following substantial question of law "whether the income tax appellate tribunal was justified in holding that the shares sold by the assessee were investment and not stock in trade?" 6. In view of the statements made by the Ld. counsel for the parties, the aforesaid substantial question of law is answered in favour of the revenue and against the assessee and an order of remit is passed." 2. In view of this, the limited issue before us is whether the capital gain shown by the assessee is business income or capital gains. During the year the assessee has shown the capital gain from long-term capital gain of Rs. 124707/-from mutual funds, income from short-term capital gain of Rs. 1979164/- from reduction of units and income from sho....
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....n sale of those shares. He therefore submitted that assessee has earned capital gain from mutual funds from reduction of units and from sale of shares. d. That the investment in such kind of securities were made out of its own fund and no borrowings have been made. e. He submitted that assessee has shown business income of Rs. 7 0, 059400/- and income from capital gain is Rs. 3 832691/- and income from house property is also at Rs. 1 811040/- which shows that the main business activity of the assessee is business income and not trading in shares. f. That the purchase of the shares have been shown by the assessee's investment in its books of accounts and not as stock in trade. g. That no such potential time is devoted on sale of those shares. As many of them are allotted in the initial public offer and subsequently sold on listing. h. That in subsequent year also the identical issue arose where the assessee has shown the income on sale of shares as short-term and long-term capital gain and which is been accepted by the Ld. assessing officer for assessment year 2010 - 11 to 2014 - 15. He referred to the various assessment orders where the assessee has earned income from cap....
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....investment in mutual funds of Rs. 298450997/- and investment in quoted shares of Rs. 97141508/-. Similarly as on 31/03/2006 the assessee has investment in mutual funds of Rs. 302032187/- and investment in quoted shares of Rs. 30461130/-. Therefore, the assessee has invested in these shares as investment activities only and it was not its business activity as per its memorandum also. We also perused the assessment orders of the subsequent years passed by the Ld. assessing officer wherein the above stand of the assessee was accepted that assessee is an investor and not a Trader in shares. In the earlier 2 years assessment on identical facts and circumstances the income from purchase and sale of the shares were also held by the Ld. assessing officer as capital gains. Therefore, in the earlier years as well as in the subsequent years the stand of the Ld. assessing officer was that assessee is an investor and not a Trader in shares. Hon'ble Delhi High Court in case of CIT versus Amit Jain 374 ITR 550 has held as under:- "8. The factors which Courts and Tribunals have to take into consideration whilst deciding whether income gained during a particular period is business income through ....
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....w the assessee is authorized in its Memorandum/Articles. In the present case, there is no dispute that the opening investment cost for the relevant year AY 2006-07 was Rs. 2.60 crores; the corresponding closing value was Rs. 4.70 crores. Furthermore, the Court notices that the assessee derived, in addition to the short term capital gains, dividend income to the tune of nearly Rs. 10 lakhs. The authorities have all emphasised that even while seeing the cumulative effect of the tests, in the given facts of a case, one test might be determinative or conclusive. At the same time, no single test having regard to the facts of a case and a cumulative effect thereof, need be determinative or conclusive. In the present instance what is apparent is that the assessee, an individual, did not borrow any funds; the share scripts traded were only from amongst what were held by him. Significantly, dividend income amounting to about 4% of the value of the investment was earned by the assessee. What appears to have weighed almost conclusively with the tax authorities in the first and second instance is the value and frequency of the transactions. As underlined by us, that factor alone cannot be c....
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....d in deleting the addition of Rs. 2029957/- made by the Assessing Officer on account of disallowance u/s 14A of the Income Tax Act, 1961. 2. Whether the ld CIT(A) under the facts and circumstances of the case and in law was justified in treating the income from sale and purchase of shares as "Short Term Capital Gain" and "Long Term Capital Gain" instead of business income as assessed by the Assessing Officer?" 13. The assessee filed its return of income on 23.09.2008 showing income of Rs. 120213170/-. During the year the assessee is engaged in the business of providing consultancy services and has earned income of Rs. 1735580/- from house property, business income of Rs. 109826094/-, and short term capital gain of Rs. 8651492/- and long term capital gain of Rs. 5031162/-. The assessee has earned exempt dividend income of Rs. 26349418/-. The ld Assessing Officer was of the view that the assessee has entered into several transactions of purchase and sales and according to him these are frequent transactions therefore, purchase and sale of shares of the assessee is not capital gain but business income as assessee is trader in share. The most of the reasons given by the ld Assessi....
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....siness of consultancy services and has earned a substantial revenue of Rs. 110299886/-. The assessee has investment in mutual funds as well as imported shares which was disclosed in Schedule-V of its balance sheet as investment. The assessee has a share capital of Rs. 10 lacs and reserve and surplus of Rs. 58 crores. It has not borrowed any money for making investment in the shares. During the year it has entered into transaction on sale and purchase of shares through its DEMAT account only 14 transactions were entered into. Furthermore, in subsequent years from AY 2010-11 onwards up to Assessment Year 2014-15 on identical facts and circumstances the ld Assessing Officer in assessment u/s 143(3) of the Act has taken a view that assessee is an investor in shares. In the Assessment Year 2007-08 when the issue is remanded by the Hon'ble High Court we have already taken a view that assessee is a investor and not a trader relying on the decision of the Hon'ble Delhi High Court. In view of above facts and binding judicial precedents for this year we hold that the income from capital gain cannot be treated as business income. In the result ground No. 2 of the appeal of the Revenue....