TaxTMI 
TaxTMI 
2016 (6) TMI 1270
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....hort term capital loss. iii. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in directing the A.O to treat gains arisen as a result of selling of shares and redemption of units of mutual fund of Rs. 82,98,814 as short term capital gain. iv. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in directing the A.O to tax the gains of Rs. 6,68,91,385/- on redemption units of M.F as LTCG. v. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in directing the A.O to tax the gain of Rs. 76,657/- accrued as a result of redemption of units of M.F. is as LTCG. vi. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in directing the A.O to treat loss of Rs. 21,45,045/- as LTCL and allow the same to be carried forward. vii. The Ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in deleting the disallowance of Rs. 57,72,237/- made u/s 14A of the I.T. Act even though the same has been made in accordance to the Rule 6D of I.T. Rules." Both the learned representatives invite our attention towards grounds (i) to (vi) extracted herei....
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....(i) Perusal of the balance sheet for A.Y. 2007-08 and 2008-09 and 2009-10 reveals that appellant is consistently declaring closing stock of Mutual Fund units, shares and equity funds under the head investments. To be precise in A.Y. 2007-08 appellant has declared investment of Rs. 95.26 crores, in A.Y. 2008-09 appellant has declared investment of Rs. 109.47 crores and in A.Y. 2009-10 investment of Rs. 92.00 crores has been declared in mutual fund units, equity shares etc. This clearly manifest the intention of the appellant that mutual fund units and shares were purchased as an investor. (ii) During the year under consideration appellant has redeemed investments in Mutual Fund units worth Rs. 63.38 crores. The cost of purchase of these M.F. units is Rs. 56.70 crores. In the balance sheet for immediately preceding year i.e. A.Y. 2008-09 appellant has declared investment in FMPS of Rs. 56.50 crores and another investment of Rs. 20 lacs in Kotak Dynamic Asset allocation is clubbed with debt funds which is also declared under the head investments. Thus, the mutual fund units, which were purchased by the appellant in the A.Y. 08-09 were declared as investment in the balance sheet for ....
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....of Rs. 82.98 lacs is accrued. Apart frorri this, [appellant has also undertaken fifteen redemption ^transactions of M.F. units. As a result of these transactions, gain of Rs. 6,68,91,385/- is accrued to the appellant. The appellant has also undertaken twenty six, transactions of equity shares or units of an equity Oriented fund which resulted into long term capital loss of Rs. 5,06,311/. The appellant has also undertaken one transaction of sale/purchase of gold through commodity exchange. As a result of this transaction, capital gain of Rs. 33.18 lacs is accrued to the appellant. In Portfolio Management Scheme (PMS) many transactions of sale/purchase of shares has been conducted. However, these transactions has been conducted by Portfolio Manager and not by the appellant. The above facts clearly establish that on his own behalf the appellant has undertaken sixty two transactions of redemption of mutual fund units, sale of shares and gold during the year under consideration. Thus the appellant on an average had undertaken one transaction in six days. The above facts reveal that the appellant was not engaged in the sale/purchase of shares on a large scale. These transactions were occ....
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....e. (a) Sanath Infrastcuture Pvt.Ltd. v/s. ACIT 122TTJ216 I (b) Gopal Purohit v/s. JCIT 29 SOT 117 (Mum.) (c) Sugamchand C.Shah v/s. ACIT 37DTR345 (Ahd.) In the instant case, the Mutual Fund units and the equity shares were registered in the name of appellant. In fact the appellant has declared dividend of Rs. 1,81,23,610/-on these units and shares during the year under consideration. The A.O. had placed reliance on Synthetic Fibre Trading Company ITA No.3022/3444/2009 and Sadhana Nabera v/s. ACIT 41 DTP 393 (Mum). Perusal of these cases reveals that the cases were delivered with different set of facts and accordingly it will not be proper to place reliance on these cases. (ix) As far as investment in PMS is concerned the predominant view is that income earned on investment in PMS is to be taxed as STCG as appellant is investing money in this scheme. In this regard appellant has rightly placed reliance on Smt. Nalini Navin Bhagwati ITA No.53/Mum/2010 and Sar Investment P. Ltd. v/s. DCIT 40 SOT 566 (Ahd.) Recently, Hon'ble Mumbai ITAT in ITO 19(2) v/s. Radha Birju Patel 46 SOT 23 (2011) has held that profits under PMS is to be taxed as STCG. Similar view was held by the....
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....pital gains and not business income. 6. We proceed further and notice from assessee's investment chart regarding long and short term capital gains that most of the investments have seen holding period for quite a longer duration. There is a very miniscule percentage of share investments being made and sold in a very short span of time less than a week. The assessee's long term capital gains arise from investment held for much longer duration of more than a year. It has come on record that his balance sheet shows two different patterns of trading and investment portfolio. We come to his City Bank borrowings of Rs. 20 crores. It emanates that the assessee had indeed availed this loan. But the same was for a period of less than one month whereas his investments are seen to have carried forward since long. The Revenue fails to rebut all these crucial findings recorded by the lower authorities. We adopt judicial consistency in these facts and circumstances to hold that the CIT(A) has rightly treated assessee's profits/losses arising from shares investments as in the nature of capital gains than business income. We reject Revenue's arguments supporting this first issue. 7. We come to t....