TaxTMI 
TaxTMI 
2019 (1) TMI 1358
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....f shares as business profit taxable at normal rate without appreciating the facts and evidences brought into light by the A.O during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. Assessment Year 2011-12 "On the facts and in the circumstances of the case, learned CIT(Appeals) erred in deleting the addition of Rs. 89,48,740/- made by the A.O. on account of treating the Short Term Capital Gain on sale of shares as business profit taxable at normal rate without appreciating the facts and evidences brought into light by the A.O during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 3. As the issues raised in both these appeals are common, these were heard together and being disposed off by this common order for the sake of convenience and brevity. 4. For the purpose of adjudication, we will take up take up the facts for the assessment year 2010-11. 5. Brief facts of the case as culled out from the records a....
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....and succeeded. 7. Now the revenue is in appeal before the Tribunal. Ld. Departmental Representative vehemently argued and supported the orders of Ld. A.O but could not controvert this fact that the assessee was consistently maintaining two portfolios for investment and trading purpose. 8. Per contra Ld. Senior Counsel for the assessee Mr. Sumit Nema though relied on the finding of Ld. CIT(A) but further submitted that it has been consistently held by various Hon'ble Courts that even the share trader may have two portfolios out of which one relates to clients in the course of business carried out and other as investment portfolios. The shares are classified as stock in trade and investment. 9. Ld. Counsel for the assessee referring to the copy of transaction statement of CDSL relating to M/s. FCS Software Solutions Ltd since its inception, mentioned that the transaction are very limited (around 4 to 5 in a year) in the investment portfolio separately maintained by the appellant in its books of accounts and also reflected in the audited Balance Sheet . Two seperate DMAT accounts are maintained by the assessee for investment and trading portfolio. Reference was also made ....
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....etails it is clear that the appellant purchased the shares of M/s FCS Software Ltd. only in F.Y. 2006-07 and 2007-08. There were 4 transactions of sale in the period under consideration and the profit on the transactions has been claimed as Short Term Capital .Gain. The appellant is maintaining an investment portfolio in its books of accounts which is duly reflected in the audited balance sheet. The share of M/s FCS Software Ltd. have been shown as investment in the balance sheet of the appellant company. Further, it is maintaining two Demat accounts, one for trading in shares and securities on its own behalf and for its customers and other account for investment in shares and securities. Therefore, it is n that the observations of the Assessing Officer are contrary to the facts the case. 3.5 Hon'ble ITAT Mumbai Bench in the matter of Gopal Purohit (122 TTJ 117)(Mum) held in the case of a assessee who was a share trader that the assessee can have two portfolios and income from investment portfolio cannot be treated as business income of the assessee. On departmental appeal, Hort'ble Bombay High Court upheld the decision of ITAT Mumbai reported at 228 CTR 582 (Born)....
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....n average basis has entered at least 2400 share trading transaction every day in its trading portfolio for every single transaction or less in investment portfolio Therefore, the observation of Ld. AO that there were huge transactions in the investment portfolio of the appellant in the relevant AY is contrary to the facts of the case. The abridged summary of sales turnover in investment portfolio and sales turnover in trading portfolio, clearly shows that in investment portfolio, of FCS Software Solutions Ltd. only 4-5 sales transactions during the year has occurred in contrast to comparatively innumerable sale and purchase transactions in the trading portfolio that too when the scrip of FCS Software Solutions Ltd were carried over by the appellant in its books since FY 2006-07 in its investment portfolio and therefore the intention of the appellant was always to hold the scrip of FCS Software Solutions Ltd as an investment only. The observations of Ld. AO, therefore, are contrary to the facts of the case. 14. Further, we find that the CBDT Circular No. 4/2007 dated 15.06.2007 states that "CBDT through instruction no. 1827 dated 31.08.1989 had brought to the notice of the assess....
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.... etc. then the profits accruing by change in such investment (by sale of shares) will yield capital gain and not revenue receipt" 17. Examination the facts in the light of judgments and finding of fact by Ld. CIT(A) which has not been rebutted by Departmental Representative, we after going through the balance sheet as on 31.3.2010 placed at page-4 of the paper book, find that the assessee has shown investments as on 31.3.2009 as well as 31.3.2010 separately. Investment details for financial year 2006-07 to 2010-11 were placed on record. Separate DMAT account have been maintained for which one is for the purpose of clients and the shares traded during the year another DMAT account is purely for the transactions of purchase and sales of shares held under the head investment account. This fact is verifiable from the copy of DEMAT account placed at page 17 to 31 which shows the quantity of shares held by the assessee as investments. The assessee purchased the shares of M/s. FCS Software Ltd during the financial year 2006-07 and 2007-08 which were split shares of M/s. FCS Software Solutions Ltd in the Financial Year 2009-10 and bonus shares were also allotted on 26.2.2010. The purcha....