TaxTMI 
TaxTMI 
2022 (6) TMI 935
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....eft-over shares, the assessee had adopted a different/contrary stand in subsequent years by treating the transaction in shares as income under the head business and hence the CIT(A) ought not to have accepted the claim of the assessee to treat the transaction under the capital gains for the instant assessment year under consideration. 2.3 Having regard to the Hon'ble supreme court's decision in the case of CIT vs Sutlei Cotton Mills Supply Agency Limited reported in 100 ITR 706, the CIT(A) ought to have upheld the contention of the AO that the transactions in shares are in assessee's ordinary line of business and hence should be assessable as such. 3 The CIT(A) erred in holding that the transactions with the holding company, M/s. Integrated Enterprises lndia Ltd. will not amount to transfer, within the meaning of Sec. 145 of the IT Act. 4 Having regards to the provisions of Rule 46A of the IT Rules, the CIT(A) ought to have forwarded the new evidences which were produced before him for the first time, for examination of the Assessing Officer 5 For these and other grounds that may be adduced at the time of hearing, it is prayed that th....
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....opined that since the assessee was in Share Trading activity, the gains were to be treated as 'Business Income'. The assessee submitted that investment in shares, right from beginning, was treated as 'capital investment' only. The assessee relied on various judicial decisions to support the action. 2.3. However, after perusal of assessee's main objects, Ld. AO observed that the assessee was formed with the main objects of dealing in shares and other securities. The treatment of transactions in Balance Sheet would not be decisive. The sale of shares was assessee's ordinary line of business and therefore, the gains were to be treated as Business Income only. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT V/s Sutlej Cotton Mills Supply Agency Ltd. (100 ITR 706) to support the same. Proceeding further, it was noted that entire sale had been made to a group concern namely M/s. Integrated Enterprises India Ltd. (IEPL) through off-market trades. The shares of CUBL were sold at price of Rs. 190/- per share as against prevailing market price of Rs. 222/- per share. Accordingly, the difference of Rs. 32/- per share was also adde....
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....be allowed to adopt a different/contrary stand in this regard in subsequent years. In the light of said circular, the assessee's claim was held to be a valid claim. 3.4. Regarding applicability of Sec. 47(v) with respect to transactions of CUBL, upon perusal of documents, it was noted by Ld. CIT(A) that the transaction will not amount to transfer within the meaning of Sec. 45 of the Act and consequently, there would be no charge of capital gains on the impugned transaction. Thus, the 'capital gains' on these transactions were not to be computed. Consequently, the issue of price differential of share was held to be infructuous. 3.5. The relevant adjudication of Ld. CIT(A) was as under:- 5.1 The matter is considered. The recent CBDT Circular No. 6/2016 dated 29.02.2016 deals with the issue of taxability of surplus on sale of shares and securities and their assessability under Capital Gains or Business. The relevant portion of the Circular is reproduced as under: b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee, desires to treat the income arising f....
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.... (iv) any transfer of a capital asset by a company to its subsidiary company, if- (a) the parent company or its nominees hold the whole of the share capital of the subsidiary company, and (b) the subsidiary company is an Indian company; (v) any transfer of a capital asset by a subsidiary company to the holding company, if- (a) the whole of the share capital of the subsidiary company is held by the holding company, and (b) the holding company is an Indian company: Provided that nothing contained in clause (iv) or clause (v) shall apply to the transfer of a capital asset made after the 29th day of February, 1988, as stock-in-trade; 5.4. In view of the provisions of Section 47(v), the impugned transaction between the holding company and the appellant subsidiary company will not amount to transfer within the meaning of Section 45 of the Act. Consequently, there can be no charge of capital gains on the impugned transaction. These grounds are allowed. 6. Sale Price of Shares of M/s. City Union Bank Limited: As I have held that there is no transfer with regard to the transaction in shares of M/s. City Un....