TaxTMI 
TaxTMI 
2024 (3) TMI 300
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....l expenses and that also ought to be considered afresh. Parties shall be entitled to raise all contentions available to them in law. 3. Thus, the Hon'ble Jurisdictional High Court has remitted the matter regarding the nature of the transaction in respect of the sale and purchase of shares, and also set-aside the finding with regard to legal expenses to be considered afresh. 4. The appellant assessee is a Proprietor who has filed return of income showing income of Rs. 1,15,18,020/-. However, the said Return of income was revised at total income of Rs. 1,08,55,610/-. During scrutiny assessment, the income was assessed at Rs. 1,37,62,030/- vide assessment order dated 30.12.2009. The Ld. CIT(A) has partly granted relief in respect of expenses claimed vide order dated 14.01.2013. On filing appeal before the Hon'ble ITAT, Amritsar Bench, in ITA No. 211/Asr/2013, the appeal of the Assessee was allowed vide order dated 27.06.2013. 5. The department being aggrieved with the Tribunal order, has filed an appeal before the Hon'ble High Court against the above said order which has been set aside to the Hon'ble Bench on the issues of treatment of income from sale and purchase of shares whethe....
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.... to be considered and then a view was required to be taken on the totality of circumstances. Unfortunately, that has not been done. It is for this reason that we feel that the present appeal ought to be disposed of by setting aside the impugned order and by remitting the matter to the tribunal for a fresh consideration in the manner indicated above. It is ordered accordingly. Since we are in any event remitting the matter with regard to the nature of the transaction concerning the sale and purchase of shares, we also set-aside the finding with regard to legal expenses and that also ought to be considered afresh. Parties shall be entitled to raise all contentions available to them in law." 7. The learned Counsel for the assessee has submitted thatit is not a case where in the Hon'ble Bench earlier has not considered the various tests as laid down by the Hon'ble Delhi High Court in the case of CIT vs Vinay Mittal. The Hon'ble High Court has set aside the matter in order to see the applicability of the various tests although the same are already dealt by the Hon'ble Bench in its earlier order. The Ld. AR argued that even otherwise, the Hon'ble Gujarat High Court in its latest Judgmen....
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....for classifying the transaction of sale and purchase of shares as trading activity as the amount of investment would depend upon the surplus money available with any person. If anybody has his own surplus sources, he can surely invest the amount for whatever time he wants. He prayed that assessee had purchased shares with clear intention of being an investor and held shares by way of investment, gain arising out of transfer of shares and accordingly the said gains should be treated as capital gains and not business income. 11. Per Contra, the Ld. DR relies on the order of the CIT appeal. 12. We have heard both the sides, perused the record, Hon'ble High Court Judgement, impugned orders, and case law cites before us.The Hon'ble High Court of Jammu and Kashmir vide its Judgement delivered on 14.07.2017 has remitted the matter back to the Tribunal vide para 5 by observing that it is remitting the matter with regard to the nature of the transaction concerning the sale and purchase of shares, and also set-aside the finding with regard to legal expenses and that also ought to be considered afresh. The Hon'ble High Court while set asiding the order of the Bench has observed that the Ben....
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....ssessee has rightly disclosed the shares in hands as Investments in the books of accounts and thus the same fact has to be duly considered. Admitedly, the Assessee is also getting a substantial amount of dividend income of Rs. 1.72 Cr. which further proves that the Assessee has kept the investment in shares for certain period. In our view, if the Assessee has been receiving enough dividend income, as in the present case, the intention of the Assessee is very much clear that it is done with/for investment mind set. 13.3 The fourth test is as to how the assessee itself has shown the profits in return income from such activities and how the Department has dealt with the same in the course of preceding and succeeding assessments. This factor, although not conclusive, can afford good and cogent evidence to judge the nature of transaction and would be a relevant circumstance to be considered in absence of any satisfactory explanation before the authorities below. It is undisputed fact on record that the Assessee has shown profits from the sale of shares as short term capital gain every year and the same has been accepted by the department year after year. 13.4 The fifth test, would not....
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....istent treatment of shares purchased on delivery basis as investment duly accounted for in its books of account and shown in its Balance Sheet as investment, which was even accepted by revenue for proceeding years and subsequent years. 18. In view of the factual matrix of the case and judicial precedents, we are of the considered view that the appellant assessee has purchased the shares with the intention of investment. Respectfully, following the Later judgment of the Hon'ble Gujarat High Court in the case of "Pr. CIT v. Bhanuprasad D Trivedi, HUF", (Supra) we hold that the assessee had purchased shares with clear intention of being an investor and held shares by way of investment, and gain arising out of transfer of shares would be treated as capital gains and not business income. Accordingly, the AO is directed to treat the income of the assessee arising out of transfer of shares as capital gains. 19. The Next issue the Hon'ble High Court has even set aside is the matter relating to legal expenses by observing that the Bench allowed the ground without giving any finding. 19.1 The Ld. AR argued that the legal expenses were incurred in order to protect the assessee's intere....
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.... was, therefore, rightly held to be deductible under section 37. We, therefore, reject the contention of the revenue that the amount in question could not be claimed as a deduction under section 37 of the Act." 19.2 The counsel further relies on the Judgment of the Hon'ble Mumbai Tribunal in the case of "DCIT vs Anil Dhirajlal Ambai", as reported in 93 taxmann.com 492 wherein it had been held as under: "Where SEBI initiated enforcement action against assessee and to avoid long drawn litigation, assessee paid consent/settlement charges to SEBI under SEBI's Guidelines regarding consent terms without admitting guilt, it would be an business expenditure" 19.3 The ITAT Amritsar Bench earlier deleted the addition by observing vide Para 13 of its earlier order are as under: "13. We have heard the rival contentions and perused the facts of the case. It is not in dispute that the assessee is a Director in many concerns, which is on record. The assessee has filed petition before the Company Board to save the goodwill and reputation of the business. Though the assessee is not earning any business income from the said company but the other business of the assessee are directly linked....