TaxTMI 
TaxTMI 
2025 (12) TMI 725
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....ly because the learned Assessing Officer had not made more enquiries with respect to Short Term Capital Gain earned by the appellant amounting to Rs. 8.16 Crore. 3. The learned Commissioner of Income Tax has erred in passing an order u/s 263 setting aside order passed u/s 143(3) as erroneous and prejudicial to the interests of revenue without having found any mistake at all and merely because, in his opinion, this income of Short Term Capital Gain could have been possibly assessed under the head "business income". 4. The learned Commissioner of Income Tax has erred in passing an order u/s 263 setting aside order passed u/s 143(3) as erroneous and prejudicial to the interests of revenue without appreciating the facts of the case, nature of business of the appellant, the process of formation of the appellant company through the process of demerger and the consistent stand adopted by the predecessor demerged entity which was continuously accepted by the department. 5. The learned Commissioner of Income Tax has erred in passing an order u/s 263 setting aside order passed u/s 143(3) as erroneous and prejudicial to the interests of revenue not appreciating that....
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....ice under section 263 of the Act on the basis that the AO has allowed the short term capital gains claimed by the assessee without making adequate inquiries. The learned PCIT further alleged that, once the assessee claimed to be in the business of investment, the income from securities could also be taxed under the head 'business income'. Accordingly, the learned PCIT, vide aforesaid show cause notice alleged that the aspect whether the income from sale of securities held for a period not more than 12 months is taxable in the hands of the assessee as short term capital gains or business income was not examined by the AO while passing the assessment order under section 143(3) read with section 144B of the Act and failed to examine the aforesaid aspect rendering the order to that extent to be erroneous and prejudicial to the interest of the Revenue, which is a fit case for revision under section 263 of the Act. 7. After considering the submissions of the assessee, the learned PCIT vide impugned order, passed under section 263 of the Act, held that the AO vide assessment order did not examine the real nature of the income of the assessee, even when the assessee had shown the income....
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....olio management, lending and borrowing of securities. 5. To place fixed deposits, Corporate deposits, recurring deposits or any other type of deposits or keeping money with any person, company, bodies corporate, scheduled Banks, financial and other institutions, trusts, corporations, local authorities and Government; 6. To carry on the business of granting properties, whether movable or immovable, on lease - or hire-purchase with or without security against it." 9. Accordingly, the assessee was formed by the demerger of the investment unit of Macleods Pharmaceuticals Ltd. As per the assessee, the investment including shares and securities, fixed deposits, etc., which were made by Macleods Pharmaceuticals in the past, were transferred to the assessee pursuant to the demerger and the assessee followed the same practice as followed by the parent company and treated the securities as investments in its books of account and offered the gains/losses to tax under the head "capital gain". We find that during the scrutiny proceedings, the return filed by the assessee was selected for complete scrutiny, inter alia, for the reason "large short-term capital gains declared ....
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....sentative ("learned DR") by referring to the order passed by the Hon'ble National Company Law Tribunal, forming part of the paper book from pages 20-37, submitted that the only purpose of forming the assessee company was to conduct business of investment activity, which was earlier conducted by the parent company. Further, by referring to the Scheme of Demerger, which also forms part of the paper book, the learned DR submitted that the entire purpose of the demerger was to constitute the assessee as a separate entity to focus on investment entirely. The learned DR further submitted that despite the aforesaid facts the issue whether the income arising from sale of shares held for less than 12 months is a business income or capital gains in the hands of the assessee was not examined by the AO and the reasons recorded for the complete scrutiny as well as the notice issued under section 142(1) of the Act are also not on this issue. Thus, the learned DR submitted that despite a case of complete scrutiny, the AO failed to make an enquiry on this aspect. 13. Having considered the submission of both sides and perused the material available on record. We are of the considered view that t....