TaxTMI 
TaxTMI 
2026 (2) TMI 1143
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....ITAT), Kolkata Bench "B", for the assessment year AY 2018-19, on the substantial questions of law formulated at the time of admission. 2. The facts of the case in a nutshell are that the respondent/assessee, a limited company, filed its return of income for Assessment Year 2018-19 on September 29, 2018, declaring a total income of Rs. 36,79,98,920/-, which it revised on March 29, 2019 to Rs. 36,18,36,450/-. The Assessing Officer completed the assessment under Section 143(3) on March 8, 2021, at an assessed income of Rs. 39,76,74,478/-. This included treating the gain of Rs. 12,97,56,648/- from the sale of 34 unquoted preference shares of ICICI Bank that was purchased in June 2012 and held for nearly six years before it was sold in March ....
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....to asset is allowed within a financial year and just before the sale of stock in trade took place? c. Whether in facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal was not justified in law in holding that the profit on sale of unlisted preferential shares of ICICI Bank Ltd be considered as Long-Term Capital Gain instead of income from business as the same was appearing in the Balance Sheet of the company as stock in trade? d. Whether in facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal was not justified in law by not considering Para 3(b) of the CBDT Circular No. 6/2016 dated 29.02.2016 clarifying that income from transfer of shares and securities may be claimed ....
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.... investment, purchase and sale documents, balance sheet extracts, capital gains computation and reliance on the CBDT Instruction dated May 02, 2016. The AO considered this material and accepted the Long-Term Capital Gains claim, reflecting a prima facie inquiry rather than a mechanical acceptance. 8. The Principal Commissioner's invocation of Section 263 falters on the ground that the assessment order lacks "elaborate discussion." It is a settled jurisprudence, as held in CIT v. Max India Ltd. reported in (2007) 295 ITR 282 (SC) that clarifies brevity in reasoning does not equate to non-inquiry or error. Where the AO has made relevant enquiries and adopted a plausible view supported by material, revisional jurisdiction cannot be exer....
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....eed on the premise of conversion, focusing instead on other grounds. Introducing new facts at the appellate stage constitutes an impermissible attempt to lay a fresh factual foundation. 12. The Tribunal's observation in this regard aligns squarely with the settled principles of tax jurisprudence. Appellate forums, including the Income Tax Appellate Tribunal (ITAT), operate within the confines of the record as it stood before lower authorities. As held in CIT v. Shree Manjunatheswara Packing Products & Camphor Works reported in (1998) 231 ITR 53 (SC), a new plea altering the character of the transaction cannot be sprung at the appellate level without prior ventilation. Here, the absence of any conversion finding in the AO's assess....
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....encing a clear investment intent from inception. They were held for nearly six years, a duration indicative of a long-term investment rather than trading stock. Critically, there was no regularity or frequency of transactions making it a solitary sale, with no pattern of repetitive dealing. The shares were consistently valued at cost in the assessee's books, eschewing the "lower of cost or market value" method typical of trading activities. The assessee's conduct thus aligns squarely with that of an investor, not a trader. It is a trite law that mere accounting nomenclature cannot dictate the true nature of the asset or income. As held in Electronic Corporation of Tamil Nadu Ltd. v. Dy. Commissioner of Income Tax reported in (2019) ....
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.... elects to treat the gains as capital in nature, the Assessing Officer shall not dispute such characterization, provided the assessee maintains consistency in its approach. However, the instant case revolves around unlisted preference shares, rendering Paragraph 3(b) inapposite. The governing directive is the CBDT Instruction dated May 02, 2016, which expressly applies to unlisted shares and mandates their treatment as capital gains, thereby obviating any grounds for dispute by the Assessing Officer. 17. Moreover, the revisional proceedings under Section 263 of the Act were not predicated on Paragraph 3(b) of the aforementioned Circular. The Principal Commissioner invoked entirely distinct reasoning in initiating revision, unconnected to....