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2012 (6) TMI 599 - ITAT MUMBAIIncome from sale of shares - Business Income vs Long term Capital gains - assessee- company, purchased shares of MABL(unlisted company) having accumulated losses - shares purchased @ Rs.21.30 per share when the book value was nil - infusion of borrowed funds - Held that:- Obvious intention of the assessee in purchasing the shares was to make profit on resale of the shares as the share price could rise because of strong market reputation and goodwill of the other promoters. This conclusion is further supported by the fact that the assessee within the lock-in period sold shares to the other promoters at high profit despite mounting losses. The assessee was not expected to earn any dividend from the investment because of huge losses. No person will purchase shares from borrowed funds for investment when no dividend is expected. Therefore, merely because the shares were shown as investment in the books, it could not be accepted as investment. Hence, the purpose behind the purchase of shares was to earn quick profit on resale of shares and not for earning dividend income. It is a settled legal position that even a single and isolated transaction can be considered as adventure in the nature of trade. In our view, the purchase and sale of the shares on the facts of the case has to be considered as adventure in the nature of trade and profit has to be assessed as business income - Decided in favor of Revenue.
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