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2012 (9) TMI 793 - ITAT MUMBAIProfit arising out of purchase and sale of shares as well as units of mutual fund through Portfolio Management Services - Business income or Capital Gains - AY 03-04 - assessee showed it as business income in return, however during the course of assessment proceedings, claimed it to be capital gains - whether head of income can be changed without filing of revised return - Held that:- Merely because assessee claimed an income under the head ‘business income’ but is to be assessed under the law under another head cannot be rejected only on the ground that no revised return has been filed. AO has to decide the assessability of income under correct head on the basis of the facts and as per provisions of I.T.Act. It is a legal ground and the same could be considered by CIT(A) on the basis of the facts and as per provisions of law. Non-filing of the revised return of income should not come in the way if all the relevant facts are available on record. On perusal of the contents of the agreement, it is observed that assessee has placed funds with PMS to make investment in shares/mutual funds and not with a view to do trade. Assessee also made direct investments in shares and there was short term capital gain and long term capital gain being accepted by department. Considering the scheme of Portfolio Management, it is observed that investments made by the assessee through PMS is meant for maximization of wealth and not with a view to do trade in purchase and sale of shares. Further, department has not disputed the fact that the Portfolio Manager have the sole and absolute discretion to make the investments for and on behalf of the assessee and the assessee has no role to play on the same. The assessee has not taken any borrowing for making investments for placing its funds with Portfolio Manager. Very nature of PMS is such that investments made by the assessee cannot be said to be scheme of trading of shares and stocks and, accordingly, the profit is to be assessed under the head ‘capital gains’ - Decided in favor of assessee
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