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2016 (8) TMI 253 - ITAT KOLKATAProfit on transactions of voluminous and frequent purchase and sale of shares - capital gain or business income - two investment portfolio - Held that:- We find from the balance-sheet of the assessee where assessee maintains two portfolios as discussed above. Even the CBDT Circular no. 4 of 2007 dated 15.06.2007 envisages the practice of assessee’s maintaining dual portfolios. We also find that the decision was rendered by the Hon'ble Bombay High Court in the case of CIT vs. Gopal Purohit reported (2010 (1) TMI 7 - BOMBAY HIGH COURT), wherein the assessee had maintained dual portfolios and ultimately the court held that the resultant gains from investment activity would be assessable as capital gains and not business income. We also find that the CBDT in its Instruction No.1827 dated 31.08.1989 has laid down certain criteria to determine whether an activity of purchase and sale of shares is in the nature of trading activity or investment activity. One of the criteria laid down is the treatment given in the books of accounts which is indicative of assessee’s intention whether to hold the shares with a view to earn dividend and long term appreciation or with a view to carrying on as business. We further find the intention of the assessee to maintain two independent portfolios i.e. one for investment purposes and one for trading purposes when he converted his stock in trade into investment on dated 1.4.2004. We hold that surplus is chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolios - Decided in favour of assessee.
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