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2014 (4) TMI 1088 - AT - Income TaxTreatment to sale of shares - capital gains or business income - Held that:- assessee has disclosed shares as investment in the balance sheet, there is no claim of any expenses while computing capital gains which demonstrates the intention of the assessee to treat the shares and securities as investment and not as stock-in-trade. No borrowed interest bearing funds was invested in shares. CBDT in its Instruction No 1827 dated 31.08.1989 has laid down certain criteria to determine whether an activity of purchase & sale of shares/securities is in the nature of trading activity or investment activity. One of the criteria laid down is the treatment given by the assessee in its books of account as a trading asset or investment; treatment given in the books is indicative of assessee's intention whether to hold the shares with a view to earn dividend & long term appreciation or with a view to carrying on as business. Even various Courts and Tribunals have approved that treatment given by the assessee in its books of account as a vital factor to decide whether the assessee is a trader or an investor. We also found that the assessee has regularly treated shares as investment in the earlier year and has offered gain on sale of shares under the head “capital gain”. Respectfully following the decision of the Tribunal in case of assessee’s brother, wherein facts and circumstances are same, we do not find any merit in the action of the lower authorities for treating the short term capital gain as business income, when the AO himself has accepted assessee’s investment in shares which resulted in long term capital gain as it is. - Decided in favour of assessee.
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