2012 (4) TMI 671 - AT - Income Tax

Summary

Issues involved:
The issue involves determining whether the short term capital gains on sale of shares should be treated as business income or as short term capital gain for the assessment year 2007-08.

Summary:

Issue 1: Treatment of short term capital gains as business income
The appellant, Revenue, challenged the order of the Ld. CIT(A) directing the AO to treat the short term capital gains as against the business income treated by the AO. The AO considered the volume and frequency of transactions and held that the assessee was carrying out trading activities in shares. However, the Ld. CIT(A) applied the principle of consistency and treated the gains as short term capital gains based on similar facts from the previous assessment year. The Tribunal found that the assessee consistently showed investment in shares and not as stock-in-trade. Referring to the previous year's decision, the Tribunal upheld the Ld. CIT(A)'s order in treating the gains as short term capital gains, emphasizing the intention of the assessee to retain shares as investments.

Decision:
The Tribunal rejected the Revenue's grounds, upholding the Ld. CIT(A)'s treatment of gains from the sale of shares as short term capital gains and not as business income. The appeal by the Revenue was dismissed, and the order was pronounced on 18th April 2012.