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2014 (1) TMI 869 - AT - Income TaxNature of Income - Business income or Short term capital gain – Held that:- The AO has included the transactions carried out by the Portfolio Managers as the transactions entered into by the assessee – The stand taken by the AO and confirmed by the FAA is factual incorrect - Transactions done by the Portfolio Managers cannot be treated as business activities as held in the case of Income Tax officer 19(2)(1), Versus Radha Birju Patel [2010 (11) TMI 145 - ITAT MUMBAI] and ARA Trading & Investments (P.) Ltd. Versus Deputy Commissioner of Income-tax, Range 11(1), Pune [2009 (8) TMI 815 - ITAT PUNE ]. Assessee had not claimed the deduction of Rs. 14.74 lacs (Rs. 14,35,398-PMS Management fees and Rs. 39,303-PMS charges) while arriving at the capital gains in respect of shares dealt by the Portfolio Managers – the assessee had transacted only in thirty scrips resulting in STCG were is only fourteen scrips were treating by her resulting in LTCG, assessee had not borrowed any funds for making investments in shares thus if frequency of the shares holding period of the shares availability of borrowed funds, payments of interest on borrowed funds, shares sold by the Portfolio Managers and other similar facts are considered, it becomes clear that assessee was an investor only - in the category of STCG there are many scrips where assessee had invested in the initial public offer and the same were not purchased from the Stock Exchanges - the income arising out of the sale of shares should not be assessed as business income – Decided in favour of Assessee.
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