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2015 (4) TMI 756 - AT - Income TaxTreatment of gain on sale of shares - Business income or Capital gains - No borrowings to fund investment - Held that:- On going through the order of the CIT(A) and the material placed on record, we find that the CIT(A) has taken into consideration the facts as well as legal position and the circulars of the CBDT, but did not interpret the same judiciously, as per the apparent facts of the case. Since the number of transactions were 48 in the entire year, this according to the CIT(A) was high in the case of the investor. This view by the CIT(A) baldly sustaining the observation of the AO. When we look into the facts, we find that the assessee is neither holding any SIT portfolio, nor was he indulging into sale and purchase on a regular interval basis. We also find that the department has accepted the status of the assessee as that of an investor in the preceding years as well as in the subsequent years. This shows the consistency of the approach by the assessee as well as by the department. However, in the instant years, the revenue authorities did not specify anything to suggest that somehow the facts were different, or conduct of the assessee was so different, to hold differently. We find ourselves gainfully supported by the decision of Special Bench of the ITAT at Mumbai in the case of Gopal Purohit [2009 (2) TMI 233 - ITAT BOMBAY-G] , which has since been approved by the Hon’ble Bombay High Court, dismissing the appeal filed by the department u/s 260A, reported in [2010 (1) TMI 7 - BOMBAY HIGH COURT], wherein the basic ratio as laid down was in the case of consistent approach to be adopted in case of separate portfolios maintained by the assessee. In such a circumstance, it would be erroneous to sustain the orders of the revenue authorities. In the course of proceedings before us, the AR had pointed out that the assessee had neither taken any loans nor it had any employees nor it conducted its activities in an organized and in any continuity. Besides this one of the most important factors is the intention the assessee. The intention has to be seen at the time of acquisition of shares, i.e. whether to hold or dispose off. This has to be gathered from the actual conduct of the assessee while dealing with the shares, We are supported by the decision of the Hon’ble Supreme Court in the case of CIT vs Madangopal Radheylal [1968 (9) TMI 14 - SUPREME Court]. In the instant case the holding period is shown to be 86 days in STCG and in excess of 16 months in LTCG, this by itself shows the intention of the assessee at the time of acquisition of shares and subsequent conduct of the assessee. Taking into the surrounding circumstances as well, we are of the opinion that the revenue authorities committed an error to treat the gains as business income instead of capital gains. - Decided in favour of assessees.
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