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2015 (5) TMI 928 - AT - Income TaxTransaction in shares - treated as stock in trade treating it as a business income or investment so as to treat it as capital gain - Held that:- It is a fact that assessee is showing these shares in its investment portfolio in the books of accounts. Shares sold were shown in the balance sheet for the previous year relevant to assessment year 2005- 06 as investment and the same has been carried forward as investment in the beginning of the financial year relevant to assessment year 2006-07. In the earlier years, the revenue has accepted the position of investments as it is in the books of accounts of the assessee. It is also a fact that most of the investments realized during the year were held as investment for more than a year even, in some of the cases, these investments were held for more than 2 to 4 years. The assessee submitted details of these transactions before the Assessing Officer. It is also a fact that during the year, the assessee has earned substantial dividend income of ₹ 3,51,49,900/-. The CIT (A) has given the relief to the assessee relying on the judgment of Hon'ble Delhi High Court in the case of CIT vs. Rohit Anand [2010 (8) TMI 232 - Delhi High Court] wherein held that although even a single transaction can be in the nature of trade, however, where the assessee has demonstrated that his intention was never to trade in shares. Then, revenue cannot change the position otherwise. The investments have been made by the assessee out of his own fund and the shares were held quite for a long period. The Income-tax Act itself provides that when the shares are held for a period of more than a year or more will be treated as long term capital asset, contrary to the fact that other assets to be called as long term asset have to be held for more than 36 months. These shares were being treated as investment in earlier years and this fact has been accepted by the Assessing Officer. Substantial dividend income was being earned on these investments.The assessee is holding the shares by taking the delivery by making full payment on such investments. All these circumstances suggest that realization of these investments shall give a rise to the capital gains and it cannot be termed as trading of shares. - Decided in favour of assesse. LTCG or STCG - Held that:- Since we have approved the CIT (A)'s view that investments declared in the books of accounts shall not be treated as trading in the shares as business, therefore, the shares held as investment at the beginning of the year, even if these are sold within a period of 30 days, then also capital gain arises in respect of trading profit, this amount shall be treated as short term capital gain.- Decided in favour of assesse. Treating interest income under the head income from other sources - Held that:- The CIT (A) has dismissed the assessee's ground without going into the details regarding business of granting the loans as the assessee was registered as NBFC. There is no clear cut finding regarding this aspect in the order of the authorities below. CIT (A) has rather based his order on the fact that assessee is claiming capital gain on sale of shares, hence, no business income. This reliance is not justified as assessee is a NBFC and doing business of granting loan. Hence, we allow this ground of assessee's cross objection.
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