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2023 (2) TMI 313 - AT - Income TaxProfit earned from the sale of PSTL shares - Treatment of Business Income OR Long-Term Capital Gain - as AO noted that SEBI has found the assessee to have manipulated the share price of PSTL with ulterior motives and has banned the assessee from doing any trading in the stock markets - why the entire long-term capital gains be not taxed as income from business or profession on the basis that the assessee was engaged in the trading in shares of PSTL and made a profit on the transaction without earning any dividend or received a meagre dividend - HELD THAT:- In the present case, it is evident from the record that the assessee has been found to be involved in manipulating the prices of shares of PSTL by the SEBI. However, even thereafter the AO merely taxed the gains arising from the share transaction as business income. As is evident from the record, the AO never alleged in the present case that since the gains have arisen from the manipulative transaction of rigging the price by issuing the forged letter of SEBI, therefore, the entire long-term capital gain, claimed as exempt by the assessee from the transaction in shares of PSTL, is not genuine and thus added the same to the total income of the assessee. AO has based its order on the issue of treatment of long-term capital gain as “business income”. As per the assessee, he has two portfolios, (i) investment portfolio, and (ii) trading portfolio, and the shares of PSTL were always held under the investment portfolio. We find that the said fact is also evident from the relevant extracts of Schedule-4 to the balance sheet and profit and loss account, annexed to the impugned order, wherein PSTL is appearing under the head “investment”. From the details of the share transaction of PSTL scrip, on page 9 of the assessment order, it is evident that after purchasing the shares on 27/03/2006, the assessee held the shares for a period of more than 2 years before its sale in the year 2008. Further, nothing contrary has been brought on record to controvert the findings of the learned CIT(A) that these shares have been shown as an investment and the same were treated as an investment by the Revenue, in the preceding years. No infirmity in the findings of the learned CIT(A) in treating the profit earned from the sale of PSTL shares as a long-term capital gain. Since the SEBI has computed the unlawful gain of Rs.32,50,882 from the price manipulation of shares of PSTL, CIT(A) restricted the addition to the aforesaid amount by treating the same as income from unlawful activity. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, all the grounds raised by the Revenue are dismissed.
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