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2014 (4) TMI 682 - DELHI HIGH COURTNature of income – STCG or business income - What factors are to be given weight while examining whether a taxpayer is a dealer in shares or having regard to the nature of investment, it is to be construed that the income bears the character of sale of a capital asset so as to attract capital gains tax – either STCG or LTCG – Held that:- Tribunal rightly held that the substantial nature of transactions has been laid bare by the assessee before the Department right from the word “go”, as deliberated upon - The holding of shares was by way of investment - The activity was in accordance with the main objective of the assessee company - It was duly authorized by the Memorandum and Articles of Association of the assessee company - The shares were purchased out of the assessees own funds and not borrowed funds - The decision of investment of the assessee’s shareholder’s funds in share/units and Mutual Funds was taken by the management of the assessee company from time to time with the objective of capital appreciation in the long term and in case the target price was achieved in the short run, the shares were to be sold in the market - It was depending on the funds available, that the management of the assessee company decided which shares were to be acquired - The investment was shown as such in the balance sheet of the assessee company, under Schedule Ill of the audited accounts. Relying upon Commissioner of Income Tax, U.P v. Madan Gopal Radhey Lal [1968 (9) TMI 14 - SUPREME Court] - For 2006-07 the total share consideration was ₹ 3.4 crores, as against ₹ 4.58 for the previous year - the assessee had its own funds to the tune of ₹ 7.31 crores, in the form of shareholder’s funds - Further, dividend income to the extent of ₹ 1.12 crore was also earned - The Commissioner found that during the year, there was no transfer from stock in trade to investment account and that the transfers had been accepted during the year 2005-06 - the income derived from sale of shares was, for 2006-07, not business income but capital gains - For AY 2007-08, the Appellate Commissioner’s evaluation of facts was based on an overall consideration of all the circumstances – Relying upon Commissioner Of Income-Tax, Bombay Versus H. Holck Larsen [1986 (5) TMI 30 - SUPREME Court] - no single factor or criteria ought to be given undue weight, ordinarily – there was no error in the order of the Tribunal – Decided against Revenue.
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