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2016 (2) TMI 344 - AT - Income TaxPurchase and sale of shares - “Capital Gains” or “Business Income” - whether the assessee had purchased/sold the shares in question as an investor or as a share trader; whether any borrowed funds were utilized or the assessee has invested its own funds and whether the shares in question were purchased/sold under a Portfolio Management Scheme or the assessee has made the transaction as a share trader? - Held that:- Admittedly, the objective of the appellant trust is to ensure effective succession planning mechanism and transfer of funds from generation to generation for the benefit of the family members of the settler and protecting the family wealth as the trust beneficiaries are only family members i.e., purely blood relatives including children and grand children. The shares in question were acquired and transferred through Portfolio Managers engaged by the assessee. The entire investments have come out of the Corpus Fund of the assessee and no borrowed funds were utilized for purchase of the shares in question. In view of the aforesaid facts the contention of the revenue that the assessee has indulged in business activities in the guise of share investment has no merit. It is quite clear that the over-riding intention of the assessee is not to trade in shares even when the purchase and sale of shares was made through various Portfolio Managers. Therefore the CIT(A) has rightly held the income in question as ‘Capital Gains’ and not the ‘Business Income’. Thus it can be concluded that the assessee had purchased/sold the shares in question in the capacity of an investor and not in the capacity of a share trader and therefore, in the present case the income accrued from sale of the shares in question is required to be computed as capital gain and not as business income. - Decided in favour of assessee
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