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2017 (3) TMI 808 - ITAT AHMEDABADTransaction of shares - capital gain or business income - Held that:- CIT(A) has accepted the contentions of the assessee with regard to the investment, which were not made through Smt. Rupal Naresh Panchal and Sudgandh Estate & Investment Pvt. Ltd. We find that in the accounts, the assessee has shown the shares under the head “investment” and not “stock-in-trade”. We also find that at the end of the year, the assessee has not valued the shares in the manner stock is being valued. The assessee has paid security transaction tax. The finding of the ld. CIT(A) are based on the facts that the assessee has financed more than 20 crores to Smt. Rupal Naresh Panchal and Sugandh Estate and Investment Pvt. Ltd. group with the intention that this group would make multiple application in the IPOs of certain companies. The second reason assigned by the ld. CIT(A) is that the assessee did not take any kind of security from these persons. However, we do not find any material brought on record by the revenue which could substantiate the apprehensions made by the First Appellate Authority. There is no evidence with the revenue to establish the nexus between the assessee and the group of two persons namely Rual Naresh Panchal and Suandh Estate & Investment Pvt. Ltd. There is nothing on record to suggest that the assessee has colluded with Smt. Rupal Naresh Panchal and Sugandh Estate & Investment Pvt. Ltd. in a manner that would indicate that shares were acquired for the purpose of trade. Such nexus has not been established. The observation of the First Appellate Authority are only inferential without any concrete material in the possession of the A.O./CIT(A). The revenue has grossly failed to establish that the assessee was trading in shares. On the contrary, the ld. Senior Counsel has successively proved the assessee is an investor. Therefore, the surplus of ₹ 3,93,54,700/- has to be taxed as Short Term Capital Gain. - Decided in favour of assessee
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