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TMI Blog2010 (1) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... TCG) of Rs. 53,01,997. The Assessing Officer issued show-cause notice to the assessee as to why the same should not be treated as business income. The assessee explained that he was carrying on the business of trading in shares and securities and that the main trading was of securities and bonds with co-operative bank. During the accounting year 2003-04, the Reserve Bank of India banned the trading of individuals with co-operative bank and as such he was stopped trading in securities. The assessee had also made investment in mutual funds, fixed deposits, shares, etc., and his main intention was to earn good return on a long-term basis. However, due to volatile conditions of Mumbai and to save further reduction of capital investment in equit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also observed that the nature and scale of activity remains the same as in earlier years. In the earlier years, nominal short-term capital gains were shown as the tax rates were same as for business income. By observing these observations, the Assessing Officer treated the gain as business income of the assessee. The detailed submissions were filed before the Commissioner of Income-tax (Appeals). The circular issued by the Central Board of Direct Taxes in determining whether the transactions of sale and purchase of shares constitute capital gains or business income was filed. Reliance was placed on the decision of the hon'ble Supreme Court in the case of CIT v. Associated Industrial Development Co. Ltd. [1971] 82 ITR 586, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments since long. The assessee has shown business income on account of trading and capital gain on account of investment and the same has been accepted by the Department in earlier years. Attention of the Bench was also drawn on the assessment order completed under section 143(3) for the assessment years 2003-04 and 2004-05. Copies of the same are placed at pages 18 to 23 of the paper book. Further reliance was placed on the decision of the Tribunal in the case of Gopal Purohit v. Joint CIT [2009] 122 TTJ (Mum) 87 and it was further submitted that the decision of the Tribunal has been affirmed by the hon'ble Bombay High Court. The learned Departmental representative, on the other hand, placed reliance on the orders of the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer to investment during the year under consideration sale of stock of Rs.1,80,98,024 has been offered as business income. The stock transferred to investment account was sold in the subsequent year. The details to this effect are placed at page 29 of the paper book. There is no ban to do both these activities together, i.e., trading in shares and investment in shares. There is a Board circular also in this regard. Therefore, not accepting the explanation of the assessee at the end of the Assessing Officer or at the end of the Commissioner of Income-tax (Appeals), in our considered view was not justified. Learned counsel for the assessee has successfully demonstrated that whatever sales were made that were on account of investment and deta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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