TMI Blog2010 (8) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... see is high. But there is no purchase of the shares from the open market - frequency in respect of the sale of shares is only two which cannot be said to be frequent and this transfer is also within the group companies - assessee has been disclosing before various other statutory authorities like the SEBI that it is in control and it is the promoter of ICL clearly shows that the intention of the assessee is not to trade in the shares of ICL - shares have been held by the assessee for acquiring and maintaining a controlling stake in the company - sale of the shares of ICL held by the assessee is in the nature of sale of capital asset and not in the nature of stock-in-trade is upheld. In the circumstances, the Assessing Officer is directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (6) of the memorandum of association (MOA) of the assessee-company the primary business of the assessee is to deal in shares/stocks and securities. 2.3 The learned Commissioner of Income-tax (Appeals) ought to have noted that unlike an individual, a limited company comes into existence for a particular purpose of carrying out a certain activity/ business stipulated in the memorandum of association and in the instant case, the assessee-company having as its primary business of dealing in shares, the income from such activity is to be assessed as 'business income' only and it cannot fall under any other head of 'income'. 2.4 The learned Commissioner of Income-tax (Appeals) ought to have seen that the assessee had held the shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear under consideration. 3. For these and other grounds that may be adduced at the time of it is prayed that the order of the learned Commissioner of Income-tax (Appeals) may be set aside and that of the Assessing Officer restored." 4. It was submitted by the learned Departmental representative that the crux of the appeal was that the assessee had sold the shares of M/s. India Cements Ltd. ("ICL" for short) held by it and had claimed the income therefrom as exempt under section 10(38) of the Income-tax Act, 1961. It was the submission that the assessee had treated the sale of the shares of M/s. India Cements Ltd. as long-term capital gains arising on the sale of the long-term non-trade investment and had claimed the exemption under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Departmental representative that in the assessee's case also the assessee had sold substantial number of shares of ICL. He vehemently supported the order of the Assessing Officer. 5. On a specific query from the Bench it was submitted by both sides that the shares of ICL which had been sold during the relevant assessment year were shown in the balance-sheet of the assessee as investments. The learned authorised representative further submitted that the assessee was the substantial shareholder in ICL and was also holding a controlling interest therein. It was the submission that prior to the sale of the investment being the shares in ICL on September 16, 2005 the assessee-company was holding 25.17 per cent of the total capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the investment in the shares of ICL was disclosed for each year from March 31, 1996 to March 31, 2006. He further drew our attention to the promoter's declaration made before the SEBI being pages 65 to 79 wherein the disclosure as per the regulation 8(2) of the SEBI has been shown wherein the target company has been specified as ICL. It was thus the submission that what has been sold was only its investment which was the capital asset and resulted in long-term capital gains which was entitled to the exemption under section 10(38) in view of the fact that the securities transaction tax has also been paid. It was the submission that the fact that the assessee has complied with all the requirements of section 10(38) remains undisputed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease in the quantity of the shares of ICL during various years is on account of amalgamations and mergers between group concerns as also the rights issue for which loans have been taken. The increase in the quantity of the shares between March 31, 2003 and March 31, 2004 is on account of rights issue of the shares of ICL for which loan amounts have been utilised. Again here these shares are not being purchased from the open market. There has been no sale of the shares of ICL by the assessee-company. Thus the magnitude of shares held by the assessee is high. But there is no purchase of the shares from the open market. The sale of the shares had taken place in 2 lots during the assessment year 2006-07 being the year in appeal. There is no fre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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