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TMI Blog2013 (3) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction in shares carried out by the assessee were adventure in the nature of trade ? (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the exemption under section 47(v) of the I.T. Act, 1961 on sale of shares ignoring the fact that the said transaction has been treated as business income and the shares held by the assessee company were not an investment but shares sold to Piramal Holding Ltd. were actually stock of the assessee and similar transactions have been held as business activity by decision of the Apex Court in the case of Sutlej Cotton Mills Agency Ltd. (1975) 100 ITR 706, 711 (SC)? 2. The respondent during the relevant previous year sold shares of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the shares of a private limited company are not tradeable in the market and consequently, such shares cannot be considered to be stock in trade. The Tribunal further held that as the shares in L & T Crossroads Pvt. Ltd. were purchased from the funds borrowed / received from its holding company i.e. Piramal Holdings Pvt. Ltd. to the extent of Rs.9.47 crores. This borrowing was not in the nature of a commercial borrowing but more in the nature of the capital being infused in the subsidiary company by the holding company. This is for the reason that no lender would lend an amount to an extent where the net worth of the borrower is less than 1% of the amount lent for investment in shares. The Tribunal recorded a finding of fact that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single principle or test. We find that the Tribunal has considered the cumulative effect of all the facts and arrived at a conclusion that the transaction was not an adventure in the nature of trade, therefore, classifiable as capital gains. 6. Moreover, as held by the Supreme Court in the matter of Sutlej Cotton Mills Supply Agency Ltd. (supra) that whether the profit or loss has to be assessed under the head business gains or under the head capital gains is primarily dependent upon a finding of fact. In the present case, the Tribunal after considering all the facts and particularly the fact that the shares sold by the respondent-assessee to its holding company was not tradeable in the market like any other normal trading asset, concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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