TMI Blog2014 (1) TMI 1599X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent : Mr. Anurag Shrivastava PER : Shri R.K.Gupta This appeal has been preferred by the assessee against the order dated 21-1-2010, passed by the learned CIT(A)-23, Mumbai, relating to assessment year 2006-07. 2. The first ground in appeal of the assessee is against treating the amount of Rs.1,21,42,192/- under the head income from business or profession instead of income from short term capital gains shown by the assessee. 3. During the assessment proceedings, the AO noted that the assessee has shown short term capital gains on shares of Rs.1,21,42,192/-. The AO placing reliance on the Board Circular No.1827, dated 31-8-1989, whereby it has been circulated that the transaction in shares has to be seen as to whether they are held as stock-in-trade or they have held as investment. The AO noted that the assessee has made frequent transaction of purchase and sales and he found that 363 transactions across 363 scrips has been made during the year. The contention of the assessee that all these shares were shown under the investment portfolio, therefore, the long term capital gains or short term capital gains, as the case may be, has to be accepted. However, since the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een by the AO as to what treatment has been given by the assessee in respect to purchase of shares. Whether the purchase of shares are shown under the head stock-in-trade or under the head investments. If purchases have been shown under the head stock-in-trade then the sale transactions has to be treated as business transactions and if the sales have been effected from investment account then the gain has to be treated as long term capital gain or short term capital gain, as the case may be. In the present case, the assessee has shown all the purchases under the head investment portfolio, therefore, in our considered view, the gain on account of sale of shares has to be treated as short term capital gain on the facts of the present case. Similar issue came before the E-Court of Nagpur Bench in the case of Shri Sanjay Ishwarlal Ranka, decided in ITA No.161/Nag/2012, vide order dated 8-2-2013. The final findings of the Tribunal has been recorded in paras 9 10, which are as under :- 9. We further noted that against the order of CIT(A) for assessment year 2006-07, the department preferred appeal before the Tribunal and the Tribunal discussing the issue in detail and placing r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit from the shares is a capital gain or business income - Whether the shares are held by the assessee as investments or - Whether the shares are purchased with an intention to keep them - Whether the shares purchased with an intention to sell; -Whether the shares were purchased with an intention to earn the profit in the Short Term; - Whether the shares are held to maximize the return; - Whether the shares have been purchased from the primary market; - Whether the shares have been purchased from the secondary market; - Whether the shares have been purchased by subscription to Public -Whether the shares have been held for fairly long period, and - Whether the shares once sold have never been re-purchased 14. We noted that in the case of CIT Vs V A Trivedi 172 ITR 95 (Born) Hon‟ble jurisdiction High Court has clearly laid down under para 12 of the order that the onus of establishing that a purchase is made with the intention to trade is on the Revenue. 15. We noted that the main contention of the revenue in treating the gain to be the income from business is the number of transactions and the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taxed as capital gain. It is not denied that in this case also, the assessee was holding the shares as investment. Holding of the shares as investment itself prove the intention of the assessee as regards to the nature of the transaction. Had the shares been the business assets, it would have shown by the assessee as a stock in trade. Apparent is real, if the revenue feels that the intention of the assessee was not to hold the shares as investment. The onus in our opinion is on the revenue to prove that apparent is not real. No evidence was being placed or brought to our knowledge by the Ld. D.R. which may prove that the intention of the assessee was not to hold the shares as investment. It is also a fact that the assessee derived the dividend income and has also made the investment in the shares not out of the borrowed funds, but out of its own surplus funds. The CIT(A) while allowing the appeal of the assessee has extensively dealt with the various factors as well as various case laws to arrive at a finding that the shares were held by the assessee as a capital investment and not as stock in trade. He has also relied on the decision of this Tribunal in the case of CIT Vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing a sum of Rs.34,26,643/- under Section 14A read with Rule 8D(2) of the IT Rules. 10. This issue requires to set aside to decide the same afresh in the light of the decision of the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. Vs. DCIT, reported in (2010) 328 ITR 081 (Bom) as the Rule 8D is applicable from assessment year 2008-09. The year under consideration is assessment year 2006-07 and Rule 8D is not applicable for the year under consideration as held by the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd.(supra). Accordingly, we set aside this issue to the file of the AO to decide the issue afresh after affording opportunity of being heard to the assessee. 11. Ground No.3 is against charging interest under Section 234ABC D, is consequential in nature, which requires no separate adjudication. 12. Ground No.4 is against initiation of penalty proceedings under Section 271(1)(c), which is premature at this stage. Therefore, the same is rejected. 13. Resultantly, appeal of the assessee is allowed in part and partly for statistical purposes. Order pronounced in the open court on this 21 st day of Aug.2013. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
