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COMMISSIONER OF INCOME TAX, KOLKATA-III, KOLKATA Versus MERLIN HOLDING PRIVATE LIMITED

2015 (5) TMI 794 - CALCUTTA HIGH COURT

Short term capital gain v/s business income - Whether Tribunal below committed substantial error of law by not analyzing the facts of the instant case to determine whether the income of the assessee was required to be treated as income from business and not short-term capital gain since the main motive of the assessee was to earn profit by trading on shares rather than to earn dividend by investing the same? - Held that:- The benefit of short-term capital gain can be availed for any period of re .....

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re 1000 transactions in a year or the mere fact that the majority of the income was from the share dealing or that the Managing Director of the assessee is also a Managing Director of a firm of share brokers cannot have any decisive value. The question essentially is a question of fact. The CIT Appeal and the learned Tribunal have concurrently held against the views of the Assessing Officer. On the basis of the submissions made by the learned Advocate for the appellant, it is not possible to say .....

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0 pertaining to the assessment years 2005-06 and 2006-07. The Assessing Officer was of the opinion that the activity which, according to the assessee, was on investment account amounted to business activity and, therefore, he treated the short-term capital gains of ₹ 1,01,00,000/- approximately as business income. Aggrieved by the order the assessee preferred an appeal. The appellate authority came to the conclusion that the claim put forward by the assessee was correct and the refusal on .....

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rry out share transactions without putting pressure on appellant s own resources. The appellant is a certified Nonbanking financial concern. Apparently the main activities of the appellant are giving loans and taking loans and investing in shares and securities. Assessing Officer has not differentiated the purpose of purchase of shares purchased and held for more than one year and shares purchased and held for less than one year. The sale of share after holding it for more than one year and sale .....

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has shown speculation loss on Future and Options and spot market and an investor will not indulge in speculative transactions. In fact the transactions in the Future and Option are not considered as speculative even by legislature from Assessment Year 2006-07. Further, the motive of appellant is well defined by appellant in the books of account and accordingly income from shares traded under future and option or speculative cash market transactions is shown as speculative business income/loss an .....

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related to delivery based purchase and sale of shares resulting in capital gain are entered into with the intention of investment. As far as volume of transactions is concerned, it can only be an indicative factor but it cannot be a determinative factor in analyzing any transaction. In current days, change in portfolio is required on the basis of performances of the companies in various industrial and other sectors and volatile share market. The volume of purchase and sale of shares under inves .....

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per law. The learned Tribunal in concurring with the views expressed by the C.I.T.(Appeals) dismissed the appeal preferred by the Revenue. The Revenue has once again come up with an appeal before us. The following questions were formulated;- 1) Whether the learned Tribunal below committed substantial error of law by not analyzing the facts of the instant case to determine whether the income of the assessee was required to be treated as income from business and not short-term capital gain since .....

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an one thousand transactions in the year which is not in consistence with the conduct of an investor. The dividend earned is restricted to less than ₹ 2,50,000/- and the trading was for ₹ 9 crores approximately. The Managing Director of the assessee is also a Managing Director of a company which deals in dealings of shares only as a share broker. There was also evidence to show that the assessee indulged in a speculative activities. The income during the assessment year 2005-06 on ac .....

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slature has not made any distinction on the basis of frequency of transaction. The benefit of short-term capital gain can be availed for any period of retention upto 12 months. Although a ceiling has been provided but there is no indication as regards the floor, which can be as little as one day. When that is the position in law and the investor has adduced proof to show that some transactions were intended to be business transaction, some transactions were intended to be by way of investment an .....

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eld against the views of the Assessing Officer. On the basis of the submissions made by the learned Advocate for the appellant, it is not possible to say that the views entertained by the CIT Appeal or the learned Tribunal were not a possible view. Therefore, the judgment cannot be said to be perverse. Mr. Saraf added that the learned Tribunal does not appear to have examined the issue and merely endorsed the view of the CIT Appeal. It can be pointed out that an Appellate Authority is not ordina .....

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