TMI Blog2015 (6) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the assessee, which was to buy the shares for investment purpose and to sell the same to maximize the gain from such investments. Besides this, another very vital factor relevant in the assessee’s case is that, on similar nature of transactions, which fact has been noted by the AO in the assessment order itself that in the earlier years the department has accepted the gain from sale of shares to be assessed under the head `capital gains’ and such a view has been accepted under scrutiny proceedings passed u/s 143(3). Thus, on the facts and circumstances of the assessee’s case, we hold that the gain from transaction of shares by the assessee is to be assessed under the head `capital gains’ and not as `business income’. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling shares through portfolio management services. He has also noted down the figures of the shares purchased, sold and number of transactions undertaken in these years. Likewise, in the financial year 2004-2005, also relevant to the assessment year 2005-2006, the assessee had purchased 275796 shares of which 62462 shares were sold directly and 213334 shares were purchased through PMS and were also sold through PMS. The assessee had also purchased mutual funds through PMS and also sold during the year. The figures of various purchases and sales made during the previous three assessment years have been noted by him in para 4 to 4.8 of the assessment order. After noting down the figures, he analyzed the legal position with regard to the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee was that the earning of the assessee from PMS had been ploughed back for further investment and the assessee has not drawn any amount for personal use or diversion of fund into other activities. The majority of the investments have been made in debt funds where there is a less risk as compared to equity funds. The assessee s submissions have been noted by the CIT(A) from pages 6 to 9 of the paper book. The learned CIT(A) too rejected the assessee s contention and upheld the action of the AO. The sum and substance of his conclusion were as under :- (i) the principle of res judicata does not apply in the instant case, because the assessee is not maintaining the books of account and has not filed any capital account or balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this year and balances have been kept in the investment portfolio. Similarly, the purchases made during the year have also been kept in the investment portfolio and there is no repetitive transaction. Besides this, the assessee s investment in mutual funds and debt shares are more than 72%, whereas the investments in equity shares are around 27%. This itself goes to show that the intention of the assessee was to kept the shares as investment and not for trading purpose. Not only that, the assessee s majority of transactions are through portfolio management services, which goes to show that the assessee is depending upon the Fund managers to augment its wealth . He also pointed out that the AO has made an observation that the dividend in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares, which is nothing but trading in shares. Accordingly, the order of the CIT(A) should be affirmed. 7. We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as the material placed on record. From the perusal of details of transactions of the shares including the date of acquisition, it is seen that the assessee is mostly having shares of Blue chip companies, which have been held since last 20 to 40 years. Some of the shares are being regularly sold and the balance shares have been kept back in the investment portfolio. The AO s main ground is that the assessee has undertaken purchase of shares and mutual funds worth in several crores and also has sold shares in mutual funds f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions, which fact has been noted by the AO in the assessment order itself that in the earlier years the department has accepted the gain from sale of shares to be assessed under the head `capital gains and such a view has been accepted under scrutiny proceedings passed u/s 143(3). Thus, on the facts and circumstances of the assessee s case, we hold that the gain from transaction of shares by the assessee is to be assessed under the head `capital gains and not as `business income . Accordingly, the order of the CIT(A) is set aside and the ground raised by the assessee is treated as allowed. 8. Regarding the alternate claim as raised in ground No.7, that expenses should be allowed if the transaction in shares is to be assessed un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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