TMI Blog2015 (9) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. CIT(A) in allowing the carry forward of loss in view of the discussion above. - Decided against revenue. - I.T.A .No. 917/Del/2013 - - - Dated:- 4-9-2015 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER. JJ. For The Appellant : Sh. Vivek Wadekar, CIT DR For The Respondent : Sh. M.L, Dujari, CA ORDER PER BEENA PILLAI, JUDICIAL MEMBER: This is an appeal filed by the Revenue against the order of ld. CIT(A) s-XXI, New Delhi dated 07.11.2012 for A.Y. 2006-07 on the following grounds: 1. Ld. CIT(A) erred in law and on the facts of the case in directing the AO not to reduce the long term capital gain from the income exempt u/s 10(38) of the I.T. Act and to allow carry forward of the long term capital gain. 2. The appellant craves, leave or reserving the right to amend, modify, alter, add, or forego any grounds of appeal at any time before or during the hearing of this appeal. 2. Brief facts of the case are that assessee is in the business of carrying on the activity of investments and to invest in and acquire shares, hold shares, stocks and debentures, stick bonds and securities and to carry on the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessment year 2005-06 the appellant held various shares and securities in its investment portfolio which were valued at cost subject to provision for diminution in their value. It also held shares in stock in respect of which it indulged into trading which were valued at cost or market price whichever is lower. The appellant is regularly and consistently carrying out these activities and had been valuing its investment and inventory in the like manner. In its Balance Sheets from year to year and tax audit reports quantitative information in respect of the shares traded has been given. Assessments for assessment years 2001-02, 2003-04, 2004-05 and 2005-06 have been made u/s 143(3) of the Income Tax Act, 1961 and consistently this position has been accepted by the Income Tax Department. b) In the year under consideration the assessee filed its Return of Income in which it finally returned its income as under: i. Business loss ₹ 2,58,36,171/- ii. Speculative profit set off from ₹ 14,92,509 Unabsorbed brought forward loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olio comprising of stock in trade which is treated as trading assets. Income derived by the assessee company on realization of its Investment Portfolio is capital gain and has been declared as such. Income derived from the stock in trade has been declared as business income. Assessee is entitled to maintain both the portfolios, and it has been maintaining them consistently from year to year. g) Ld. CIT(A) placed reliance on the judgment of Hon ble Delhi High Court in the case of CIT vs. Rohit Anand reported at 327 ITR page 445. The Hon ble Delhi High Court has held as under: There is no doubt that even a single transaction can be in the nature of trade but the assessee has demonstrated that his intention was never to trade in shares. The intention is manifested by treatment given to such investment that the investment is out of own fund and not borrowed that the investment is not rotated frequently, that the total number of transactions are very few, that all the shares purchased are not sold and rather held for quite number of days. It is to be noted the Income Tax Act itself has provided that when the shares are held for a period of one year or more will be treated as lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide following criteria to hold when gains are to be taxed as profit to be earned under the business or to be taxed as short term capital gain, we hold that if shares are not held even say for a month, then the intention is clearly to reap profit by acting as a trader and he did not intend to hold them in investment portfolio. We believe that if a person intends to hold his purchases of shares as investment, he would watch the fluctuation of rates in the market for which a minimum time is necessary, which we estimate at one month. Where shares are held for more than a month, they should be treated as investment and on their sale short term capital gain should be charged. When shares are held for less than a month, gain on them should be treated as profit from business. i) After analyzing the issue and considering the various case laws as relied upon by the ld. AR, the ld. CIT(A) found that, holding period is the most appropriate factor to decide the issue, whether it should be treated as stock in trade treating it as a business income or investment so as to treat it as capital gain. j) In view of the above discussion the bifurcation of the shares held for less 30 days on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital gains assessable for that assessment year in respect of any other capital asset not being a short term capital asset; c) If the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on (2) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. 15. Clause (b) of sub section (1) of this section provide that in so far as capital loss relate to capital asset, it shall be set off against income, if any, under the head Capital gains assessable for that assessment year in respect of any other capital asset not being a short term capital asset and arising in the following assessment year. 16. Law makes it amply clear that long term capital loss can be set off only against assessable capital gains and not otherwise. However, while giving effect to the order of the ld. CIT(A) on 21st March, 2011(pages 1to 3 of the paper book) ld. AO set off the loss from the long term capital gain, not assessable to tax during the year under consideration. In view of specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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