GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 176 - ITAT KOLKATA

2015 (11) TMI 176 - ITAT KOLKATA - TMI - Surplus from share transactions - business income OR capital gains - Held that:- We find that the frequency of transactions does not really matter and what is to be seen is the intention of the assessee whether he wants to penetrate into the capital market for the purpose of investment or for making speculative gains by doing day trading and dealing in futures and options. It is also seen that the Learned AO had clearly stated in his assessment order that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

classified the share transactions under the head Investments. This itself clearly proves the intention of the assessee that he is only interested in share market only as an investor and not otherwise. No hesitation to treat the assessee as an investor and direct the Learned AO to treat the gains arising out of share transactions as returned by the assessee as capital gains. - Decided in favour of assessee.

Addition towards loan received from Sri Ram Niranjan Saraogi u/s 68 - Held tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt and this conduct cannot be doubted with in the facts and circumstances of the case. These facts are quite evident from the cash flow statement of Sri Ram Niranjan Saraogi and Sri Naresh Kumar Bharech filed by the Learned AR before us. Hence we have no hesitation in directing the Learned AO to delete the addition made u/s 68 of the Act.- Decided in favour of assessee. - ITA No. 1366/Kol/2012 - Dated:- 23-9-2015 - Shri Mahavir Singh, JM And Shri M. Balaganesh, AM For the Appellant : Ms. Varsh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

JCIT, the Learned DR argued on behalf of the revenue. 3. The assessee earned income from (a) trading business of textiles ; (b) capital gains , speculation business, futures & options and (c ) other sources. 4. The first issue to be decided in this appeal is as to whether the Learned CITA is justified in confirming the action of the Learned AO in treating the surplus of ₹ 1,01,095/- from share transactions as business income as against the capital gains reported by the assessee. 4.1. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of assessee declaring income from share transactions in the form of capital gains and business income are not disputed. The only point of dispute on this issue is whether the gains on share transactions are to be accepted as gains arising to the assessee in the capacity of investor or a trader. The Learned AO treated the gains from share transactions as business income of the assessee on the following grounds:- a) The assessee did not maintain separate books for share investment and share busine .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Learned AO reworked the net profit from share business at ₹ 1,01,095/- and brought the same to tax. This action of the Learned AO was upheld by the Learned CITA in first appeal. Aggrieved, the assessee is in appeal before us on the following ground:- 1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the action of the A.O. in treating the surplus of ₹ 1,01,095/- from share transactions as business income instead of income u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le (average period of holding of shares ranging from one month to less than a year) were filed in pages 17 - 22 of Paper Book ; details of mark to market for futures and options transactions date wise were filed in pages 23 -28 of paper book and copy of return acknowledgement together with computation of total income and assessment order passed u/s 143(3) of the Act dated 12.10.2009 for the Asst Year 2007-08 in pages 29 - 36 of paper book, wherein the assessee s share transactions have been acce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee has been engaging himself in the share transactions both as an investor and as well as trader. It is seen that the assessee had clearly bifurcated the investment and trading transactions including speculative share transactions in his books of accounts and it is also seen that the average period of holding of shares range from one month to more than one year and accordingly short term or long term capital gains are duly offered to tax by the assessee depending upon the period of holding .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n futures and options. It is also seen that the Learned AO had clearly stated in his assessment order that the interest on borrowings were paid by the assessee only for trading in shares and this itself goes to prove that the assessee had clearly bifurcated his activities into two parts - one towards investment in shares out of own funds of the assessee and other towards trading in shares out of own and borrowed funds of the assessee. It is also seen that the assessee has been doing this activit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Bombay High Court and decision rendered thereon are as below:- (a) Whether, on the facts and circumstances of the case and in law, the Hon ble ITAT was justified in treating the income from sale of 7,59,003 shares for ₹ 5,00,12,879/- as an income from short term capital gain and sale of 3,88,797 shares for ₹ 6,65,02,340/- as long term capital gain as against the Income from business assessed by the A.O. ? (b) Whether, on the facts and circumstances of the case and in law, the Ho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of account is the most crucial source of gathering intention of the assessee as regards to the nature of transaction without appreciating that the entries in the books of accounts alone are not conclusive proof to decide the income? The Tribunal has entered a pure finding of fact that the assessee was engaged in two different types of transactions. The first set of transactions involved investment in shares. The second set of transactions involved dealing in shares for the purposes of business .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tment transactions and the profit received there from should be treated either as short term or, as the case may be, long term capital gain, depending upon the period of the holding. A finding of fact has been arrived at by the Tribunal as regards the existence of two distinct types of transactions namely, those by way of investment on one hand and those for the purposes of business on the other hand. Question (a) above, does not raise any substantial question of law. In so far as Question (b) i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ition, that the principle of res judicata is not attracted since each assessment year is separate in itself. The Tribunal held that there ought to be uniformity in treatment and consistency when the facts and circumstances are identical, particularly in the case of the assessee. This approach of the Tribunal cannot be faulted. The revenue did not furnish any justification for adopting a divergent approach for the Assessment Year in question. Question (b), therefore, does not also raise any subst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inent to note that the decision of Bombay High Court was subjected to further appeal by the revenue before the Hon ble Apex Court and the Special Leave Petition (SLP) was dismissed by the Supreme Court. It is also pertinent to note that the CBDT Circular No. 4/2007 dated 15.6.2007 has also recognized possibility of two portfolios i.e one Investment portfolio comprising of securities which are to be treated as capital assets and the other Trading portfolio comprising of stock in trade which are t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

justified in confirming the addition of ₹ 1,00,000/- towards loan received from Sri Ram Niranjan Saraogi u/s 68 of the Act. 5.1. The brief facts of this issue is that the assessee was in receipt of a loan from Sri Ram Niranjan Saraogi in the sum of ₹ 1,00,000/- on 10.5.2005 during the assessment year under appeal. The assessee furnished the complete details of the loan creditor before the Learned AO including the PAN, income tax assessment particulars of loan creditor, balance sheet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

68 of the Act which was also upheld by the Learned CITA. Aggrieved, the assessee is in appeal before us on the following ground:- 2.(a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 1,00,000/- made by the A.O. on account of loan received from Sri Ram Niranjan Saraogi. 5.2. The Learned AR argued that the loan creditor was having sufficient cash balance of ₹ 81,111/- and out of which a sum of ₹ 75,000/-was deposi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pleaded that the assessee had duly discharged his onus in terms of section 68 of the Act in full and accordingly no addition u/s 68 would lie in the facts and circumstances of the case. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 5.3. We have heard the rival submissions and perused the materials available on record including the paper book and we find that the assessee had duly discharged his onus in full in terms of section 68 of the Act by furn .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

umstances of the case. These facts are quite evident from the cash flow statement of Sri Ram Niranjan Saraogi filed by the Learned AR before us. Hence we have no hesitation in directing the Learned AO to delete the addition made in the sum of ₹ 1,00,000/- u/s 68 of the Act. Accordingly, the ground no. 2 (a) raised by the assessee is allowed. 6. The next ground to be decided in this appeal is as to whether the Learned CITA is justified in confirming the disallowance of interest to loan cred .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Learned AO and Learned CITA observed that the assessee had not actually paid the said interest of ₹ 25,751/- but only credited to the parties account. However, we find from the face of the assessment order itself that the assessee is following mercantile system of accounting and accordingly the assessee is duly entitled for deduction of ₹ 25,751/- towards interest payable on the loan from Sri Ram Niranjan Saraogi. Accordingly, the ground no. 2 (b) raised by the assessee is allowed. 7 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the loan creditor before the Learned AO including the PAN, income tax assessment particulars of loan creditor, balance sheet and statement of total income together with confirmation of having given the loan to the assessee together with the respective sources. The Learned AO disbelived the version of the assessee and brought the loan credit to tax u/s 68 of the Act as unexplained cash credit which was also upheld by the Learned CITA. Aggrieved, the assessee is in appeal before us on the foll .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed that the assessee had duly appeared in person before the Learned AO and confirmed the aforesaid transactions. However, at the time of deposition before the Learned AO , the concerned loan creditor could not explain the source of deposit of ₹ 2,06,049/- credited in his bank account on 6.7.2005 and ₹ 45,000/- on 26.12.2005. She argued that the concerned loan creditor Shri. Naresh Kumar Bharech had advanced loan to Shri.Ved Prakash Suresh Kumar in Asst Year 2005-06 amounting to ͅ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Similarly the concerned loan creditor had received back a loan of ₹ 15,000/- given on 9.11.2005 was received on 23.12.2005 which was credited in his bank account. The concerned loan creditor also received interest from the assessee in the sum of ₹ 45,000/- which was credited in his bank account on 26.12.2005. From these balances, the concerned loan creditor advanced another loan of ₹ 55,000/- to the assessee herein on 27.12.2005. All these facts are stated in pages 46- 57 of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version