Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Dy. CIT, Shri Bahubali Shantilal, Shah Gujarat Samachar, Ahmedabad Versus Shri Bahubali Shantilal, Shah Gujarat Samachar & ACIT, Ahmedabad

Treatment given to the profits earned on sale of shares - whether it is to be considered as “business income” or “capital gains” - Held that:- CIT(A) has noted that the shares were acquired by the Assessee in IPO, ILFS Ltd. and J M Financial Services Pvt. Ltd. had partly financed the acquisition of those shares, the entities who had financed had charged fees and the shares were sold shortly after their acquisition. The activity of Assessee was held by the ld. CIT(A) to be in an organized and sys .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d, we find that ld. CIT(A) has given a finding of fact that the underlying shares have been acquired by Assessee’s own funds and no borrowed funds have been used, the Assessee had treated the shares as “Investments” and not as “stock in trade” and the motive of trading in those shares have not been established by the A.O and merely by referring to the volume and number of transactions does not establish the motive of Assessee to be a trader of shares. These finding of fact of ld. CIT(A) has not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Petitioner : Shri Dinesh Singh, Sr. D.R. For the Respondent : Shri S.N. Soparkar, A.R. ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. These 4 appeals of which 2 are filed by the Assessee and 2 appeals are filed by the Revenue are against the order of CIT(A)-I Ahmedabad, dated 24.02.2010 & 09.12.2010 for A.Ys. 2006-07 & 2007-08 respectively. 2. Before us, at the outset ld. A.R. submitted that though the appeals relate to two different assessment years but the issues involved in both the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be having income from salary, business of share trading, capital gains and other sources. Assessee filed his return of income for AY 2006-07 on 30.12.2006 declaring total income of ₹ 2,48,57,450/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 30.12.2008 and the total income was determined at the ₹ 2,46,96,280/- by inter alia treating the gains earned from sale of shares as business income instead of short term capit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f Capital gain. It is submitted that the income of the assessee be treated and taxed as capital gain only and not as Business Income. 2. Without prejudice to the above, the learned C.I.T. (Appeals) erred in holding that the assessee had derived the surplus of ₹ 28,52,583/- in the purchase and sale of shares of the companies, which were acquired through two entities, who were charging fees for such activities and therefore, the point for determination is that it is a systematic activity 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

arned C.I.T. (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 5. On the other hand the grounds raised by the Revenue in ITA No. 1361/Ahd/2010 reads as under:- 1. The ld. CIT(A) has erred in law and on facts in directing the A.O. to tax surplus of ₹ 1,29,68,597/- arising from sale of shares and securities as short term capital gains as per the provisions of Section 111A and not as business income. 2. On the facts and in 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

12 months were considered as Long term capital gains (LTCG) (being ₹ 85,21,36,058/-) and the profit on sale of shares which were held by the Assessee for less than 12 months were treated as Short term capital gains (STCG) (being ₹ 1,58,21,181/-). The treatment of Assessee s claim of LTCG was accepted by the AO but on perusing the details of the transactions that had resulted into gains and that were considered by Assessee as STCG, AO noticed that the transactions of purchases were o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing purchase of shares and had also obtained overdraft facilities and the interest cost incurred was added to the cost of shares or debited the interest account and that the Assessee had advanced funds to the persons involved in IPO scam for subscribing to the IPO and then in turn obtained the shares from those persons and were sold by Assessee. A.O was therefore of the view that the intention of holding the shares for a longer period and enjoying its benefit was missing in the case of Assessee. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

olding as under:- 8.1 Before deciding the main issue, the facts are required to be recapitulated. The facts emerging in the present case are :- The appellant, in the previous year under consideration, has got surplus of ₹ 1,58,21,180/- in the share transactions. In the return, the aforesaid surplus amount has been offered to tax as STCG, which is taxed @ 10%. The appellant has not directly advanced any funds to Rupal Panchal and others, who are involved in the IPO Scam. This has been categ .....

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 Pvt. Ltd. had also partly financed such activity. The appellant has provided part finance to M/s. IL&FS and M/s. J.M. Financial Services Pvt. Ltd. for making application in the IPOs of IDFC Ltd. and Yes Bank Ltd. After acquisition of these shares, these shares have been sold as per the details mentioned by the Assessing Officer at page 19 of the assessment order. 8.2 In the light of these facts, the issue for determination is as to whether the surplus of ₹ 1,58,21,180/- is to be taxe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ciples laid down by Hon ble ITAT, Ahmedabad in the order in the case of M/s. Hipolin Ltd., supra, the facts in the present case are required to be examined. In the present case, the appellant has derived surplus of ₹ 28,52,583/- in the sales/purchase of shares of the companies, the shares of which were acquired through IPOs by applying for the same through M/s. IL&FS and M/s. J.M. Financial Services Pvt. Ltd. The financing for such IPOs is partly borne by appellant and partly by IL& .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nufacture." The word "adventure" is defined in the shorter oxford dictionary as a pecuniary venture .................. and the word pecuniary venture, in its turn, is defined as "a commercial enterprise in which there is considerable risk of loss as well as chance of gain." 8.4 In the present case, the appellant has partly financed in the IPOs of certain companies to M/s. J. M. Financial Pvt. Ltd. and M/s. IL&FS. After allotment, these shares have been transferred 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

Officer is directed to tax ₹ 28,52,583/- at the rates applicable in the case of business and profession. 8.5 As regards to balance surplus amount of ₹ 1,29,68,597/-, this surplus has arisen as the appellant had mainly invested in shares it's own funds. It is also noticed that investment in shares is shown by the appellant in the account under the head Investment and not stock in trade. Thus, the appellant's intention of making investment was clear. The appellant has not incur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

han one year. This itself suggest that the short period of holding is not the criteria to be considered as trading transactions. Apart from this, the section 111A also provides for specific treatment of tax in respect of short term capital asset, particularly when STT has been paid. In appellant's case, the transactions are subjected to STT. Reference may also be made to the Bombay ITAT decision in the case of Gopal Purohit 29 SOT 117, which supports the appellant's explanation. In the c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

us. 9. Before us, the Ld AR apart from reiterating the submissions made before AO and CIT(A) further submitted that there are only 57 transactions during the year and the average number of transactions in a month are only 5 and Assessee had also earned huge dividend of ₹ 91.66 lacs. He also submitted on perusing the Balance Sheet it can be seen that against the Investment of ₹ 25.20 crores as on 31.3.2006, Assessee s own capital was ₹ 28.99 crore meaning thereby that most of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

neriwal Vs DCIT (2012) 134 ITD 179 (Bom), ACIT vs Smt Gargi S Patel (2012) 13 ITR (Trib) 386 (Ahm), Dev Ashok Karvat vs DCIT (2012) 50 SOT 167 (Mum) and CIT vs Rohit Anand (2010) 327 ITR 445 (Del). He further submitted that AO is wrong in observing that the Assessee has advanced money to people involved in IPO scam and submitted that Assessee had not acquired any shares from the persons involved in IPO scam and that the observation of the AO was factually incorrect. He further submitted that on .....

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 assessee. 10. The Ld DR on the other hand supported the order of AO and further submitted that in the present case, of the total profits which have been claimed by the Assessee as STGG, Assessee has earned ₹ 71.80 lacs from the sale of shares where the holding period of shares ranged between 0 to 33 days, that the Assessee has also indulged in speculation of shares as is evident from the computation of income and that the facts in the present case are similar to that of Manoj Samderia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

LTCG, there is no dispute between both the parties. The dispute is only with respect to the treatment to be given to profits that have been earned on sale of shares which have been held for less than 12 months i.e. whether the profits are to be considered as business income or Short terms capital gains . The total profits of ₹ 1,58,21,180/- is also not in dispute. We find that ld. CIT(A) has noted and which is not disputed by the Assessee is that ₹ 28,52,583/- has been earned by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nature of trade and therefore it was considered to be a business activity. Before us, no material has been placed on record by the Assessee to controvert the findings of ld. CIT(A). In view of the aforesaid facts and the reasoning given by ld. CIT(A), we do not find any reason to interfere in his order. As far as the treatment of the surplus of ₹ 1,29,68,597/- which is held to be STCG is concerned, we find that ld. CIT(A) has given a finding of fact that the underlying shares have been acq .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.



|| 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