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DEPUTY COMMISSIONER OF INCOME TAX, CENTRA CIRCLE 13, NEW DELHI Versus M/s GDA FINVEST & TRADE PVT. LTD. AND VICA-VERSA

Sale of investments - Short term capital gain V/S business income - Held that:- As per Section 45(1) of the Act, any gain arising on transfer of a capital asset is to be taxed as capital gain. Further section 2(14) define capital asset to mean property of any kind held by an assessee whether or not earmarked for his business or profession, but does not include any stock in trade, consumable stores or raw material held for the purpose of business. Thus the gain arising on capital asset falling wi .....

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r of Companies. The books of accounts and the audited financial statements have evidentially value and what is recorded therein cannot be disturbed lightly. The income arising on sale of capital asset, as stated hereinabove, has to be assessed under section 45(1) as capital gain and accordingly the CIT(A) was right in holding that gain arising on sale of investment will be chargeable as capital gain and not as business income. - I.T.A. No. 2019/Del/2013, C.O. 321/DEL/2014 - Dated:- 15-1-2016 - S .....

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On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in directing the AO to treat the income of ₹ 95,92,653/- as STCG against business income assessed by AO. 3. On the facts and circumstances of the case the ld. CIT(A) has erred in law in directing the AO to charge the amount of ₹ 90,180/- as Short Term Capital Gain under the head Capital Gains and not under the head Income from Business income whereas the amount of addition was ₹ 95,92,653/-. 4. T .....

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143(3) is without jurisdiction. 2. On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 3. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in ignorin .....

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contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law. 5 (i) On the facts and circumstances of the case, Ld Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in making addition of ₹ 62,817/- invoking the provisions of Sec 14A of the Act. (ii) That the addition has been arbitrarily estimati .....

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77; 95,34,323/-. Notice was issued u/s. 143(2) on 20.9.2010 and u/s. 142(1) on 30.9.2010. These notices were duly complied with, and necessary details / clarifications were filed. The AO has completed the assessment at an income of ₹ 99,74,084/- as against returned income of ₹ 95,34,323/-. The assessee during the year has earned long term capital gain of ₹ 14,27,860/- and short term capital gain of ₹ 95,92,653/-. The AO held that the short term capital gain is a business .....

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ntions raised by the assessee. However, on merit the CIT(A) gave partial relief to the assessee. 6. Against the order of the learned CIT(A) the Revenue is in appeal before the Tribunal and assessee has filed cross objection. During the course of hearing the assessee did not press the cross objection filed by it raising legal ground. Accordingly the same is dismissed as not pressed. 7. The issue in all the four grounds of appeal is one only i.e. regarding taxation of short term capital gain as bu .....

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ent in shares as business income. It was further submitted that AO has given cogent reasons for treating short term capital gain as business income. 8. On the contrary, the Ld. Counsel of the Assessee contended that the action of the AO was not justified. He stated that the assessee during the year has earned a total capital gain of ₹ 1,10,20,860/- which included long term capital gain of ₹ 14,27,860/- and short term capital gain of ₹ 95,92,653/-. He further stated that the AO .....

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s been holding investment in shares and has been declaring so. In this regard attention was also invited to the balance sheet of the earlier years whereby investments in shares has always been declared as investment. It was also stated by him that there are no frequent transactions. There is no organized activity. The assessee s main business is that of financing from which it has earned interest income and that has been rightly declared as business income and there is no trading activity of sha .....

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/2011 dated 27.04.2015 and Omkareshwar Properties (P) Ltd. vs. ITO, ITA No. 5754/Del/2013 dated 23.10.2015. 10. We have heard both the parties and perused the paper book, assessment order and the order of the Ld. IT(A). In the Revenue s appeal, though it has raised four grounds of appeal but the only issue is treatment of income of ₹ 95,92,653/- as short term capital gain against business income though in ground no.3 the Revenue has stated that the learned CIT(A) has mentioned the amount o .....

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al gain has been accepted by the AO and whereas the short term capital gain has been assessed as business income. From the assessment order, we find that no reason has been given by the AO to treat these two differently. From the balance sheet of the assessee company of this year and also earlier years it is evident that all along the assessee has been making investment in shares and the same have been declared as investment. These transactions have been accounted for in the books of account as .....

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has made investment. There are no repeated transactions in the same script. There does not appear to be any organized activities as is normal in the case of a trader. There is no intra-day transaction. 12. The AO has referred to the Memorandum & Articles of Association to support its allegation that investment in scripts is the business of the assessee. We are of the view that this cannot be the basis for holding that the gain arising during the year is business income and not capital gain b .....

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g on sale of shares held as stock in trade as business income. This issue has come up before the ITAT in the case of Omkareshwar Properties (P) Ltd. vs. ITO (Supra) where it was held that if the assessee though having object clause of carrying on the business of real estate in the Memorandum & Articles of Association, the land held as capital asset will not become stock in trade merely because the Memorandum & Articles of Association has an object clause to carry on the business of real .....

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