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2016 (3) TMI 464 - BOMBAY HIGH COURT

2016 (3) TMI 464 - BOMBAY HIGH COURT - TMI - Capital gain v/s business income - nature of income - Held that:- All the facts concluded that the respondent assessee has subsequent to the Resolution of its Board made investment in shares as investments. The gains / loss earned on these investments were held to be chargeable to tax under the head capital gains on consideration of all facts and application of applicable law i.e. well settled test to distinguish between gains of trading and capital g .....

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his Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 5th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Year 2007-08. 2. This appeal raises the following questions of law for our consideration : (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in ignoring the fact that the respondent company as per its Memorandum of Association was pr .....

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pondent assessee is mainly engaged in the business of dealing in shares. The respondent assessee has shown income arising on account of its investment under the head of capital gains . The respondent assessee before the Assessing Officer sought to justify its income on account of capital gains by virtue of Resolution of the Board of Directors, approving scrips in which it would invest. This investment was distinct and separate from its regular business of dealing in shares. It is further pointed .....

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. 4. The Assessing Officer by his order dated 27th November, 2009 did not accept the above, holding that the respondent assessee had organized its portfolios into trading and investment only for its own convenience. Consequently, the Assessing Officer brought to tax as business income of ₹ 17.04 lakhs and ₹ 1.24 crores offered by the respondent assessee as long term capital gains and short term capital gains respectively. 5. Being aggrieved, the respondent assessee carried the issue .....

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respondent assessee. It has accepted the respondent assessee's justification to be investor in shares even when it deals in them, while recording a further fact that no borrowed funds were used in making the investments. Thus, partly allowing the respondent assesse's appeal by its order dated 15th September, 2010. 6. Being aggrieved, the Revenue carried the issue in appeal before the Tribunal. The Tribunal by the impugned order dated 5th April, 2015 while upholding the findings of the CI .....

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eved, the Revenue is in appeal before us. 7. Keeping in mind the aforesaid basic facts leading to this appeal, we shall consider the question as raised for our consideration. 8. Re. Question No.(i) : (a) Mr. Pinto, learned Counsel for the Revenue states that as the Memorandum of Association of the respondent assessee has as its object clause dealing in shares, it must follow that any income earned by the respondent assessee in respect of shares should be classified only as business income. This .....

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e the Tribunal. Thus, the question as framed does not arise from the impugned order of the Tribunal. Accordingly, question (i) as framed does not give rise to any substantial question of law. Thus, not entertained. 9. Re. Question No.(ii) : Mr. Pinto, learned Counsel for the Revenue in support of question no.(ii) relied upon the Assessment order passed for the subject Assessment Year 2008-09 to contend that the respondent assessee therein has accepted the profits earned on sale of shares is to b .....

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