TMI Blog2010 (7) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... chasing and selling these shares for quite a few years. b) Assessee has treated the STCG of ₹ 1,21,46,511/- only with the intention of claiming long term capital loss on sale of shares of ₹ 56,15,864/- and setting off of earlier year capital loss of RS.65,30,647/-. c) Assessee is trading company and not an investment company because its gross total income consists mainly of business income through trading in shares. In this regard, Assessing Officer has relied upon the provisions of clause (2) to section 109. d) Assessee has shown total sales of ₹ 2,56,99,956/- including sale of shares of ₹ 1,21,46,511/- and thus sale of shares constitute only 47.26% and balance 52.73% is on total income. 3. Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , represents the income and not the sales. Apart from the short term investments disposed off by the assessee during the year , assessee company has also treated sales of shares of ₹ 2,07,00,472/- as business sales shown in schedule- F of the profit and loss account. Appellant has shown loss of ₹ 93,01,809/- on the share trading which has been debited to the profit and loss account. Therefore, STCG of ₹ 1,21,46,511/- in my opinion, cannot be treated as business income merely on the ground that the assessee has been purchasing and selling shares for quite a few years. Coming to the argument of the Assessing Officer that the assessee has treated the gain of ₹ 1,21,46,511/- just to claim long term capital loss on sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been accepted by the assessing officers. For example, in the regard, AR has drawn my attention to the assessment order made u/s.143(3) for Assessment Year 1998- 99 in which Assessing Officer has observed that the assessee company was engaged in the business of investment, dealing in shares and securities, and conducting and providing finances and related services. In the computation of income for Assessment Year 1998-99, assessee has shown long term capital loss on sale of shares at ₹ 4,65,822/-, which has been carried forward for set off and income on account of capital gain shown at NIL, which has also been accepted by the Assessing Officer. Similarly, in the intimation made u/s.143(1)(a) for Assessment Year 1997-98, assessee s clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67. The intention of the assessee at the time of purchasing is important, Subsequent sale does not ersatz the original intention to hold the shares as investments. From this fact also, it is clear that the assessee s action to sell was not in the nature of trade. AR has also stated that these investments, which were made to be held and mad e to held as long term investments if were not sold, the company would have incurred huge losses subsequently as the prices started falling down. The assessee s total income mainly consisted of capital gain. In this regard AR in its submission dt. 11th Feb, 2004 has stated that loss under the head business income for the relevant year is of ₹ 47,17,116/- whereas income under the head capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain and income of ₹ 4,34,973/- as income from share trading business. 4. Aggrieved by the order of the Ld. CIT(A), Revenue is in appeal before us and has raised the following grounds: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the AO to treat gain of ₹ 1,17,11,538/- as short term capital gain instead of treating as business income without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that as the gross total income of the assessee was mainly of income under the head capital gain and therefore loss on account of share trading business cannot be deemed as speculation loss in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1998-99, assessee has shown long term capital loss on sale of shares at ₹ 4,65,822/- which has been carried forward for set off and income on account of capital gain shown at Nil, which has also been accepted by the AO. Similarly, in the intimation made u/s. 143(1)(a) for A.Y. 1997-98, assessee s claim of STCG on sale of shares of ₹ 36,00,000/- has been accepted by the AO. Similar is the position in A.Y. 1995-96 where STCG of ₹ 22,615/- and short term capital loss of ₹ 4,742/- has been accepted in the intimation made u/s. 143(1). 10. The Bombay High Court in the case of CIT Vs Gopal Purohit has held at para-3 as follows: In so far as question (b) is concerned, the Tribunal has observed in paragraph 8.1 of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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