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M/s Uma Laboratories Pvt. Ltd. Versus ACIT, Cir-4, Baroda

2016 (4) TMI 733 - ITAT AHMEDABAD

Taxability head for income from sale of shares - capital gain or income from business - CIT(A) confirming the action of the ld. AO in treating the “capital gain” as “income from business” - Held that:- From going through the record, we find that the assessee company is mainly dealing in pharmaceuticals, laboratory works and research and development since last many years and coupled with these activities assessee company has also earned income from investments in the form of long term and short t .....

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sessee’s investments in shares have increased from ₹ 3.54 crores in FY 2002-03 to ₹ 5.43 crores in FY 2005-06; whereas business turnover has drastically decreased from ₹ 3 crores in FY 2002-03 to ₹ 0.64 crores in FY 2005-06. We further observe that major portion of net profit which was flowing out of the business activities upto FY 2002-03 have shifted to the investments income so much so that in the year under appeal net profit of the assessee is ₹ 0.44 crores whic .....

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our of assessee for statistical purposes. - ITA No.2379/Ahd/2010 - Dated:- 3-3-2016 - Shri Rajpal Yadav, JM, & Manish Borad, AM. For The Appellant : Shri Umaid Singh Bhati, AR For The Respondent : Smt. Sonia Kumar, Sr.DR ORDER PER Manish Borad, Accountant Member. This appeal of the assessee is directed against the order of CIT(A)-III, Baroda dated 13.1.2010. Assessment for Asst. Year 2006- 07 was framed under section 143(3) of the IT Act, 1961 (in short the Act) on 17.12.2008 by ACIT, Circle .....

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the business of pharmaceuticals, research, development laboratory and investment activities. The assessee filed its e-return on 19.12.2006 declaring total income at ₹ 3,49,120/-. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 10.10.2007 which was duly served. The case was discussed and information required by the Assessing Officer were furnished. Assessment was completed by assessing the income at ₹ 32,68,295/- and speculation loss on acc .....

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f ₹ 1,89,347/- made by Assessing Officer and confirmed the view of ld. Assessing Officer by treating the short term and long term capital gain from sale of shares as business income. 4. Aggrieved, assessee is now in appeal before the Tribunal. 5. At the outset ld. AR of the assessee submitted that he is not pressing ground no.1 and hence the same is dismissed as not pressed. 6. As regards the second ground ld. AR submitted that assessee s main business is dealing in pharmaceuticals, resear .....

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ness income and, therefore, income from sale of shares and mutual funds should have been accepted to be taxed as capital gains and not as business income. 7. On the other hand, ld. DR supported the orders of lower authorities. 8. We have heard rival contentions and perused the material on record. The only issue before us is to examine the taxability head for income from sale of shares as to whether it has to be treated as capital gains or income from business. From going through the record, we f .....

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me from long term capital and short term capital gain from shares, dividend income and speculation loss in F & O transactions shows that assessee has been regularly involved in shares related activities in the year under appeal as well as in past also. On the basis of documents placed on record we have summarized the year-wise detail of investments in shares, reserve and surplus, business turnover, other income and net profit from financial year 2002-03 to financial year 2005-06 detailed as .....

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that assessee s investments in shares have increased from ₹ 3.54 crores in FY 2002-03 to ₹ 5.43 crores in FY 2005-06; whereas business turnover has drastically decreased from ₹ 3 crores in FY 2002-03 to ₹ 0.64 crores in FY 2005-06. We further observe that major portion of net profit which was flowing out of the business activities upto FY 2002-03 have shifted to the investments income so much so that in the year under appeal net profit of the assessee is ₹ 0.44 cror .....

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going through the order of ld. CIT(A) we find that he has dismissed the appeal of assessee by observing as under :- 5 The Grounds No.2,3 & 4 are directed against treatment of considering the share transaction activity for the purpose of capital gain. It has been noted by the AO that the investment was one of the activities as noted in the audit report itself. According to the AO, the share transaction activity has been undertaken as business. There is no reason for the appellant to show the .....

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