TMI Blog2016 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... shares, though the transaction have been confined to the scrips of Piramal Group of companies. Having regard to the facts and circumstances of the case, we are unable to uphold the stand of the Revenue that the purchase and sale of shares have been undertaken regularly so as to be treated as a business activity. Reference made by the CIT(Appeals) in assessment year 2001-02 to the factum of assessee not disputing the stand of Assessing Officer in assessment year 1999- 2000 is not determinative of the issue because ostensibly, the amount involved was very small and for that reason assessee did not prefer an appeal before the Tribunal, an assertion of the Ld. Representative for the assessee, which is not controverted by the Ld. Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the order passed by the CIT(Appeals) XXI, Mumbai dated 31/03/2004, which in turn arises out of an order passed by the Assessing Officer under section. 143(3) of the Act, 1961 ( in short the Act ) dated 26/03/2003. 3. In this appeal, although assessee has raised multiple Grounds of appeal, but the pertinent dispute arises from the action of the incometax authorities in assessing the long term capital gain and short term capital gain earned on the sale of shares as business income . Briefly put, the relevant facts are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is an investment company incorporated with the object, inter-alia, of undertaking and transacting in all kinds of inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares have been regularly undertaken by the assessee. Thus, the stand of the Assessing Officer to tax the gain on sale of shares as business income was affirmed. 4.1 At this point, it would also be relevant to note that the CIT(Appeals) not only affirmed the stand of the Assessing Officer, but also enhanced the total income on account of interest costs. The Assessing Officer has allowed the deduction in respect of interest cost of ₹ 95,79,195/-, while assessing the gain on sale of shares as business income . The CIT(Appeals) was of the view that disallowance is required to be made out of interest expenditure on an application of section 14A of the Act and/or that the same was not relatable to the year under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being valued at cost in the books of account. Countering the charge made by the Assessing Officer that assessee has undertaken multiple transactions, it was pointed out that the sale and purchase of shares involved scrips of only three group companies and, therefore, the stand of the Assessing Officer was incorrect. In this context, our attention was invited to pages 3 to 4 of the Paper Book, wherein is placed scrip-wise details of short term capital gain and long term capital gain annexed with the return of income. Furthermore, it is sought to be pointed out that the assessee was an investment company and the shares in question related to the group companies and it cannot be regarded as a trading activity per-se. The Ld. Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have carefully considered the rival submissions. The controversy as to whether sale and purchase of shares is to be regarded as an investment activity, so as to tax the resultant gain as business income is not without precedents. In fact, there is a plethora of judicial pronouncements on the said subject. So however, it is quite well understood that each case has to be decided, having regard to its peculiar facts and circumstances. In the present case, it is an established position that assessee company is an investment company primarily involved in undertaking transactions in the shares of Piramal Group of companies. This feature contrasts it from an investment company, who otherwise freely operates in the market place looking for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. Therefore, having regard to the facts and circumstances of the case, we are unable to uphold the stand of the Revenue that the purchase and sale of shares have been undertaken regularly so as to be treated as a business activity. Reference made by the CIT(Appeals) in assessment year 2001-02 to the factum of assessee not disputing the stand of Assessing Officer in assessment year 1999- 2000 is not determinative of the issue because ostensibly, the amount involved was very small and for that reason assessee did not prefer an appeal before the Tribunal, an assertion of the Ld. Representative for the assessee, which is not controverted by the Ld. Departmental Representative for the Revenue before us. 7.2 Considering the entirety of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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