TMI Blog2016 (7) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDICIAL MEMBER For The Assessee : Ms. Urvashi Shodhan, AR For The Revenue : Shri Ashish Pophare, Sr. DR ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income-tax (Appeals)-XV, Ahmedabad dated 18.01.2010 for Assessment Year 2006-07. 2. The brief facts of the case for AY 2006-07 as culled out from the materials on record, are as under:- 2.1. Assessee is a consulting physician who filed his return of income for AY 2006-07 on 28/03/2007 declaring total income of ₹ 15,67,540/- The case was selected for scrutiny and thereafter assessment was framed u/s/143(3) of the I.T. Act, 1961 by order dated 12/12/2008 and the income was determined at ₹ 15,67,540/- inter alia by considering profit on sale of shares as business income as against the capital gains offered by the assessee. Aggrieved by the order of the AO, assessee carried the matter before ld.CIT(A), who vide order dated 18th January-2010 in appeal No.CIT(A)-XV/DCIT(OSD)/Circle-9/215/08-09 granted partial relief to the assessee. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal and has raised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s transactions was not acceptable to AO because according to AO the assessee has placed the funds at the disposal of the PMS for the purpose and purchase of sale of shares on his behalf with the sole intention on earning quick profit by utilising the skills on the PMS Managers. He, therefore, considered the STCG of ₹ 11,45,160/- as business income of the assessee. Aggrieved by the order of the AO, assessee carried the matter before the ld.CIT(A) who upheld the order of the AO by holding as under:- 4. After going through rival submissions following points emerge: 1 In the return as per copy of computation of income the appellant has not shown any receipts from his profession. The computation filed with the return is as under: Salary Nil House property Nil Business profession profits Nil Profit/loss from speculation Nil STCG Rs.11,45,160 CY business Loss set off ₹ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been given in the table only the name of the respective portfolio management company has been written, which makes it very clear that the magnitude of trading in shares was much more than what meets the eye. Dates of purchase and sale of shares has been given for portfolio managers but not the name of the company which show holding at times just for two days, which is amazing. Several shares (without informing the names of companies) shown under Templeton Treasury Management account have been held just for a few days not even for a month like acquisition dates have been given as 21.10.2005 or 24.10.2005 or 28.10.2005 or 31.10.2005 but all have been sold on 7.11.2005. Several shares have been informed purchased and sold on 7.11.2005 i.e. single day. Bank of Baroda shares were purchased on 8.2.2006 and sold also on the same date. Allahabad bank shares were purchased on 26.4.2005 and sold on the same date. 5 The appellant has not shown any business income and the AO has observed on page 5 of the assessment order that the appellant paid interest of ₹ 2,06,089. The observation of the AO that borrowed funds were used for buying shares has not been disproved, and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities. 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements/decision relied upon by both the parties. The issue in the present case is about the treatment of profits earned on sales of shares. It is an undisputed fact that the assessee earned profit on sale of shares and it is also a fact that assessee has availed the services of Portfolio Managers for purchase and sales of shares and the act of the assessee of engaging the PMS and the profits earned therefrom has been considered to be a part of business of the assessee by the ld.CIT(A). We find that Hon ble Karnataka High Court in the case of CIT-Bangalore vs. Kapur Investments (P) Ltd.(supra) after relying on the decision of Hon ble Delhi High Court in the case of Radials International vs. ACIT[supra] has held that the Portfolio Management Services (PMS) cannot be termed as business of the assessee. The relevant observation of the Hon ble Karnataka High Court is as under:- 10. As regards the first question that merely because of employment of Portfolio Management Service for investment in shares, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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