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A.C.I.T., Circle 35 (1) , New Delhi. Versus Rekha Batra

2016 (7) TMI 843 - ITAT DELHI

Treatment to profit on sale of shares - business income or investments - Held that:- In view of the clarification issued by the CBDT regarding determination of income under the head business income or capital gains, it stands clarified that it is upto the assessee as to how he derives income from share transactions- whether as business income or as capital gains. This clarification has been given by the CBDT with the sole objectives of reducing litigation and maintaining consistency in approach .....

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to the income shown by the assessee as capital gain. - Decided against revenue - ITA No. 4380/Del./2010 - Dated:- 12-7-2016 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. V.R. Sonbhadra, Sr. DR For The Respondent : Sh. V.K. Tulsian, FCA ORDER Per L.P. Sahu, Accountant Member: This is an appeal filed by the Revenue against the order of ld. CIT(A)XXVII, New Delhi dated 08.03.2010 for the assessment year 2007-08 on the following grounds : 1. On th .....

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ry, business or profession capital gain (short term as well as long term) and income from other sources . 2. The brief facts of the case are that the assessee filed return of income on 17.07.2007 declaring total income at ₹ 10,47,950/-. The return was processed u/s. 143(1) and later on it was selected for scrutiny and notice was issued u/s. 143(2) dated 22.07.2008 which was duly served upon the assessee. The assessee has shown income from short term capital gain of ₹ 9,85,531/- from .....

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ng bank interest of ₹ 29,242/- instead of ₹ 39,84,301/-, ₹ 9,85,531/- and ₹ 5000/- respectively. The Assessing Officer asked to justify why its income from dealing in securities not be treated as income from business or profession instead of income from capital gains. The assessee has earned ₹ 40,32,189/- towards long term capital gain and claimed exemption u/s. 10(38) of the IT Act, 1961 since the transactions were entered through recognized Stock Exchange & Se .....

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submitted that the ld. CIT(A) has deleted the addition without distinguishing the case laws relied by the Assessing Officer. The assessee has done transactions in frequency. Receiving of dividend is not a matter for determination whether the assessee is holding the shares as investment or as business transactions. 4. The ld. AR, on the other hand, relied on the order of the ld. CIT(A) and submitted that the ld.CIT(A) has made reasoned order and it does not require any interference. The assessee .....

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ility of surplus on sale of shares and securities - Capital Gains or Business Income - Instructions in order to reduce litigation - reg.- Sub-section (14) of Section 2 of the Income-tax Act, 1961 ('Act') defines the term "capital asset" to include property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock-in-trade or personal assets subject to certain exceptions. As regards shares and other securities, the .....

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trade. The Central Board of Direct Taxes ('CBDT) has also, through Instruction No. 1827, dated August 31, 1989 and Circular No.4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations . 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal .....

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ted from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following - a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income, b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the dat .....

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is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. 4. It is, however, clarified that the above shall not apply in respect of such transactions in shares/securities where the genuineness of the transaction itself is questionable, such as bogus claims of Long Term Capital Gain / Short Term Capital Loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with t .....

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me regularly on the same pattern. In the identical facts and circumstances of the case, similar income returned by the assessee for the assessment year 2006-07 has been accepted by the Assessing Officer u/s. 143(3) without raising any query on the nature of income shown under the head capital gains . In support of his arguments for justifying the return of income filed by the assessee, the ld. AR relied on the judgment of ITAT, Mumbai in the case of CIT vs. Gopal Purohit in ITA No. 3469/Mum/2012 .....

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Officer that the appellant has under taken an activity in the nature of business. 7.1. The reliance placed by the appellant in the following case carries fare GOPAL PUROHIT vs. JOINT COMMISSIONER OF INCOME TAX ITAT, MUMBAI "G" BENCH (2009) 122 TTJ (Mumbai) 87: and upheld by Hon'ble HIGH COURT OF JUDICATURE AT BOMBAY IT APPEAL NO 1121 OF 2009 on JAN 6, 2010. 7.2. In the appellant's case, it is noticed that the assessee has derived income from Short Term Capital Gains & Long .....

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