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COMMISSIONER OF INCOME TAX-II Versus INDIA GELATINE & CHEMICALS LTD

2016 (8) TMI 152 - GUJARAT HIGH COURT

Profit on sales of shares - "capital gain" OR "business income" - Held that:- Assessing Officer without referring to the total transactions and the period for which shares in question were hold, made certain broad general observations. However, Commissioner of Income tax (Appeals) noted that the appellant had shown shares of ₹ 42,000/- of Oriental Bank of Commerce as investment since 01.06.1995 and shares of IPCL worth ₹ 3.26 lacs as investment since 31.03.2001. Share of Alliance Fro .....

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by the Commissioner of Incometax (Appeals) and the Tribunal. Looking to the period for which the shares were held, the number of transactions, the fact that the shares were shown as investments in the books of the assessee since long and that the assessee had not utilized any funds borrowed from purchase of the share, the Assessing Officer committed error in treating the shares as the business income of the assessee. Decided in favour of assessee. - TAX APPEAL NO. 143 of 2011 - Dated:- 25-7-201 .....

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pite insertion of Section 145A by relying upon the decision of the Supreme Court in the case of Commissioner of Income Tax v. Lakshmi Machine Works, reported in [2007] 290 ITR 667 [SC] by totally overlooking the fact that the same related to assessment prior to April 1, 1999, the date of coming into operation of Section 145A. [B] Whether the Tribunal below committed substantial error of law in directing the Assessing Officer to treat the profit on sales of shares as "capital gain", bot .....

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inception of Section 14A of the Act." 2. Insofar as questionA is concerned, we notice that Division Bench of this Court in case of Commissioner of Incometax v. Kalptaru Power Transmission Co. Ltd., reported in [2014] 42 taxmann.com 104 (Guj) relying on the decision of the Supreme Court in the case of Commissioner of Income Tax v. Lakshmi Machine Works, reported in 290 ITR 667 has held the issue in favour of the assessee and against the Revenue making following observations. 7. Applying rati .....

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urpose of Section 80HHC of the Act despite insertion of Section 145 A of the Act. 3. Regarding questionC, we notice that the Division Bench of this Court in case of Commissioner of Income taxIV v. Sintex Industries Ltd, reported in 33 Taxmann.com 240 has made following observations. 4. With respect to proposition that Rule 8D is not retrospective in operation, we have no hesitation in agreeing with the decision of the Bombay High Court in the case of Godrej Boyce & Manufacturing Co. (supra). .....

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Guj). The questionC is therefore answered against the Revenue. 5. This leads us to the sole surviving questionB which pertains to the treatment that the income derived by the assessee from sale of shares should be accorded. For the assessment year 2004-05, the assessee has sold certain shares and claimed long term capital gain on the sale proceeds. The Assessing Officer however, treated such income as business income, observing that the assessee had held majority of shares for a period less than .....

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investment from 161995. Similarly the shares of IPCL of ₹ 3,26,387/- have been shown as investment from 3132001 and shares of Alliance Frontline Funds as investment from 122003. The appellant has contended that it is a cash surplus company and it has got share capital of ₹ 8.48 crores and reserves of ₹ 72.32 crores. Considering the disclosure in balance sheet in the earlier years as investment and the period of holding and the fact that own funds have been invested and no borr .....

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g on facts have been given by the Learned CIT(Appeals) that the shares in question of Oriental Bank of Commerce were shown as an investment from 1/06/1995 and shares of IPCL have also been shown as an investment from 31/03/2001 onwards and likewise shares of Alliance Frontline Fund have been shown in the balancesheet with effect from 01/02/2003. Therefore, the view taken by the first appellant authority; which appears to have been taken after due verification of the records of the case, need not .....

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