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2015 (8) TMI 1312 - ITAT DELHI

2015 (8) TMI 1312 - ITAT DELHI - TMI - Profit on sale of shares - shares held for less than thirty days - business income or capital grains - Held that:- The intention alone is the material factor to determine whether a particular share is held as investment or trading portfolio. In order to find out the intention of the parties, one is to look at the treatment given in the books of account and the conduct of the assessee that apart, the courts have evolved several tests including whether the sc .....

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rest - Held that:- From the order of CIT(A), it is very clear that the CIT(A) had made a bifurcation between the investment portfolio and trading portfolio and therefore, the same is in line with the provisions of sec. 14A read with Rule 8D of the Income Tax Rules, 1962. Thus, we do not find any reason to interfere with the reasoning given by the CIT(A). Accordingly, the second ground raised by the Revenue is dismissed. - ITA Nos. 2559 & 2553 /Del/2011 - Dated:- 19-8-2015 - SHRI I.C. SUDHIR, JUD .....

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has raised the following grounds of appeal: i. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that profit on sale of shares held for less than thirty days would constitute business income and the remaining such profit would constitute capital grains and thereby deciding that out of the profit of ₹ 6,35,42,874/- from share transactions treated by the AO as business income, lonely ₹ 2,17,10,019/- would be business income and the balan .....

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A) has erred in directing the AO to allow proportionate claim out of security transaction tax payment incurred in respect of business income of ₹ 2,17,10,019/- 3. In ITA No. 2553/Del/2011 for AY 2007-08, following grounds of appeal has been raised: i. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that profit on sale of shares held for less than thirty days would constitute business income and the remaining such profit would con .....

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est expenditure of ₹ 21,56,962/- is to be treated as incurred in connection with income from business of the assessee company. iii. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing the AO to allow proportionate claim out of security transaction tax payment incurred in respect of business income of ₹ 54,85,307/- out of the income of ₹ 38,72,78,020/- from transactions in shares and securities held by the AO as business income, on .....

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of the case are that the appellant is a private company duly incorporated under the provisions of Companies Act. The appellant is engaged in the business of stock broker, sub-broker etc. and also duly registered with SEBI. However, because of its inability to comply with the stringent requirements of SEBI it was decided to trade only in commodities and derivatives features etc. on NSE, BSE & NCDEX apart from investing surplus funds in the stock market with a view to enjoying the appreciation .....

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the the Act ) by ACIT, Range-XVIII, New Delhi, at a total incomes of ₹ 6,46,90,877/- and ₹ 1,25,00,003/-. While doing so, the Assessing Officer treated the profit arising from the sale of shares of Wimco Ltd. of ₹ 1,77,23,023/- as profit from business as against the capital gains returned by respondent assessee and also treated the loss arising on the sale of shares of Colour Cem Ltd. as a business loss and also disallowed the interest paid of ₹ 1,24,98,189/-. Being aggri .....

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ng income and others as investments i.e. capital gains. In respect of the disallowance of interest, the CIT(A) directed the Assessing Officer to allocate proportionately the total interest expenditure between the trading portfolio and investment portfolio as per para 6 of his order. He further directed the Assessing Officer to allow statutory rebate under Section 88A of the Act in respect of the trading portfolio. Aggrieved by these findings, the Revenue had come up with the present appeals.

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portfolios i.e. trading and investment portfolio and this principle is recognized by CBDT in its Circular No. 4 of 2007, dated 15th June, 2007. He also relied on the case of PVS Raju Vs. ACIT, Hyderabad, [2012] 18 taxmann.com 9 (AP). 7. We have heard the rival submissions of the parties and perused the material on record. Undisputedly, the respondent assessee company is engaged in trading of stocks, derivatives and features, it does not mean that the assessee company is precluded fr .....

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e treated as trading assets. Where an assessee has to portfolios, the assessee may have income under both heads i.e. capital gains as well as business income. 8. From the above Circular, it is clear that that the assessee is entitled to maintain two portfolios i.e. investment portfolio and trading portfolio. The profit arising on account of investment portfolio ought to be treated under the head capital gains whereas the profit arising on account of sale of trading portfolio ought to .....

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inciple has been reiterated subsequently by Hon ble Apex Court in the case of CIT Vs. Holck Larsen (H.), 160 ITR 67 (SC) and Hon ble Delhi High Court decision in the case of CIT Vs. Raunaq Singh Swaran Singh, 85 ITR 220. Therefore, from these decisions it is clear that the intention alone is the material factor to determine whether a particular share is held as investment or trading portfolio. In order to find out the intention of the parties, one is to look at the treatment given in the books o .....

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