TMI Blog2016 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... reby the appeal of the assessee came to be dismissed confirming the order passed by the CIT (A). 2. The facts of the case are that assessee filed the return of income on 15/10/1993 declaring the total income of ₹ 14,04,304/, accordingly return was processed under Section 143 (1)(a) of the Act. The assessee is investor in shares. The AO after examining the share dealings of the assessee for the three years relevant to Assessment year 1991-92, 1992-93, 1993-94 observed that the assessee is dealing on secondary markets and making heavy purchases and sales every year and looking to the magnitude and sale transactions, the case of assessee is covered in the definition of a share dealer and not an investor . Thus, the AO treated the income from sale of shares as income from business or adventure in the nature of trade and has not accepted the claim of the assessee that the income is liable to be taxed as Long Term Capital Gains and Short Term Capital Gains. 2.1 The matter was carried before the CIT (A) which has uphold the action of AO in treating the profits from sale of shares as 'business income' is in order and thereby partly allowed the appeal of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AP). 2. Dalhousie Investment Trust Co. Ltd. v. Commissioner of Income Tax (Central), Calcutta 68 ITR 486. 6. Having heard the learned Counsel for the parties and having considered the submissions made by them, this Court is of the opinion the ITAT has committed serious error of law in holding that the assessee lady was a dealer in shares and was not an investor in shares. It is required to be noted that for the assessment year 1992-93 the department had accepted the status of the assessee to be an investor and purchasing the shares of six companies and selling the shares of three companies could not have converted the status of the assessee from investor into a dealer. 7. Similar question had arisen before this Court while deciding Tax Appeal No.1763 of 2005 and allied matters and relevant observations made therein are reproduced herein below: 4. The learned counsel for the appellant has further contended that the Tribunal while setting aside the judgement of the Commissioner of Income-tax (Appeals) has not properly considered the decision of this court relied on by the appellant in the case of Dy. C.I.T. v. Smt. Divyaben C. Shah delivered on 18.4.2001 in Tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as against business income treated by Assessing Officer. 6. Similar view is taken in the case of Commissioner of Income-tax v. Saurabh Rameshchandra Lavti reported in (2013) 40 Taxmann.com 214 (Gujarat) and Commissioner of Income-tax v. Manish Nathulal Lavti reported in (2013) 36 Taxmann. Com 5 (Gujarat). 7. The learned counsel for the appellant has relied on the decision of this court delivered on 19.8.2013 in Tax Appeal No. 71 of 2013, more particularly, paragraph No. 3, wherein it has been observed as under: para 3 .........when in the immediate earlier year i.e. assessment year 2004-05 and with respect to the very shares, the Assessing Officer had accepted the same as investments in shares and when these very shares came to be sold by the assessee during the year under consideration, no error and/or illegality has been committed by the CIT(A) as well as Income-tax Appellate Tribunal in deleting the additions made by the Assessing Officer and treating it as business income for the purpose of short term capital gain and long term capital gain.. 8. Reliance is placed on the decision of the Supreme Court in the case of Janki Ram Bahadur Ram v. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot as capital gains. He has further submitted that now the Government has come out with subsequent Circular No. 6 of 2016 dated 29.2.2016 which will govern the field. The said Circular reads as under: 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 same can be held either as capital assets or stock-intrade/ trading assets or both. Determination of the character of a particular investment in shares or other securities, whether the same is in the nature of a capital asset or stock-in-trade, is essentially a fact-specific determination and has led to a lot of uncertainty and litigation in the past. 2. Over the years, the courts have laid down different parameters to distinguish the shares held as investments from the shares held as stock-in-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 Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities. 10. *** 11. We have heard learned advocate Mr. Shah for the appellant and learned counsel Mr. Patel for the respondent. Taking into consideration the question of law, we have considered that while the Assessing Officer has considered the income arisen to the assessee out of sale of shares as assessable under profit and gains of business or profession, however, in appeal, the Commissioner of Income-tax (Appeals), for the detailed reasons given in paragraph No. 9 as reproduced hereinabove, treated the income as short term capital gain/long term capital gain. Considering the decision of this court in the case of Smt. Divyaben C. Shah (supra) where this court has observed the test to be considered that (i) The assessee have purchased almost all the scripts from primary market. (ii) The purchases during the year under consideration from the secondary market were quite insignificant. (iii) The investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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