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TMI Blog2016 (12) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... / 112 or exempt u/s. 10(38) and also erred in confirming the process of action of the AO in not allowing set off of brought forward Short term capital losses of the A.Y.2009-10 to the extent of Short term capital gains of Rs. 41,35,767/-. b) The Id. CIT(A) failed to appreciate that the profit on sale of shares held as investment ought to have been assessed as Long term capital gains of Rs. 10,52,379/- being exempt u/s.10(38) and Short term capital gains of Rs. 41,35,767/- being taxed at special rate prescribed u/s 111A/ 112 or eligible for set off against brought forward Short term capital losses of the A.Y.2009-10. c) In reaching to the conclusion and making such changes in heads of income, the Id. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. Even, in the concluding part of the order, the Id. CIT(A) given his findings on the facts which are not relevant to the facts of the Appellant. 2. The Id. CIT(A) erred in not disposing the ground No.3 raised disputing the levy of interest u/s.234B and 234C of the Income Tax Act, 1961. The Appellant denie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has offered speculation business profit of Rs. 71,251/- and profit on sale of investment of Rs. 41,35, 767/- as short term capital gain and set 'off it against short term capital loss for A.Y.2009-10 which in total was Rs. 43,32,497/- and balance unadjusted short term capital loss is carried forward to subsequent Asst. Year. In this connection we submit as under: 1. The assessee has been investing in share since many years, showing the said shares as investment in the balance sheet as submitted during the proceedings. The gain from the sale of said investments has been offered to tax as capital gains and the' profit from share trading has been offered to tax as Business income year after year. 2. As per accounting policy of assessee he shows the shares held as investment in balance sheet under the head investment, the same is valued at cost. 3. During the year under consideration, the assessee was dealing in securities, stocks and other marketable instruments. The assessee has offered speculation business profit of Rs. 71,251/- and profit on sale of investment of Rs. 41,33, 767/- as short term ital gains. 4. The assessee further submits that it has made investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. It was observed by the AO that showing the shares as 'investment' was not determinative factor to decide real nature of transactions. In other words, if a receipt was a trading receipt, the fact that it was not shown as such in the accounts of the assessee does not prevent the AO from treating it as trading receipt. The AO was also influenced by the fact that assessee was dealing in large volume of shares and also the fact that many shares were bought and sold. Therefore, the AO was of the view that the nature of activity carried out by the assessee was share trading. He also placed reliance upon the CBDT circular No.4/2007 dated 15-06-2007 to arrive at the conclusion that the share trading activity of the assessee was in the nature of business and, therefore, the resultant gain should be treated as income from business. Accordingly, he assessed the income of the assessee as business income and denied the consequential benefits as have been mentioned in the grounds raised by the assessee. During the course of appeal before CIT(A) detailed submissions were made by the Ld. Counsel on behalf of the assessee, but Ld.CIT(A) was not impressed with the arguments of the assessee; the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee has been showing the amount of investments in shares under the head 'investments' in its Balance Sheets right from Balance Sheet dated 31-03-1999. During all the years, the investment has been shown in the Balance Sheet under the head 'investment'. At no point of time, the investment made in shares has ever been shown as part of stock-in-trade. Gain arising on sale of shares has always been shown under the head 'Income from capital gains'. The same has been accepted under the head 'Income from capital gains' by the AO in all the years, i.e. AY. 1999-2000. It is further noted that in A.Y. 2006-07, assessment order was passed u/s 143(3) dated 07-08-2008, wherein income returned under the head 'Capital gain' has been accepted, as such. Our attention was also drawn on the fact that the purchase and sale of shares in A.Y. 2006-07 was also done in identical manner. It is also shown to us that even in subsequent years, i.e. AYs. 2011-12 TO 2015-16, income from sale of shares has been returned and accepted under the head 'Capital gains'. Under these circumstances, we do not find any reason with the AO or Ld. CIT(A) to deviate from the consistent stand which had been taken and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to treat them as stock-in-trade, the income arising from transfer or 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 date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; c) In all other cases, the nature of transaction (i.e. whether the same 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." 11. It was further observed in the circular is as under:- "5. It is reiterated that the above principles have been formulated with the sole objective of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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