TMI Blog2017 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4,37,000/-, which duly appeared in the balance sheet as on 31.03.2007 under the investment in shares head and thereafter in the beginning of Financial Year 2007-08 assessee in order to get warrants converted into equity shares paid the balance amount i.e. 90% i.e. ₹ 39.33 lakhs and acquired the equity shares of the company and got it in demat form and all the aforesaid shares came to be sold in between 01/08/2007 and 05/02/2008, the learned tribunal noticed that the assessee paid the interest on borrowed funds for paying ₹ 39.33 lakhs towards balance amount of allotment money for converting warrants into shares and paid interest of ₹ 8,48,296/- to his relatives from whom fund was borrowed, however, did not claim the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income for the Assessment Year 2008-09 declaring the total income of ₹ 1,93,12,540/-. The case of the assessee was selected for scrutiny assessment. Thereafter, notice under Section 143(2) of the Income Tax Act (hereinafter referred to as the Act ) was issued on 19/08/2009 and served upon the assessee. During the year under consideration the assessee disclosed short term capital gain of ₹ 2,04,87,755/-, business loss of ₹ 14,64,380/- and speculation income of ₹ 87,595/-. The assessee also claimed exemption of dividend income of ₹ 11,598/- and gift of ₹ 10,005/-. The assessee was issued show cause notice as to why the income derived on sale of shares amounting to ₹ 2,04,87,755/- shown as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer of ₹ 2,04,87,755/- and treating the same as short term capital gain instead of business income as assessed by the Assessing Officer, revenue preferred Appeal before the learned tribunal, being ITA No.168/Ahd/2012. By the impugned judgment and order, the learned tribunal has dismissed the said Appeal and confirmed the order passed by the learned CIT(A). Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned tribunal, revenue has preferred the present Tax Appeal with the following proposed question of law; Whether in the facts and circumstances of the case, learned ITAT has erred in law and on facts in not considering surplus of ₹ 2,03,86,894/- earned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain in respect of 54 transactions only. These transactions being small in number, it cannot be said that appellant was engaged in the business of trading of shares. (ii) As per the CBDT Circular No.4/2007 dated 15/06/2007, most important criteria to be applied for treating the share transaction as investment is the treatment given by the appellant to these transactions in his balance sheet. It is seen that appellant has claimed sale proceeds of stocks as short term capital gain in respect of 7/8 scrips only. Most of these scrips were purchased in the immediately preceding A.Y. i.e. A.Y. 2007-08. In the balance sheet of A.Y. 2007-08 i.e. F.Y. 2006-07 appellant has declared investments in the following shares; 1) HDFC Flati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT also. As the record indicates that shares in question were registered in the name of appellant, thus it can be safely said that the transactions are delivery based, accordingly respectfully following the ratio of above decisions, sale proceeds in respect of these shares should be treated as capital gains. The aforesaid findings of the learned CIT(A) has been confirmed by the learned tribunal by observing in paragraph 11 as under; 11. The major amount of capital gain is in relation to scrips in the name of Lok Housing and Construction Ltd. of which assessee has sold 4,37,000 shares and has earned a capital gain of ₹ 2,03,86,894/-. In order to further examine the transactions of sale of shares of Lok Housing and Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 2,03,86,894/- and that the assessee applied for acquiring fully convertible warrants of the said Company on 26/02/2006 and paid 10% i.e. ₹ 4.60 per warrant for 95,000 warrants at the time of application and thereafter on 10/05/2006 warrants were allotted to the assessee for an amount of ₹ 4,37,000/-, which duly appeared in the balance sheet as on 31.03.2007 under the investment in shares head and thereafter in the beginning of Financial Year 2007-08 assessee in order to get warrants converted into equity shares paid the balance amount i.e. 90% i.e. ₹ 39.33 lakhs and acquired the equity shares of the company and got it in demat form and all the aforesaid shares came to be sold in between 01/08/2007 and 05/02/2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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