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DCIT, Circle 22 (1) , New Delhi Versus Sh. Vibhu Goel

2017 (9) TMI 468 - ITAT DELHI

Gains from transactions in shares - capital gain or business receipt - treat the income of the appellant shown under the head Short Term Capital Gain as 'Income from Business & Profession' - Held that:- Intent of the legislature is abundantly clear from the perusal of the explanatory notes and as such there is no case to treat the income of the assessee shown under the head Short Term Capital Gains as ‘Income from Business & Profession.’ We further find that as per Explanatory Statement issued w .....

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miss the ground no. 1 raised by the Revenue. - Allowing business loss - AO was of the view that assessment proceedings are not an opportunity to make additional / fresh/ revised claim for any benefit/ deduction, which was not there in the original return - Held that:- Fact of these case are identical with the case of CIT Vs. Bharat Alluminium Co. Ltd., [2007 (5) TMI 228 - DELHI HIGH COURT] wherein the Hon'ble Jurisdictional Delhi High Court has held that the revised computation of income cou .....

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011 - Dated:- 1-9-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Department : Sh. Sharavan Gotru, Sr. DR For The Assessee : N o ne ORDER PER H.S. SIDHU, JM The Revenue has filed the present appeal against the impugned order dated 09/12/2010 passed by the Ld. Commissioner of Income Tax (Appeals)-XXIII, New Delhi on the following grounds:- 1. On the facts and on the circumstances of the case the Ld. CIT(A) has erred in law and on the facts in deletin .....

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peal. 2. The brief facts of the case are that the assessee filed his return of income for the relevant assessment year on 31.10.2007 declaring a total income of ₹ 1,37,69,660/-, which was duly processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act). The case of the assessee was selected for scrutiny. Notice u/s. 143(2) of the Act dated 18.9.2008 was issued to the assessee and duly served upon him. Thereafter, Notice u/s. 142(1) of the Act alongwith questionnaire .....

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audit report says that trading in shares is business / profession. Thus, prima facie it was evident that the assessee is a trader in securities. The assessee was booking a loss of ₹ 58,75,272/- in the speculation business, the gains from transactions in shares were shown under the head Short Term Capital Gains. AO vide order sheet dated 22.9.2009, asked the assessee to show cause why income from share transactions should not be treated as business income. In response to the same, the A.R. .....

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422/- and allowed setoff losses of ₹ 58,75,272/- as business loss. 3. Aggrieved by the assessment order dated 18.12.2009, assessee filed appeal before the Ld. First Appellate Authority who has allowed the appeal of the assessee vide order dated 09.12.2010. 4. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal and requested that the appeal of the Revenue may be allowed. 5. In this case Notice of hearing was issued to the assessee on the add .....

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rusing the records. 6. We have heard the Ld. DR and perused the orders of the authorities below especially the order of the Ld. CIT(A), with regard to ground no. 1, we find that AO has taxed the income amounting to ₹ 1,37,69,661/- from sale of shares under the head 'Income from Business & Profession' as against 'Income from Short Term Capital Gains' reflected by the assessee. Assessing Officer has made a preliminary observation in her assessment while discussing this is .....

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ins'. The Assessing Officer has also referred to the Authority for Advance Ruling's decision reported in 288 ITR 641 on this issue.' The Assessing Officer has finally discussed the decision of Hon'ble Lucknow Bench of the ITAT in Sarnath Infrastructure Pvt. Ltd. vs. ACIT 16 DTR (Lucknow)(Tribunal) 97, wherein all the important judicial pronouncements at had been laid down on legal principles to determine the nature of transactions, such as Raja Bahadur Visheshwara Singh (Deceased .....

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hich has been relied upon by the Assessing Officer in the impugned order. After considering almost all judicial decision and the CBDT Circular" the Tribunal culled out the principles to determine whether transactions in question were in the nature of trade or is merely for investment purposes. We further find that the Assessing Officer has first discussed that the opening stock with the assessee was 91100 shares amounting to ₹ 42,57,794/- and closing stock of 132704 scrips amounting t .....

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rned dividend of ₹ 36,404/-. It has been concluded that the assessee was purely driven profit motive to earn quick profits. The Assessing Officer has also highlighted-that value of transaction run into crores and the frequency was also very high. The Assessing Officer has further observed that the assessee had only ₹ 5 lacs as his capital in the preceding year and therefore, it was clear that investment in the shares had been made out of borrowed funds. It has also been highlighted b .....

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essee, but the same were not conclusive in deciding this issue and for this the Assessing Officer has relied on the judgment of Hon'ble Supreme Court reported in 82 ITR 899. The Assessing Officer further reads that for the purpose of business trading, normally shares and securities that are easily marketable are purchased and the assessee has also generally dealt in shares of blue chip companies. In view of the above detailed analysis, the Assessing Officer proceeded to assess the gains from .....

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e sale and purchase of shares and securities carried out through Stock Exchange. The said Explanatory Statement reads as under:- Levy of Transaction tax and exemption/ concession on capital gain from Securities entered in a recognized stock exchange Under the existing provisions of Income Tax Act, 1961, the profits arising to an investor from the transfer of securities are charged to tax either as long term capital gain or Short Term Capital Gains depending on the period of holding of the said s .....

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ly. In case of a trader in securities, however, the gains are taxed as any other normal business income. With a view to simplify the tax regime on securities transactions, it is proposed to levy a tax at the rate of 1.15 per cent. on the value of all the transactions of purchase of securities that take place in a recognized stock exchange in India. This tax shall be collected by the stock exchange from the purchaser of such securities and paid to the exchequer. The provisions relating to the pro .....

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such securities to an investor including FIIs shall be charged at the rate of ten per cent. These amendments will take effect from 1st April, 2005 and will, accordingly, apply to Assessment Year 2005-06 and subsequent years. 6.1 The intent of the legislature in this regard is abundantly clear from the perusal of Explanatory Note referred to above and as such there is no case to treat the income of the appellant shown under the head Short Term Capital Gain as 'Income from Business & Profe .....

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