TMI Blog2022 (6) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard in subsequent years. Considering the same, the adjudication of Ld. CIT(A), in this regard, could not be faulted with. As in the case of CIT V/s NSS Investments P. Ltd. ( 2005 (4) TMI 45 - MADRAS HIGH COURT] support the case of the assessee wherein Hon'ble Court dismissed revenue's appeal and held that where shares were never treated by assessee as stock-in-trade and they were held for earning dividend only then the profit on sale of shares in question was to be treated as capital gains instead of business income. Applicability of Sec. 47(v) with respect to transactions of CUBL - We find that Ld. CIT(A) has already verified the documentary evidences submitted by the assessee and thereafter, reached a conclusion that it was a case of transfer of asset by subsidiary company to holding company and therefore, the transaction would be out of purview of capital gain in terms of Sec. 47(v) - These facts remain uncontroverted before us. Upon perusal of assessee's financial statements, we find that the assessee is 100% subsidiary company of IEPL and this transaction was covered u/s. 47(v). This plea was taken by the assessee before Ld. AO which was not deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer be restored. The Ld. Sr. DR controverted the findings of Ld. CIT(A) that the transfer of shares was not to be regarded as transfer. The Ld. Sr. DR submitted that the issue under consideration was head of income and additional evidences were admitted by Ld. CIT(A) in violation of Rule 46A and therefore, Ld. AO should be provided an opportunity to consider those evidences. The AR, on the other hand, relied on the Board Circulars and submitted that the shares were shown as investment in the Balance Sheet. Having heard rival submissions and after going through the orders of lower authorities, our adjudication would be as under. Assessment Proceedings 2.1. The material facts are that the assessee being resident corporate assessee is stated to be engaged in the business of share broking. The assessee was also engaged in share trading business. The name of erstwhile assessee i.e., M/s. Cub Share Brokering Services Ltd. has been changed to M/s. Integrated Securities Ltd. w.e.f. 13.01.2008. 2.2. During assessment proceedings, it transpired that the assessee sold shares of Shriram City Union Finance Ltd. (SCUFL) and City Union Bank Ltd. (CUBL) and offered re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the main objects of dealing in shares and other securities. The treatment of transactions in Balance Sheet would not be decisive. The sale of shares was assessee's ordinary line of business and therefore, the gains were to be treated as Business Income only. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT V/s Sutlej Cotton Mills Supply Agency Ltd. (100 ITR 706) to support the same. Proceeding further, it was noted that entire sale had been made to a group concern namely M/s. Integrated Enterprises India Ltd. (IEPL) through off-market trades. The shares of CUBL were sold at price of Rs. 190/- per share as against prevailing market price of Rs. 222/- per share. Accordingly, the difference of Rs. 32/- per share was also added to the income of the assessee. The same resulted into another addition of Rs. 240 Lacs in the hands of the assessee. Finally, the Business Income was determined as Rs. 803.36 Lacs. Appellate Proceedings 3.1. During appellate proceedings, the assessee reiterated that the shares were shown as investment in the Balance Sheet. The assessee relied on CBDT Circular No. 4 dated 15.06.2007 which provide clear guidance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be no charge of capital gains on the impugned transaction. Thus, the 'capital gains' on these transactions were not to be computed. Consequently, the issue of price differential of share was held to be infructuous. 3.5. The relevant adjudication of Ld. CIT(A) was as under:- 5.1 The matter is considered. The recent CBDT Circular No. 6/2016 dated 29.02.2016 deals with the issue of taxability of surplus on sale of shares and securities and their assessability under Capital Gains or Business. The relevant portion of the Circular is reproduced as under: 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 in different contrary stand in this regard in subsequent years. 5.1.1 In the light of CBDT's Circular, it is seen that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Indian company: Provided that nothing contained in clause (iv) or clause (v) shall apply to the transfer of a capital asset made after the 29th day of February, 1988, as stock-in-trade; 5.4. In view of the provisions of Section 47(v), the impugned transaction between the holding company and the appellant subsidiary company will not amount to transfer within the meaning of Section 45 of the Act. Consequently, there can be no charge of capital gains on the impugned transaction. These grounds are allowed. 6. Sale Price of Shares of M/s. City Union Bank Limited: As I have held that there is no transfer with regard to the transaction in shares of M/s. City Union Bank Limited in the light of provisions of Section 47(v) of the Act, the issue of adjudication on the sale price of the shares for computational purposes, become infructuous, and therefore does not require adjudication. 7. In the result, the appeal is allowed. This order is passed under section 250 read with section 251 of the Act. Aggrieved, the revenue is in further appeal before us. Our findings and Adjudication 4. Upon careful consideration of material facts, the undisputed position ..... 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