TMI Blog2007 (7) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... T Judgment of the Court was delivered by P. P. S. Janarthana Raja, J. - This appeal is filed under Section 260A of the Income Tax Act, 1961 by the Revenue, against the order of the Income Tax Appellate Tribunal, Chennai Bench 'C', Chennai in I. T. A. No. 437/Mds/2004 dated 25.01.2007, raising the following substantial questions of law :- "1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the profit/loss on purchase and sale of shares of Raasi Cements Ltd. should be treated as capital gain/loss and also allowing indexation benefit? 2. Whether in the facts and circumstances of the case, the Tribunal was right in allowing the interest liability incurred on borrowings to acquire the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany only. Under this scheme, for every share held in RCL, the shareholders were paid a sum of Rs.300/- per share by ICL and paid up value of shares of RCL was reduced to Rs.0.05 per share. The assessee worked on capital gains which arose from restructuring by taking total amount received as consideration and reducing there from the cost of acquisition of shares. While doing so, it excluded the face value of residuary amount of share. It resulted in long term capital loss as well as short term capital loss. The Assessing Officer did not accept the same under the head "capital gain" and held that the entire share holdings would constitute business assets of the assessee company and hence indexation of cost of acquisition benefit could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) of the Act. The test to decide whether it was an investment or an adventure in the nature of trade, has a very thin line of demarcation. Even a single instance of transaction can be regarded as business and even multiple transaction sometimes are deemed as investments. So, the criteria for deciding whether it is investment or business is that of the intention of the assessee, viz. whether assesses's real intention is to invest or the intention was in the nature of trade. As per the Memorandum of Association of the assessee company, it could be seen that the assessee company was incorporated on 24.01.1995 under the Companies Act, 1956 to engage in the business of investment. The Tribunal considered the relevant materials and evidences an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment activity and held that the profits derived from the sale of shares is subject to capital gain. The reasons given by the Tribunal are based on valid materials and evidence and we do not find any error or legal infirmity in the order of the Tribunal so as to warrant interference. Under the circumstances, no substantial question of law arises for consideration of this Court in respect of Question No. 1. 7. In respect of Question No.2, the interest liability on the borrowed funds was debited in the books of the assessee-company. The Tribunal correctly held that the interest paid for acquisition of shares would partake character of cost of share and therefore the same was rightly capitalised along with the cost of acquisition of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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