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TMI Blog2024 (11) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised a solitary issue i.e. treating of 'Short Term Capital Gain' on sale of shares as 'Business Income' of the assessee. 3. Shri Salil Kapoor, appearing on behalf of the assessee submits that during the period relevant to the assessment year under appeal, the assessee had sold shares held as investment. The Short Term Capital Gain amounting to Rs. 21,64,49,666/- arising on sale of shares was offered to tax. The Assessing Officer (AO) placing reliance on CBDT Instruction no. 1827 dated 31.08.1989 and 13.12.2005 treated the gain on sale of shares as 'Business Income' of the assessee as against Short Term Capital Gain claimed by the assessee and made addition of Rs. 6,49,34,900/-. The ld. Counsel for the assessee submits that intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's Balance Sheet as on 31.03.2010 (at page 60 of the paper book) reveals that the assessee has shown shares under Capital Assets as Investment, and the income from sale of such shares were reflected in Profit & Loss Account as Short Term Capital Gain. In the past, as well investment in shares has been reflected under Fixed Assets. It is intention of the assessee which has to be seen at the time of purchase of share. As is evident from the accounting treatment, intention of the assessee was to hold the shares as investment and not a trading asset. Thus, the assessee was holding shares in Investment Portfolio. The AO while treating income from sale of shares as 'Business Income' has placed reliance on Instruction no. 1827 dated 31.08.198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investment Portfolio and a Trading Portfolio. The income from sale of shares held in investment portfolio is liable to be taxed under the head capital gains and the income from sale of shares held under trading portfolio is subject to tax as 'Business Income'. After examining the documents on record in the instant case, we have already held that the assessee was holding shares under investment portfolio. Accordingly, the assessee rightly offered gain on sale of shares as Short Term Capital Gains. The action of the AO in treating gain on sale of shares as, 'Business Income' is unwarranted and without any basis. The AO completely disregarded the intention of assessee and the accounting treatment. 7. The Hon'ble Jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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