2011 (5) TMI 973 - AT - Income Tax

Summary

Issues involved: The only issue raised in this appeal is against the holding by the learned CIT(A) that profit from sale transaction in shares be treated as capital gain instead of business income assessed by the A.O.

Summary:

Issue 1: Classification of Profit from Sale of Shares

The assessee, a partner in various firms, declared short term capital gain on sale of shares. The Assessing Officer treated this gain as business income, considering the volume of shares traded and the holding period. However, the assessee consistently treated such gains as capital gains in previous and subsequent years. The Tribunal noted the assessee's investment pattern, source of funds, and lack of borrowing for share purchases. The Tribunal also observed that the shares were held as investments, not as stock-in-trade, based on the assessee's behavior in trading. Referring to a relevant High Court decision, the Tribunal concluded that the income from sale of shares should be taxed as capital gains, affirming the CIT(A)'s decision.

Decision: The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.

This summary provides a detailed overview of the judgment, highlighting the key issues and the Tribunal's decision on the classification of profit from the sale of shares.