2013 (2) TMI 756 - AT - Income Tax

Summary

Issues Involved: Determination of whether income arising from sale and purchase of shares should be treated as business income or short term capital gain.

Summary:

Issue 1: Classification of Income

The appellant contested the treatment of short term capital gain on sale of shares as business income by the Assessing Officer (AO). The AO based the classification on factors such as volume and frequency of transactions, holding period, and motive of the assessee. The AO referred to relevant case laws to support the decision.

Issue 2: Appeal before Ld. CIT(A)

The appellant appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that the nature of transactions, including holding periods and profit/loss incurred, indicated investment rather than trading. The appellant emphasized consistency in treatment of similar transactions in previous years and cited relevant court decisions to support the claim.

Issue 3: Decision of Ld. CIT(A)

The CIT(A) upheld the AO's decision, considering factors such as interest paid on borrowed funds and IPO funding availed by the assessee. The CIT(A) concluded that the assessee was engaged in trading activities, leading to the assessment of income as business income.

Issue 4: Arguments before ITAT

The appellant presented arguments before the Income Tax Appellate Tribunal (ITAT) regarding consistency in treatment of income from share transactions. The appellant highlighted specific details of transactions and holding periods to support the claim that the income should be treated as capital gains.

Issue 5: ITAT Decision

After considering the submissions and past assessments, the ITAT ruled in favor of the appellant. The ITAT noted the consistency in the assessee's approach to share transactions over the years and found no material change in the facts of the case to warrant a different classification for the year under consideration. The ITAT emphasized the importance of uniformity and consistency in such cases and allowed the appeal.

This summary provides a detailed overview of the legal judgment, highlighting the key issues involved and the arguments presented by the parties, leading to the final decision by the ITAT.