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Issues involved: Determination of whether profit earned from transactions of shares and mutual funds should be considered as capital gain or business income.
Summary: The High Court considered the substantial question of law raised by the Revenue regarding the classification of profit earned from transactions of shares and mutual funds. The appellant argued that the substantial investments made over several years should be treated as income from business rather than capital gain, citing the decision of the Hon'ble Supreme Court in a specific case. After thorough consideration of the arguments and reviewing the orders passed by various authorities, including the Assessing officer, Commissioner of Income Tax (Appeals), and the ITAT, the High Court concluded that the intention of the assessee was always to hold the shares as investments. The CIT(A) provided detailed reasoning supporting this conclusion, highlighting the history of the assessee's share transactions and the acceptance of shares as investments in previous years by the Department. The High Court affirmed the reasons given by the CIT(A) and found them to be appropriate. Referring to the decision of the Hon'ble Supreme Court in a specific case, the High Court emphasized that the dominant intention behind purchasing shares should determine whether the profit is taxable. In this case, it was evident that the assessee's intention was not to carry on business but to make investments. The findings of the CIT(A) and ITAT were deemed to be correct and in line with the Supreme Court's decision, indicating that no substantial question of law arose in the appeal. In conclusion, the High Court dismissed the appeal, upholding the classification of profit earned from transactions of shares and mutual funds as capital gains based on the assessee's intention and the factual findings presented by the authorities.
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