2010 (3) TMI 1174 - AT - Income Tax

Summary

Issues involved: Determination of nature of income from sale of shares - Capital gains or business income.

Summary:

Issue 1: Nature of income from sale of shares

The assessee company, engaged in purchase and sale of shares, contended that profits from sale of shares held as investments should be treated as capital gains, while the Assessing Officer (A.O.) classified it as business income. The ld. CIT(A) ruled in favor of the assessee, citing precedents from ITAT Mumbai which emphasized that the intention of the appellant to hold shares as investments is crucial in determining the nature of the transaction. The ITAT directed to treat the income from sale of investments as capital gains and allowed set off of capital losses. The Revenue, aggrieved by this decision, appealed. However, as no contradictory evidence was presented, the ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

The judgment highlights the importance of the intention behind holding shares in determining the nature of income, supported by precedents from ITAT Mumbai, and emphasizes consistency in treatment of such transactions over the years.

This judgment clarifies the distinction between income from sale of shares as capital gains or business income based on the intention of the assessee, as established by precedents from ITAT Mumbai.