2015 (3) TMI 12 - HC - Income Tax

Share transactions - CIT(A) concluded that the amount received on sale of share is taxable as capital gains in the hand of the respondent assessee and not as income from other sources do confirmed by tribunal - Held that - Orders of the CIT (Appeals) as well as the Tribunal are detailed orders rendering findings of fact about the nature of the transaction of purchase and sale of shares entered into by the respondent-assessee. The aforesaid finding of fact was reached on consideration o as similar transactions in the past was accepted by the revenue when loss returned, certificate given by the subbroker confirming that transaction belonged to appellants, the shares purchased had been taken dealivery of within the settlement cycle, but the same was kept as collateral security by the sub-broker as security for payment to be received from respondent-assessee, the purchases shares were thereafter transferred to the DMAT account of the respondent assessee; and the contract notes produced by the respondentassessee for purchase and sale of shares has not been challenged by the revenue. - Decided in favour of assessee.

Summary

Issues:
Challenge to the Tribunal's order under Section 260A of the Income Tax Act for the Assessment Year 2003-04.

Analysis:
In this case, the Revenue appealed against the order of the Income Tax Appellate Tribunal (the 'Tribunal') for the Assessment Year 2003-04. The main questions of law raised by the Revenue were whether the Tribunal failed to appreciate the facts correctly and whether the share transactions should be considered as income from business. The respondent assessee initially declared income at Rs. 1.95 lakhs, but the Assessing Officer determined the total income at Rs. 2.90 lakhs after adjustments. Subsequently, the Commissioner of Income Tax held that treating the amounts earned on share sales as short term capital gains was erroneous, leading to a fresh assessment directing unexplained income treatment. The respondent appealed, and the CIT(A) concluded that the income from share sales should be taxable as capital gains, allowing for the carry forward of losses. The Tribunal upheld this decision, noting the acceptance of similar transactions resulting in losses in earlier years by the Revenue. The Revenue contended that the assessee did not take delivery of shares and only received the price difference, alleging non-genuineness of the transactions. However, the CIT(A) and Tribunal's detailed findings considered various factors, including past transactions, subbroker certificates, share delivery within the settlement cycle, and contract notes, leading to the dismissal of the appeal due to lack of substantial legal questions arising.

Therefore, the appeal challenging the Tribunal's order was dismissed, with no costs awarded.