2016 (4) TMI 472 - AT - Income Tax

Income from capital gain OR business income - whether CIT(A) erred in directing the AO to assess the income as income from capital gain as disclosed by the appellant as against assessed as business income by the AO - Held that - Since the assessee has treated the securities as investment and not as stock in trade in all the earlier A.Ys as found by the ld. CIT(A) therefore in view of the CBDT Circular No. 6/2016 dated 29th February 2016 the revenue cannot be permitted to take a contrary stand this year and claim the securities as stock in trade .

Summary

Issues:
- Determination of income as capital gain or business income based on the nature of investment in shares and securities.

Analysis:
The appeal involved a dispute regarding the characterization of income as either capital gain or business income. The assessee, a financial consultant engaged in selling financial products, declared income under various heads, including capital gains. The Assessing Officer contended that the assessee's activities amounted to trading in securities due to short holding periods and profit motive, assessing the income as business income. However, the assessee argued that the transactions were investment activities, supported by consistent accounting treatment, lack of borrowed funds, and holding periods. The ld. CIT(A) accepted the assessee's contentions, emphasizing the nature of transactions, accounting treatment, and absence of regular trading activities. The CBDT Circular provided guidance on distinguishing capital assets from stock-in-trade, emphasizing the assessee's consistent treatment of securities as investments. The Tribunal upheld the ld. CIT(A)'s order, citing the CBDT Circular and the assessee's historical treatment of securities as investments, dismissing the Revenue's appeal.