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2019 (4) TMI 955 - HC - Income TaxLTCG - applicability of Explanation to Section 73 assessee was of an investor and not of a businessman - activities of buying and selling of shares being speculative in nature - HELD THAT - The two things immediately emerge from the Judgment of the Tribunal. Firstly the question of nature of assessee's activities of buying and selling of shares being speculative in nature with special reference to Explanation 73 was not an issue at all. We therefore do not permit the Revenue to raise such a contention for first time in this Appeal before the High Court since this issue can at the be considered as one of the facts and law. The second thing which emerges from the Judgment of the Tribunal is that the Tribunal had noted relevant facts applying correct parameters to come to a conclusion that in relation to the shares held by the assessee in excess of one year the intention was to invest in shares and not to engage itself in business of buying and selling the shares - No question of law arise
Issues:
1. Applicability of Explanation to Section 73 of the Income Tax Act, 1961. 2. Nature of assessee's activities of buying and selling shares. 3. Challenge to the Tribunal's judgment by the Revenue. Analysis: Issue 1: Applicability of Explanation to Section 73 of the Income Tax Act, 1961 The appeal filed by the Revenue challenges the Income Tax Tribunal's judgment regarding the applicability of Explanation to Section 73 of the Income Tax Act, 1961 in relation to the Respondent Assessee, a limited company. The controversy primarily revolves around a gain earned by the Assessee from the sale of shares. The Assessing Officer initially treated the entire gain as arising from the Assessee's business activities. However, the CIT (Appeals) and the Tribunal provided partial relief by categorizing shares sold after one year as long-term gains. The Tribunal's decision, favoring the Assessee, is the subject of the Revenue's challenge in the present Appeal. Issue 2: Nature of Assessee's Activities of Buying and Selling Shares The Tribunal's observations highlighted that the Assessee's behavior indicated an investment intent rather than engaging in a business of buying and selling shares. The Tribunal noted the pattern of purchase, sale, and holding periods of various shares to conclude that the Assessee's actions aligned more with an investor's behavior rather than that of a businessman. The Tribunal's analysis emphasized the absence of essential business elements in the transactions, supporting the Assessee's position as an investor. Consequently, the Tribunal found no grounds to consider the Assessee's activities as speculative, particularly in light of Explanation 73 of the Act. Issue 3: Challenge to the Tribunal's Judgment by the Revenue The High Court dismissed the Revenue's appeal, noting that the nature of the Assessee's share transactions was not speculative and that the Tribunal had correctly applied the relevant legal principles. The Court emphasized that the question of the Assessee's activities being speculative, especially in connection with Explanation 73, was not a valid issue raised by the Revenue previously. Therefore, the Court did not allow the Revenue to introduce this argument at this stage, considering it a matter of fact and law. Ultimately, the Court found no legal question warranting consideration and upheld the Tribunal's decision, leading to the dismissal of the Appeal. In conclusion, the High Court's judgment affirmed the Tribunal's findings, emphasizing the nature of the Assessee's share transactions as investments rather than speculative activities, and rejected the Revenue's challenge on the grounds of late introduction of legal contentions.
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