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Issues Involved:
1. Whether the profit on the sale of shares should be assessed as capital gains or business income. 2. The validity of invoking Section 263 by the CIT. 3. The condonation of delay in filing the appeal. Issue-wise Detailed Analysis: 1. Whether the profit on the sale of shares should be assessed as capital gains or business income: The primary issue was whether the profit from the sale of shares by the assessee should be treated as capital gains or business income. The CIT had directed the Assessing Officer to treat the profit as business income, arguing that the assessee's transaction was an adventure in the nature of trade. The assessee contended that the shares were sold due to family disputes and business losses, not with the intention of making a profit. The Tribunal examined the circumstances, including the assessee's old age, illiteracy, and lack of other trading activities, and concluded that the transaction was not an adventure in the nature of trade. The Tribunal referred to several judicial precedents, including decisions by the Supreme Court and various High Courts, to support its conclusion that the profit should be treated as capital gains. 2. The validity of invoking Section 263 by the CIT: The CIT invoked Section 263, claiming the original assessment was erroneous and prejudicial to the interests of the revenue. The Tribunal, however, found that the original assessment treating the profit as capital gains was neither erroneous nor prejudicial. The Tribunal emphasized that the CIT's conclusion was based on an incorrect interpretation of the facts and the law. The Tribunal noted that the CIT failed to consider the true nature of the transaction and the compelling circumstances under which the shares were sold. Consequently, the Tribunal held that the invocation of Section 263 by the CIT was not justified. 3. The condonation of delay in filing the appeal: There was a delay of 98 days in filing the appeal, which the assessee attributed to her old age, ill health, and a misunderstanding regarding the need to appeal only after receiving the fresh assessment order. The Tribunal considered the affidavit filed by the assessee and the arguments presented by both parties. Given the assessee's advanced age and health issues, the Tribunal found the reasons for the delay satisfactory and decided to condone the delay, thereby admitting the appeal. Conclusion: The Tribunal concluded that the CIT was not justified in directing the Assessing Officer to treat the entire profits from the transfer of shares as business income and to withdraw the deductions allowed under Sections 54E and 48(2) of the Income-tax Act. The Tribunal canceled the order of the CIT passed under Section 263 and restored the original assessment order of the Assessing Officer, thereby allowing the appeal filed by the assessee.
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