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2015 (1) TMI 653 - AT - Income TaxGains from sale of shares - Income From Business OR Capital Gain - Held that - The totality of facts, indicates that the intention of the assessee was making the investment, thus gains arising out of sale of shares should be assessed as capital gain and not business income as has been canvassed by the ld. CIT-DR. Admittedly, no borrowed funds were utilized for making the investment, frequency of transactions, intention of the assessee making investments main through IPOs, being best possible mode of acquiring shares at lowest price and sold the same at initial period, being the best possible opportunity to sell at the pick price, as is evident from page 67 of the paper book, wherein, we find that the assessee held the investment till the accounting period i.e. 31/03/2008 and sold the shares at prevailing price as on that date earning short term capital gain of ₹ 50,73,057, which is at the rate of 13.71% of returned income as against actual short term capital gain of ₹ 1,53,51,497/- which fetched returned income at the rate of 41.48%. It is also not worthy, the assessee retained 41% of the total sales acquired during the year and sold in subsequent years and the capital gains earned there from has been accepted as capital gains by the Assessing Officer in scrutiny assessment. So far as, manner of accounting is concerned, it has been shown as investment (page-13 of the paper book) in his financial statement and consistently followed in all the years and accepted by the Department. So far as, method of valuation is concerned, the assessee valued at cost and not at cost are market price whichever is less . Therefore, the assessee is having merit in its contention. - Decided in favour of assessee. Exemption available u/s 17(2)(vi) restricted while calculating income under the head income from salary - reimbursement of medical expenses - Held that - The assessee was admitted in the hospital to carry out angioplasty (angiography). The assessee also submitted the bills of hospital in support of its claim. The expenses were first incurred by the assessee for treatment of Coronary Angiography cost in ₹ 90,090/- and claimed as medical reimbursement as per the provision of section 17(2), while computing the salary income. In view of these facts, it is allowable expenses and cannot be said to be perquisite u/s 17(2) of the Act. This ground of the assessee is allowed. - Decided in favour of assessee.
Issues Involved:
1. Treatment of gains from the sale of shares as 'Income from Business' instead of 'Capital Gain'. 2. Disallowance of expenses of Rs. 33,367. 3. Restriction in exemption available under Section 17(2) of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Treatment of Gains from Sale of Shares: The primary issue was whether the gains from the sale of shares should be treated as 'Income from Business' or 'Capital Gain'. The assessee argued that the gains should be assessed under 'Capital Gains' as they were from investments made using own funds without any speculative or repetitive transactions. The assessee had historically declared such gains as 'Capital Gains', which the Department had accepted in previous assessments. The Tribunal found that the assessee's intention was to make investments, not to engage in trading. The shares were primarily acquired through IPOs, held for a short term, and sold at a profit. The Department had previously accepted similar transactions as 'Capital Gains'. The Tribunal emphasized the principle of consistency, referencing multiple legal precedents, and concluded that the gains should be assessed as 'Capital Gains' and not as 'Business Income'. 2. Disallowance of Expenses: The second issue was the disallowance of expenses amounting to Rs. 33,367 while calculating income under 'Income from Other Sources'. This ground was not pressed by the assessee's counsel during the hearing and was therefore dismissed as not pressed. 3. Restriction in Exemption Under Section 17(2): The final issue was the restriction of exemption available under Section 17(2)(vi) of the Income Tax Act to Rs. 15,000, whereas the actual expenses incurred by the assessee were Rs. 90,090. The assessee had received reimbursement for medical expenses related to angioplasty and claimed this amount as exempt under Section 17(2). The Tribunal observed that the medical expenses were genuine and supported by hospital bills. It held that these expenses should be allowable and not treated as a perquisite under the head 'Income from Salary'. Consequently, the restriction of the exemption to Rs. 15,000 was incorrect, and the entire amount of Rs. 90,090 should be exempt. Conclusion: The Tribunal allowed the appeal partly: - The gains from the sale of shares were to be treated as 'Capital Gains'. - The disallowance of expenses of Rs. 33,367 was dismissed as not pressed. - The restriction in exemption under Section 17(2) was lifted, allowing the entire claimed amount of Rs. 90,090. The order was pronounced in the open court on 01/01/2015.
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