2017 (1) TMI 1291 - HC - Income Tax

Income from sale of shares - Short Term Capital Gains or Income from Business and Profession - Held that - We find that the distinction made on behalf of the Revenue does not carry the matter any further. This for the simple reason the table which has been reproduced in the impugned order and on which reliance is placed gives the details of aggregate purchases and dividend received and not those relatable to short term capital gain only. Moreover, it is to be noted so far as long term capital gains are concerned, character of the respondent-assessee as an investor has been accepted by the Assessing Officer. Therefore, in view of the aforesaid concurrent finding of fact arrived at by the CIT(A) and the Tribunal that the respondent assessee was an investor in respect of short term capital gain declared by her for the subject Assessment year not being shown to be perverse calls for no interference. No substantial question of law.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding classification of income as Short Term Capital Gains or Income from Business and Profession for Assessment Year 2008-09.

Analysis:
The respondent, a sub-broker of the Stock Exchange, declared business income and short-term capital gains in her return of income for the Assessment Year. The Assessing Officer disagreed with the classification of ?1.18 crore as short-term capital gains, treating it as taxable business income instead. The Commissioner of Income Tax (Appeal) examined the facts and found that the respondent consistently treated shares as investments, not stock in trade, satisfying the tests to distinguish between the two. The CIT(A) allowed the appeal based on these findings.

The Revenue appealed to the Tribunal, which, after detailed examination, concluded that the intention of the assessee was always to hold the shares as investments. Considering factors like holding period, treatment in previous years, and books of accounts, the Tribunal held the income to be short-term capital gains, not business income. Citing a previous court decision, the Tribunal dismissed the Revenue's appeal.

The Revenue contended that the facts in the subject Assessment year differed from previous years, pointing out differences in purchase transactions and dividend received. However, the High Court found that the details provided did not specifically relate to short-term capital gains and noted that the Assessing Officer had accepted the respondent as an investor for long-term capital gains. The High Court upheld the concurrent findings of the CIT(A) and the Tribunal, stating that no substantial question merited further consideration, and thus dismissed the appeal without costs.