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2018 (11) TMI 387 - AT - Income TaxAddition made by the voluminous shares trading as business in nature - assessee is a non-resident individual residing in Bahrain, and is pursuing her teaching profession over there - Held that - Assessee being an NRI has been investing in equity and mutual funds in India. CIT(A) has observed that there is no borrowed funds that has been used for this purpose and the gain/loss has been declared by assessee consistently as income under the head capital gains. This position has been accepted by revenue till A.Y. 2007-08, however only for A.Y. 2008-09 & 2009-10 Ld.A.O. treated capital gain declared by assessee as income from business or profession. Again from A.Y. 2011-12 and 2012-13 assessee had declared income under the head Capital Gains , which has been accepted by revenue authorities. We do not agree with reasoning of Ld.AO that since assessee travels to India there exist Permanent Establishment. Further it has been submitted by Ld.Counsel that order passed by Ld. CIT (A) for A.Y. 2008-09 and 2009-10 has not been appealed by revenue before this Tribunal, thereby accepted the long standing position taken by assessee. - decided against revenue
Issues Involved:
Revenue's appeal against the order of Ld.CIT(A) for A.Y. 2010-11 regarding the treatment of shares trading activities as 'business in nature' instead of 'Capital Gain'. Detailed Analysis: Issue 1: Treatment of Shares Trading Activities The Revenue challenged the deletion of addition made by Ld.AO under the head 'Income from Business and Profession' by Ld.CIT(A). The Ld.AO presumed the assessee to be engaged in the business of trading in securities due to frequent sale and purchase of shares during the year. The Revenue contended that the Circular no.1827 dated 31.08.1989 by CBDT does not support considering the activities of sale/purchase of shares under 'Capital Gain'. The Ld.CIT(A) had previously deleted the addition made by Ld.AO, leading to the current appeal. Issue 2: Assessment and Previous Years' Treatment The assessee, a non-resident individual residing in Bahrain and pursuing a teaching profession, filed her return of income for A.Y. 2010-11. The Ld.AO observed that the assessee had disclosed Income from House Property, Short Term Capital Gains, and Income from Other Sources. The Ld.AO considered the assessee to be engaged in the business of trading in securities based on similar views taken for A.Y. 2008-09, which was later reversed by Ld.CIT(A). The Ld.CIT(A) for the current year deleted the addition made by Ld.AO, leading to the Revenue's appeal. Issue 3: Permanent Establishment and Tax Liability The Revenue argued that an element of Permanent Establishment (P.E.) could not be ruled out due to the assessee's visits to India and frequent trading in securities. The Revenue contended that the income earned should be classified as Income from Business and Profession instead of Capital Gains. However, the assessee's counsel argued that no business connection could be established as per section 9 of the Act and DTAA between India and Bahrain. The counsel highlighted that the assessee is liable to be taxed for business profit in Bahrain, not in India. Conclusion: The ITAT Delhi upheld the observations of Ld.CIT(A) and dismissed the grounds raised by the Revenue. The Tribunal found no new facts to deviate from the consistent view taken for previous assessment years. The appeal filed by the Revenue was ultimately dismissed, affirming the treatment of the assessee's shares trading activities as Capital Gains and not Income from Business and Profession.
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