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TMI Blog2011 (3) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been made with a view to resell at a profit in a short period of time at cost or fair market value whichever is lower, whereas long term investments are required to be valued at cost, unless there is a permanent diminution in their values - Right from the very beginning it has been valuing its shares held in the investment account on cost basis and not on the basis of cost or market value which is lower at the end of relevant accounting year - The profits resulted therefrom was capital gain - Therefore, these appeals are dismissed in limine X X X X Extracts X X X X X X X X Extracts X X X X ..... er for business purposes. Insofar as shares in question are concerned, they were purchased with predominantly intention of investment. The objective was to clear these shares securities as investment and enjoy the income there from and not to hold these shares as stock in trade with the intention to trade in them. Before the CIT(A) arrived at the aforesaid findings he pose following three questions:- "1. What was the objective of acquiring the shares? Whether objective was to acquire shares/securities as an investment and enjoy income there from or to make profit by buying and selling shares in the short run. 2. The period for which shares have been held. 3. The frequency of the transactions." 3. Answers to these questions were foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant in JOL has resulted from shares received on account of bonus/gift/merger and not on account of purchase made by the appellant. 3. The shares of JOL have been valued at cost by the appellant in the profit and loss account which has not been objected to by the statutory auditors/RBI. 4. The Sale of shares of JOL in the captioned assessment year was made out of investment portfolio and not out of stock in trade. 5. Sale proceeds of the shares have not been reflected as turnover and profit derived been show as profit on sale of investment. 6. The appellant has held all his investment for long period with an objective of earning dividend income therefrom. 7. The appellant had even converted the shares of JOL held as stock in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortfolios, i.e., an investment portfolio comprising of securities which are to be treated as capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading assets. Where an assessee has two portfolios, the assessee may have income under both i.e. capital gains as well as business income" 6. The ITAT went into the entire gamut with the dispute all over again and accepted the aforesaid findings of the CIT(A). It took note of the judgment of Gujarat High Court in CIT v. Reqashanker A Kothari 283 ITR 338 wherein the High Court has given a few broader tests for determining the nature of transaction. These tests are as under:- "(a) The first test is whether the initial acquisition of the subject matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, coupled with the magnitude of the transactions, bearing reasonable proportion to the strength of holding, an inference can readily be drawn that the activity is in the nature of business." 7. Appling these tests to the facts of this case, the Tribunal concluded as under:- "With the assistance of ld. Representative we have gone through the pages NO. 55-56 of the paper book wherein assessee has placed on record the details of shares held as investment starting from 15th July, 2000 upto 31st March, 2005 and the details of shares held in stock starting form 20th July, 2001 upto 31st March, 2005. From perusal of these details it would reveal that in the beginning assessee had made investment only in the shares because it is one of the prom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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