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TMI Blog2013 (12) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of sale of shares by the assessee have to be treated as short-term or long-term capital gains instead of 'business income'. 3. As the issue raised in these appeals being identical and pertaining to the same assessee, for the sake of convenience, both the appeals were heard together and disposed off in this consolidated order. 4. Briefly stated, the assessee company is engaged in the finance and film, business. While concluding the assessment for the assessment year 2006-07, the AO treated the surplus on account of investment in shares as 'business income' instead of 'capital gains' as claimed by the assessee. Aggrieved, the assessee took up the issue before the then CIT (A) who decided the issue in favour of the assessee vide his order in ITA No.103/AC-11(5)/CIT(A)-I/08-09 dated 18.12.2009. Aggrieved, the Revenue had appealed before the Tribunal. The earlier Bench of this Tribunal in its findings in ITA No.390/BANG/2010 dated 23.9.2010 remitted back the issue to the file of the CIT (A) for disposal of the issue de novo. Accordingly, the issue came for adjudication before the present CIT (A). During the course of hearing, the assessee justified the transactions as investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kotak Securities Ltd. It may be seen that the appellant showed a substantial income i.e., Rs.20,70,045/- from the finance and film business. Thus, the appellant is involved mainly in the film business though the surplus on account of shares is more because of investment through the broker. (vi) Source of funds: No doubt, the appellant used the borrowed funds to some extent for the purchase of shares but there is no provision under the I.T. Act which prohibits the assessee from making investments in capital assets using the borrowed funds. It is a common practice that people borrow funds for making investments for getting higher rate of return. As rightly pointed out by the appellant in its submissions, even interest is allowed as a part of the cost of acquisition while computing capital gains. Therefore, the borrowals by the appellant cannot be viewed negatively. (vii) Consistency: The appellant has been consistently following the same method showing these transactions as an investment in its books of accounts and the same were accepted by the Department. It is argued by the appellant that there are no new facts in the present assessment year based on which the treatment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treat this as business income for the assessment year 2008-09 also" 5. Aggrieved by the findings of the CIT (A) (supra), the revenue has come up before us with the present appeals. During the course of hearing before us, it was contended by the learned DR that the CIT (A) erred in allowing the relief on the basis of the assessee showing the value of shares as 'investments' in the books of account and valued the shares at cost as the accounting under the head 'investments' does not change the characterization of income/interest of the assessee. It was, further, contended that the CIT (A) erred in allowing the relief on the basis that the assessee did not have any separate business infrastructure to carry out its share transactions for the purpose of business and the assessee had invested funds through M/s. Kotak Securities Limited under Portfolio Management Scheme, without appreciating the fact that the assessee had entrusted the business of purchase and sale of shares to M/s. Kotak Securities Limited who had traded in shares on behalf of the assessee. The learned DR also found fault with the CIT (A) in holding that the use of borrowed funds for the purchase of shares cannot be v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as in nature of 'business'. 6.1 The learned AR has placed reliance on number of judicial views in support of the assessee's contentions. To illustrate further, the views of judiciaries are analyzed as under: (i) In the case of ITO v. Radha Birju Patel reported in A(2011) 11 Taxmann.com 293(Mum), the Hon'ble Mumbai Tribunal has held, on a similar issue, as under: "It was apparent from the record that the share transactions in question were carried out by the assessee's PMS Manager. Therefore, these transactions were clearly in the nature of transactions meant for maximization of wealth rather encashing the profits on appreciation in value of shares. The very nature of Portfolio Management Scheme is such that the investment made by an assessee is protected and enhanced and in such a circumstance, it cannot be said that it is scheme of trading in shares and stock. Whether, an assessee is engaged in the business of dealing in shares or investment in shares is essentially a question of fact and it has to be determined with regard to the entirety of the circumstances. In circumstance, in which the assessee was engaged in a systematic activities of holding portfolio through the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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