9911796707
TMI Blog2014 (9) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter as taken from the Assessment Order are that the respondent assessee, at the relevant time, was engaged in the business of retail trade in periodicals and books including subscription agents for Indian and Foreign Periodicals. The respondent assessee a company filed its original return on December 01, 2006 declaring income of Rs. 93,87,127/-. Notice under Section 143(2) was issued and served upon the respondent assessee on June 13, 2008 and taken up for scrutinizing assessment. 3. The Assessing officer vide its order dated November 11, 2008 held that income of Rs. 30,81,610/- from sale of units of mutual funds, shown by the respondent assessee as short term capital gain should be treated as business income and accordingly taxed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received on any of the units of mutual funds sold on which assessee company earned Short Term Capital Gain. No dividend was received by the assessee company on these units of mutual funds still it preferred to sell the units of mutual funds holding them for a period as less as 3 months. It is also pertinent to mention here that the assessee has shown any income under the head 'Business income' on account of sale of units of mutual funds. The department has accepted the stand of the assessee in earlier years does not mean it has to be accepted in this year as well. It is as well laid down law that the principle of stopple does not apply to income tax proceedings. Further it is pertinent to mention that during the F.Y. 04-05, w.e.f. from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in light of Board circular no. 4/2007 dated 15.06.2007, it is clear that the claim of the assessee for sale of units of mutual funds shown as investment and accordingly being treated as short term capital gain does not hold ground in view of the aforesaid discussion. Hence, the income shown by the assessee company as capital gain of Rs. 30,81,610/- is hereby treated as business income and is accordingly taxed at the normal rate i.e.35%." 4. Aggrieved the respondent assessee approached Commissioner of Income Tax (Appeals) [CIT (Appeals) for short] in appeal wherein by an order dated January 20, 2010, it was held that the transactions-in-question for the purpose of trading and hence, the contention that the units were held for investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude activities relating to purchase and sale of shares. Under clause (6) of ancillary objects the respondent assessee is permitted to invest and deal with money of the company not immediately required in such a manner as may from time to time be determined. From these facts it is evident that respondent assessee had invested in shares/units of mutual fund as investment and had not held them as 'stock in trade'. Therefore, profit arising on sale of investments will be liable to tax under the head 'capital gains' and not under the head 'business or profession'. The issue is covered by the decision of Hon'ble High Court of Delhi in the case of Ess Jay Enterprises P. Ltd. (supra) wherein Hon'ble High Court of Delhi has held that the tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction was with the intention of dealing in the item, or with a view to finding an investment. If the transaction, since the inception, appears to be impressed with the character of a commercial transaction entered into with a view to earn profit, it would furnish a valuable guideline. (b) The second test that is often applies is as to why and how and for what purpose the sale was effected subsequently. (c) The third test, which is frequently applied, is as to how the assessee dealt with the subject matter of transaction during the time the asset was with the assessee. Has it been treated as stock-in-trade, or has it been shown in the books of account and balance sheet as an investment. This inquiry, though relevant, is not conclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The objective of the assessee company do not include activities relating to purchase or sales of shares rather, under clause 6 of ancillary objects, permitted to investment and deal with the money not immediately required in such a manner as may from time to time be determined. Valuation was made as per the norms of capital asset and not as a trading asset. 9. Regrettably the ITAT has not taken into consideration the facts as noted by the Assessing Officer and also CIT (Appeals). The facts recorded and highlighted by the authorities, do not find mention or noticed. The ITAT was required to determine the cumulative effect of all the facts as noted by it and the authorities below, including whether any dividend had been received on the uni ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
