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TMI Blog2016 (5) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is carrying on the business of investment in shares. Profits from such investment, either directly or through professionally managed firm, would still remain as profits to be taxed as capital gains as the same will not change the nature of investment, which is in shares, and the law permits it to be taxed as capital gains and not as business income. See Commissioner of Income Tax, Deputy Commissioner of Income Tax Versus M/s Kapur Investments (P) Ltd. [2015 (5) TMI 616 - KARNATAKA HIGH COURT] - Decided against revenue - ITA No. 1859/Bang/2013 - - - Dated:- 29-4-2016 - Shri Abraham P. George, Accountant Member And Shri George George K., Judicial Member For the Appellant : Shri Sunil Kumar Agarwala, Jt. CIT (DR) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the relevant previous year computed capital gains arising out of sale of certain equity shares and mutual fund units as under:- Short term capital loss (mutual funds) Rs. (-) 2,38,334 Long term capital loss (mutual funds) Rs. (-)1,50,010 Short term capital gains on shares ₹ 11,43,347 Long term capital gains on shares ₹ 22,24,785 Total ₹ 29,83,788 3. Since volume of transaction of shares were found to be substantial, Assessing Officer proposed to treat the income arising from such transactions as business income against c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/2012 dated 29.11.2013 in support of the order of ld. CIT(Appeals), as also the judgment of jurisdictional High Court on further appeals filed by the Revenue. 7. We have perused the record and heard the rival contentions. We find that the issue of treatment of surplus arising on sale of shares and mutual funds had come up before this Tribunal in the appeal of Revenue for AYs 2006-07 2008-09. This Tribunal in its decision dated 29.11.2013 held as under:- 6. We have carefully considered the rival submissions, perused the relevant materials on case records and also the case laws on which the learned AR had placed strong reliance. As a matter of fact, the issue has since been deliberated exhaustively by the CIT (A) and came to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so apparent from the fact that the shares had not been treated as stock in trade by the assessee; even after the sale, the assessee had made investment in bonds of NABARD, indicating that he had treated the same as long-term capital gain; as well as the fact that the assessee had not split the shares in lots but had sold the same in one lot; it was not possible to agree with the contention raised on behalf of the revenue that the transaction in question was an adventure in the nature of trade and, therefore, income derived by the assessee from the said transaction was a business income and could not be treated as capital gains. 6.2. Taking into account all the facts and circumstances of the issue as discussed above and also in conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be termed as business of the assessee but would only be a case of a more careful and prudent mode of investment, which has been done by the assessee. Funds which lie with the assessee can always be invested (for earning higher returns) in the shares either directly or through professionally managed Portfolio Management Scheme and by doing so, it would not mean that the assessee is carrying on the business of investment in shares. Profits from such investment, either directly or through professionally managed firm, would still remain as profits to be taxed as capital gains as the same will not change the nature of investment, which is in shares, and the law permits it to be taxed as capital gains and not as business income. 12. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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