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TMI Blog2016 (8) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the shares with a view to earn dividend and long term appreciation or with a view to carrying on as business. We further find the intention of the assessee to maintain two independent portfolios i.e. one for investment purposes and one for trading purposes when he converted his stock in trade into investment on dated 1.4.2004. We hold that surplus is chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolios - Decided in favour of assessee. - ITA No.1547-1548/Kol/2011 - - - Dated:- 24-6-2016 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member For The Assessee Shri A.K.Tulsian, FCA For The Revenue : Shri P.K.Chakraborty, JCIT-DR ORDER PER Waseem Ahmed, Accountant Member:- Both appeals by the Revenue are against the common orders of Commissioner of Income Tax (Appeals)-XII, Kolkata dated 04.08.2011. Assessments were framed by DCIT, Circle-10, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his orders dated 28.11.2008 26.10.2009 for assessment years 2006-07 and 2007-08 respectively. Shri A.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 approximate for long term capital gains. This regular activity of the assessee constitutes the business. The assessee has carried out large number transactions with large voluminous some of the transactions were completed within short period of time. The assessee till the assessment year 2004-05 was only in the trading of share and securities as apparent from the financial statement that there was no investment in AY 2004-05. The AO also observed that as per the memorandum of assessee its main business is to undertake the trading of shares and securities. In earlier assessment year, the Department never examined the issue on this line. Finally, AO treated the capital gains income as business income after having reliance in various judgments and CBDT s Circular No.4 of 2007 and passed the assessment order accordingly. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A), where it was submitted that the CBDT in its Circular no. 6/2016 has clarified that it is possible for a taxpayers to have two portfolios i.e., an investment portfolio comprising of securities which are to be treated as capital asset and trading portfolio comprising of stock-in-trade , which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very much covered by the Notification issued by CBDT No.6 of 2016 dated 29.02.201 and he relied on the order of L d CIT(A). 6. We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that assessee has declared its capital gains income which AO treated as business income on the ground that numerous transactions with large voluminous were made by assessee in systematic and organized manner. So it should be treated as business income, however, L d CIT(A) has treated the income earned by assessee as capital gains by observing that assessee has maintained two separate portfolios for investment and for stock-in-trade. We find that nothing prohibits assessee from holding dual portfolios (i) shares / units held as investment (ii) shares / units held for trading purposes. We find from the balance-sheet of the assessee which are placed on pages 34, 35, 48, 49, 61 62 of the assessee s paper book where assessee maintains two portfolios as discussed above. Even the CBDT Circular no. 4 of 2007 dated 15.06.2007 envisages the practice of assessee s maintaining dual portfolios. We also find that the decision was rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the nature of transaction conducted by the assessee. Though the investment in shares is on a large magnitude but the same shall not decide the nature of transaction. Similar transactions of sale and purchase of shares in the preceding years have been held to be income from capital gains both on long term and short term basis. The transaction in the year under consideration on account of sale and purchase of shares is same as in the preceding years and the same merits to be accepted as short term capital gains. There is no basis for treating the assessee as a trader in shares, when his intention to hold the shares in India companies as an investment and not a stock in trade. The mere magnitude of the transaction does not change the nature of transaction, which are being assessed as income from capital gains in the past several years. The Assessing Officer is directed to set off the Long Term Capital Loss against the Short Term Capital gain of the year under consideration. The ground of appeal raise by the assessee are allowed. 6.2 Further we also find the judgment of Hon'ble jurisdictional High Court in the case of CIT vs. Merlin Holding P Ltd. (2015) 375 ITR 118 (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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