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TMI Blog2016 (8) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue preferred against two separate orders of the Ld. CIT(A)-VI, Ahmedabad dated 15.10.2010 23.11.2012 pertaining to A.Ys. 2006- 07 2008-09. 2. Since, one of the grievance of the revenue is common in both these appeals, these where heard together and are being disposed of by this common order for the sake of convenience. ITA No. 3370/Ahd/2010 for A.Y. 2006-07 3. The sole grievance of the revenue is that the ld. CIT(A) erred in deleting the addition of ₹ 1,02,71,681/- on account of treating short term capital gain as business profit. 4. The assessee company is engaged in the business of leasing and hiring. The return of income was filed on 30.12.2006 declaring total income at ₹ 67,52,004/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 5. While scrutinizing the return of income, the A.O. noticed that the assessee has shown short term capital gain at ₹ 70,29,388/- and long term capital gain at ₹ 32,42,293/-. The assessee was asked to furnish the relevant details pertaining to the capital gains. Assessee filed details scrip-wise and the same is extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully perused the orders of the authorities below and have considered the relevant documentary evidences brought on record. 14. The dispute is regarding the nature of income on sale and purchase of shares by the assessee. The issue, whether the income from sale and purchase of shares in a particular case should be treated as capital gain or as business income has been a debatable issue and there are conflicting decisions of the Tribunal on this issue. Each case is therefore, to be based on its own factual situation. In the balance sheet, the assessee has shown shares under the head 'investment'. These investment shares have been valued at cost. The Hon'ble Supreme Court in the case of CIT Associated Industrial Development Co Pvt. Ltd. 82 ITR 586, which decision has also been considered by the CBDT in its Circular No. 4/2007 dt. 15.6.2007, has observed that: Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is -within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all take into account the following- a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income, b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; c) In all other cases, the nature of transaction (i.e. whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. 4. It is, however, clarified that the above shall not apply in respect of such transactions in shares/securities where the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvesting in shares. But then the matter does not rest purely on the technical question of onus which undoubtedly is initially on the revenue to prove that a particular item of receipt is taxable. Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. 18. The Hon'ble Supreme Court in another case in P.M. Mohammed Meerakhan (P.M.) v/s CIT, [1969] 073 ITR 735 (SC), reiterated that it was not possible to evolve any single test or formula which could be applied in determining the transaction as adventure in nature of trade or not. The distinction between the two types of transaction is not always easy to make. Whether the transaction is of one kind or the other depends on the question whether the excess is an enhancement of the value by realizing the security or a gain in an operation of profit making. The assessee might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts, the A.O. formed a belief that provisions of Section 2(22)(e) of the Act squarely apply on the facts of the case. 25. This issue is no more res integra in the light of the decision of the Hon ble High Court of Bombay given in the case of Universal Medicare Pvt. Ltd. 324 ITR 263 and Impact Containers 367 ITR 346 and also by the decision of the Hon ble Jurisdictional High Court of Gujarat in the case of Daisy Packers Pvt. Ltd. in Tax Appeal No. 212 of 2010. The Special Bench of the Tribunal in the case of Bhaumik Colour Pvt. Ltd. 313 ITR (AT) 146 (Mum) has held that for the application of the provisions of Section 2(22)(e) of the Act, it is mandatory that the recipient of the loan/advance must be both registered and beneficial shareholder. The Special Bench further observed that the deemed dividend cannot be taxed in hands of persons other than shareholder of lender company. This view of the Special Bench has been confirmed by the Hon ble High Court (supra). 26. The Hon ble High Court of Bombay in the case of Universal Medicare Pvt. Ltd. (supra) has held that the Tribunal had found that as a matter of fact no loan or advance was granted to the assessee. Even, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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