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TMI Blog2016 (8) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... d into group with an intention to sell.", we are of the opinion that the assessee has made investment in shares as investor and therefore, the income arisen to the assessee out of sale of shares is assessable under the head capital gain and not profit and gains of business or profession. In that view of the matter, we set aside the order of the Tribunal. - Decided in favour of the appellant-assessee - TAX APPEAL NO. 1763 of 2005 With TAX APPEAL NO. 1764 of 2005 TO TAX APPEAL NO. 1767 of 2005 - - - Dated:- 8-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR MANISH J SHAH, ADVOCATE, MR JP SHAH, ADVOCATE FOR THE OPPONENT : MR MANISH J SHAH, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) All these appeals arise out of the common order dated 25.7.2005 passed by the Income-tax Appellate Tribunal, Ahmedabad (hereinafter referred to as the Tribunal ) whereby the Tribunal has reversed the findings of the Commissioner of Income-tax (Appeals) by restoring the order of the Assessing Officer. While admitting the appeals, this court framed the following substantial question of law: Whether on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, ipso facto, lead to the conclusion that the appellant was a trader in shares inasmuch as when the share market was having a steep upward trend, even an investor would be inclined to sell off the shares for getting maximum return for its investment. However, those shares which she purchased and sold, without getting them registered in her name, are clearly outside the purview of investment. Applying the test of dominant impression that one gets, looking at the nature of transactions, I am of the view that the appellant held most of the shares as her investment and not as stock in trade. Also, the facts show that the large magnitude of transactions was on account of large funds available with the appellant for investment. On the facts and circumstances of the case, the conclusion that she was a trader in shares is not warranted. However, the profits earned from sale of such shares, which were not registered/transferred in the name of the appellant, irrespective of whether held for more than 12 months or less than 12 months, should justifiably be assessed as business profits and not capital gains. The profit earned by her on sale of shares registered in her name is, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal arrived at a conclusion that the assessee never indulged in adventure of any trade. We find no substantial question of law arising in these appeals. The appeals are therefore dismissed. 5. The learned counsel for the appellant has relied on a decision of this court in the case of Commissioner of Income-tax v. Brijesh Bhagwatilal Lavti reported in (2013) 38 Taxmann.com 376 (Gujarat) wherein it was held as follows: Where assessee, a salaried class person, earned profit amounting to ₹ 70 lakhs on sale of shares, Tribunal was right in holding assessee as investor and treating gain as capital gain as against business income treated by Assessing Officer. 6. Similar view is taken in the case of Commissioner of Income-tax v. Saurabh Rameshchandra Lavti reported in (2013) 40 Taxmann.com 214 (Gujarat) and Commissioner of Income-tax v. Manish Nathulal Lavti reported in (2013) 36 Taxmann. Com 5 (Gujarat). 7. The learned counsel for the appellant has relied on the decision of this court delivered on 19.8.2013 in Tax Appeal No. 71 of 2013, more particularly, paragraph No. 3, wherein it has been observed as under: para 3 .........when in the immediate ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f trade. The profit motive in entering a transaction is not decisive, for an accretion to capital does not become taxable income merely because an asset was acquired in the expectation that it may be sold at a profit. 9. In light of the above decisions, the learned counsel for the appellant submitted that the Tribunal has committed an error in reversing the judgement of the Commissioner of Income-tax (Appeals) and confirming the order of the Assessing Officer holding that the income arisen to the assessee out of shares was assessable under the head `profit and gains of business or profession and not as capital gains. He has further submitted that now the Government has come out with subsequent Circular No. 6 of 2016 dated 29.2.2016 which will govern the field. The said Circular reads as under: Sub-section (14) of section 2 of the Income-tax Act, 1961 (`Act ) defines the term capital asset to include property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock-in-trade or personal assets subject to certain exceptions. As regards shares and other securities, the same can be held either as capital asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transaction itself is questionable, such as bogus claims of Long Term Capital Gain/Short Term Capital loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with the sole objective of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities. 10. Learned counsel for the respondent Mr. Varun Patel has supported the order of the Tribunal and contended that the Tribunal has rightly reversed the order of the Commissioner of Income-tax (Appeal) and restored the order of the Assessing Officer holding that the income arisen to the assessee out of sale of shares was assess ..... 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