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TMI Blog2016 (7) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were even scrutinized u/s 143(3). Moreover, the case of the assessee is fortified by the CBDT circular bearing number 6 of 2016 dated 29.2.2016. The assessee was not carrying any trading activity into equity shares and securities and therefore, we are inclined to set aside the order of the ld. CIT(A) and direct the AO to treat the income from sale and purchase of shares as short term and long term capital gains. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... verage period of holding, intention made clear by the repurchase and sale of shares already transacted earlier, the fact that the main business of the appellant is in an allied activity viz, trading in derivatives, the fact that the appellant has also made speculative transactions in the same scrips offered under LTCG/STCG, the fact that principles of res-judicata is not applicable to tax proceedings, it is held that the appellant has clearly indulged in adventure in the nature of trade. The AO has rightly brought the profits on sale of shares/securities under the head, declared as LTCG and STCG/STCL as profits and gains from business. The ground thus is dismissed" Aggrieved by the order of ld.CIT(A), the assessee is in appeal before the Bench. 4. The ld. AR vehemently submitted that the assessee company is primarily engaged in the activities of investments in shares and trading in derivatives. The ld. AR submitted that due to global uncertainty in the share and stock markets, the assessee has to frequently shuffle his portfolio in order to minimize losses or to maximize the profits. The assessee held some script for a fairly longer period of time of more than 12 months on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CBDT vide Circular No.6 of 2016, dated 29.2.2016 wherein it has been provided that if the shares and securities held for a period of more than 12 months before the transfer and the assessee desires to treat the income arising from sale of transfer of said shares /securities as capital gain and the same shall not be put to dispute by the AO. The ld. Counsel submitted that the circular brought out by the CBDT to set the controversy at rest which arose from treating gain/loss from the sale of shares under the head business income by the department in large number of cases giving rise to tremendous litigations. The ld. AR finally prayed that in view of the Circular issued by CBDT (supra) the intention of the government has been made clear that unnecessary controversy which was resulted in unending litigation due to treatment of loss/gain on sale of shares by the department was intended to be put at rest and that the LTCG on sale of shares and securities may be directed to be treated as gain/loss from investment and not from business by setting aside the order of ld.CIT(A). 5. The ld. DR on the other hand, relied heavily on the orders of authorities below and prayed that same be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days. The assessee also filed the details of short term and long term capital gains right from the assessment year 2005-06 to AY 2011-12 which reveals that the revenue has consistently accepted the stand of the assessee barring the year under consideration. The details in respect of previous years are reproduced below for the sake of better understanding of the issue involved: AY Remarks LTCG LTCL STCG STCL 2005-06 Accepted u/s 143(3) 77,18,627 - 32,58,466 2,70,640 2006-07 Accepted u/s 143(1) 40,91,787 - 25,59,171 14,48,287 2007-08 Accepted u/s 143(3) 36,98,798 - 1,32,58,078 11,986 2008-09 Year under consideration 5,14,30,041 - 2,57,89,559 7,57,10,332 2009-10 Accepted u/s 143(1) 3,051 1,89,95,127 13,08,09,534 7,25,01,308 2010-11 Accepted u/s 143(1) - - 43,72,124 3,88.093 2011-12 Accepted u/s 143(1) 81,51,192 - - - After looking to the overall scenario of the assessee, we are of the considered view that the department cannot dictate the manner and method of treating the activity of assessee in shares as trading activity in one year while accepting the same as investment in shares in other years which were even scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake 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 stockin-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 transaction itse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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