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TMI Blog2017 (1) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... rtable by the scheme of the Act. The STCGs as defined under section 2(42A) does not contemplate such bifurcation. Thus, the aforesaid action of the CIT(A) is a mere ipse dixit of the CIT(A) and is not sustainable in law. Hence, the plea on behalf of the assessee deserves acceptance. As a result, grievance of the assessee raised in ground No.1 is decided in favour of assessee. - I.T.A. No. 328/Ahd/2014, I.T.A. No. 357/Ahd/2014 - - - Dated:- 3-1-2017 - Shri Rajpal Yadav, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member Assessee by : Shri Rasesh Shah, AR Revenue by : Shri Prasoon Kabra, Sr.DR ORDER Per Pradip Kumar Kedia, AM These cross-appeals by the Assessee and the Revenue are directed against the order of the Commissioner of Income Tax(Appeals)-III, Surat dated 07/11/2013 passed for Assessment Year (AY) 2010-11. 2. Whereas the Revenue in its appeal questioned the wisdom of the CIT(A) in granting partial relief to the assessee against the action of the Assessing Officer (AO) holding the Short Term Capital Gains (STCGs) and Long Term Capital Gains (LTCGs) arising on sale of shares as business income , the assessee has also assailed the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly treated the gains arising on sale of shares claimed as STCGs or LTCGs, as the case may be, as business income of the assessee while framing the assessment. 5. In first appeal against the order of the AO, the CIT(A) granted partial relief to the assessee. The CIT(A) took note of the decision rendered in assessee s own case in respect of earlier AY 2008-09 and following the same, directed the AO to treat the income on sale of shares as STCGs or LTCGs as the case may be under the head capital gain in so far as gain arising on sale of shares which were held by the assessee for a period of more than one month. 6. The relevant para of the order of the CIT(A) is reproduced hereunder:- 7. As regards treatment of Short Term Capital Gain of ₹ 56,57,594/- and Long Term Capital Gain of ₹ 18,96,152/- as Business Income , the assessing officer has mainly relied on the assessment order of earlier years. The appellant in his written submissions relied on the Order of the Commissioner of Income Tax (appeals) in appellant s own case in assessment years 2006- 07. 2007-08 and 2008-09. In all these decisions, the issue of assessability of the income has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 24.06.2011, in appellant s own case, the assessing officer is directed to treat the Capital Gain from sale of shares held by the appellant for a period of one year or more as Long Term Capital Gain . The shares held by the appellant for a period of one month or more, but less than one year should be a period of one month or more, but less than one year should be treated as investment and profit earned from sale of the same should be assessed as Short Term Capital Gain , while the shares held for less than a month should be treated as trading purchases of the appellant and profits from the same should be assessed under the head Business Income . The appellant shall furnish the details of all the shares with duration for which the shares were held by him, before the assessing officer. Consequently, the ground nos 1 and 3 are partly allowed in favour of the appellant. 7. The Ld.AR Mr. Rasesh Shah, at the outset, submitted that identical issue on similar facts has arisen before the Hon ble ITAT Ahmedabad in assessee s own case in ITA Nos.1970 2247/Ahd/2011 Ors. for AY 2006-07 and also in other assessment years, order dated 31/05/2016 and the issue has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below as well as the case-law cited. The limited controversy in hand is whether the LTCGs amounting to ₹ 18,96,152/- and STCGs amounting to ₹ 56,57,594/- earned by the assessee is in the nature of capital gains as declared by the assessee on a business income as sought to be held by the AO. It is the case of the assessee that the shares were held as capital asset and not as a trading asset prior to its sale. The intention of the assessee in this respect can be gauged from the fact that the assessee is overwhelmingly engaged in textile business and therefore not occupied primarily as a trader. Secondly, it is claimed that the assessee has clearly maintained separation between investment in shares and stock-in-trade in its books of accounts. We also observe that in the earlier assessment years, the CIT(A) has taken view in favour of assessee on similar facts. We also take note of the contention on behalf of the assessee that the capital gains on transactions held for less than 30 days is meager. As claimed by the assessee, there are hardly 94 transactions during the whole year and maximum gains resulted out of shares which were held for more than 30 days. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business income, shall take into account the followinga) 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts, we find no reason to draw adverse inference against the claim of the assessee. Therefore, the appeal of the Revenue is liable to be dismissed. 11. As regards the grievance of the assessee, we find considerable merit therein. Mere fact that the assessee has also quickly sold shares in some instances within the short interval would not ipso facto lead to a conclusion that the assessee was a trader in the shares. The action of the CIT(A) in bifurcating the gains based on the period of holding of less than 30 days and more than 30 days is not supportable by the scheme of the Act. The STCGs as defined under section 2(42A) does not contemplate such bifurcation. Thus, the aforesaid action of the CIT(A) is a mere ipse dixit of the CIT(A) and is not sustainable in law. Hence, the plea on behalf of the assessee deserves acceptance. As a result, grievance of the assessee raised in ground No.1 is decided in favour of assessee. 12. Ground No.2 of the assessee s appeal concerns disallowance under section 14A of the Act which was not pressed and accordingly stands dismissed. 13. In the combined result, appeal of the assessee is partly allowed, whereas the appeal of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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