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TMI Blog2017 (6) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... Treatment to the income earned by the assessee on sale of shares - capital gain or business income - ITAT holding the share transaction as investments - Held that:- Clause (b) of circular of the CBDT dated 29.2.2016 thereof in particular provides that 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. In other words, the Revenue would not pursue this issue if the necessary ingredients are satisfied, only rider being the stand taken by the assessee in a particular year would be followed in the subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arry out share transactions and thus ignoring that through these fictitious and sham transaction the assessee has taken entries of exempt income? (B) Whether on the facts and in the circumstances of the case and in law, the ITAT is justified in confirming the decision of the CIT(A) in holding the share transaction as investments despite the fact that motive of transactions admittedly was earning the profit (maximization of wealth in words of assessee) coupled with huge number of transactions with very less holding period, many were less than a month, transaction to stock ration was very high? (C) Whether on the facts and in the circumstances of the case and in law, the ITAT is justified in directing the Assessing Officer to treat the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing heard learned counsel for the Revenue on this issue, we are in agreement with the Tribunal. As facts recorded by the Tribunal would suggest, the shares were purchased by the assessee during the period relevant to the Assessment Year 2005-2006. The return for the said year was scrutinized by the Revenue. The Assessing Officer did not disturb the investment. It would therefore later on not be open to the Assessing Officer to make addition with the aid of Section 68 of the Act when such shares were sold on the premise that the purchasers themselves were bogus. No question of law therefore arise on this issue. 5. The second issue pertains to the treatment to the income earned by the assessee on sale of shares. The assessee contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Direct Taxes ( CBDT ) has also, through Instruction No.1827, dated August 31, 1989 and Circular No.4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intaining 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. 7. Two things emerge from this circular. One is that the CBDT desires to obviate the difficulties of the assessees and simultaneously to reduce the litigation. In paragraph 3 of the circular, certain parameters have been laid down. Clause (b) thereof in particular provides that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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