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TMI Blog2018 (3) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... 2727/Delhi/2008 And 3897/Delhi/2010 - - - Dated:- 21-12-2017 - Shri B.P. Jain, Accountant Member, And Shri Sudhanshu Srivastava, Judicial Member For the Assessee : Shri Salil Kapoor, And Shri Sumit Lalchandani, Advs For the Revenue : Shri S.K. Jain, Sr. DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, The above two appeals of the Revenue are directed against the separate order of the ld. CIT(A), New Delhi vide orders dated 16.05.2008 for assessment year 2005-06 and 21.06.2010 for A.Y. 2006 07 respectively. Since the appeals pertain to same assessee and were heard together involving common issues the appeals are being disposed off by this common order for the sake of convenience and brevity. ITA No. 2727/DEL/2008 [A.Y. 2005-06] 2. The Grounds of appeals raised by the Revenue are as under: 1. The ld. CIT(A) erred in law and facts in directing the Assessing Officer to treat the sum of ₹ 2,60,49,678/- as a capital gain instead of treating it as business income. 2. The ld. CIT(A) erred in law and facts in directing the Assessing Officer to allow the payment of registration fees of ₹ 27.30 lakhs to SEBI even when such fee is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he light of aforesaid tests, shall examine and ascertain whether or not the shares were held as investment . The question of law is accordingly answered. 13. Learned counsel for the respondent-assessee states that he will like to file an application for additional documents before the Tribunal. If any such application if filed, the same will be considered sympathetically by the Tribunal. We clarify that we have referred to the two orders passed by the Assessing Officer and the appellate authorities to decide the present appeals. The Tribunal will be at liberty to decide the issue without being influenced by the observations made in favour or against any party in the present order or the impugned order passed by the Tribunal. 5. At the outset, the ld. DR submitted that the Hon ble High Court has remanded back the issue to the Tribunal for fresh adjudication and further submitted that the assessee sold the shares in a short period and sometimes in two-three days and even on the same day. He quoted from AO s order for A.Y. 2006-07 that shares of M/s LML Ltd were sold 8 times and M/s Oswal Chemical were sold 14 times which pointed to trading transactions and not investment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006-07 showing scrip names, dates of purchase and sale and capital gain/loss thereon to buttress his claim. Further, as against alleged by DR, the specific transactions of sale of M/s LML Ltd and M/s Oswal Chemicals were in fact coming from investments made in earlier year as such accepted by the Ld.AO in its scrutiny assessment for AY2005-06. He again referred to the charts submitted by him and submitted that the shares of M/s LML Ltd were held for more than 260 days and on average for 277 days and that shares of M/s Oswal Chemicals were held for period ranging from 55 days to 259 days before being sold He submitted that the sale were effected in tranches and in fact constituted single transaction. There was not frequency buying or selling the same. iii) He submitted that the quantum of dividend income on the shares claimed as investment is not relevant factor for determining as to whether those shares have been purchased as investment or stock in-trade. When the shares are purchased it cannot be said with certainty whether the company will declare dividend and at the same time the decision to classify the share as investment/stock-in trade is taken by the assessee at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 365 days that itself will not make it business income. viii) He submitted that assessee company is a share broker and at the same time it is doing Investment and declaring Long Term and Short Term Capital Gains which has been accepted in 2002 03 to 2004-05. Ld. AR further submitted that one of the objects read with ancillary object is to carry on the business of an investment company. Thus, the company is authorized for investment. ix) He submitted that the AO has accepted the share transactions as for investment where the holding period is 365 days or more and has treated the same as LTCG, however, wherever the holding period is less than 365 days even the shares were distinctively held in the same demat account marked as Investment A/c , he has treated the same as for business purposes. x) Ld. AR submitted that in financial books of a/c, these purchases have been shown under the head investment in contrast to other shares which have been shown as purchases / stock in trade. This itself proves the nature and the intention of the assessee at the time of purchase. xi) Ld. AR submitted that in the balance sheet, these shares held as on the closing date have been sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has observed that the assessee is into stock broking business as well as investor in shares and stocks. The AO has accepted the long term capital gains declared by the assessee in respect of shares which are held for more than 365 days. This fact is not denied by the DR. The assessee is having two different Demat accounts and the investment account is marked as Demat investment account. The other Demat account is for shares held as stock in trade. It is at the time of purchase of share that the assessee has to decide if it is for investment or its stock in trade and is credited in the required Demat account. It has been investing in shares for the last years and its accepted by the department. In some cases the assessment is order made u/s 143(3). There no borrowed funds used by the assessee for purchase of these investments. All the transactions are actual delivery. The STT paid is not claimed as deduction by the assessee. Moreover the balance investments in the balance sheet as on the last day of the years are taken at cost and not at market value or cost whichever is less. Chart filed by the assessee shows that valuation loss is not claimed and this fact is not denied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns even in the past years. This contention of the appellant has been accepted by the Assessing Officer for various assessment years from 2002-03 to 2004-05. Further for the assessment year 2005-06, the Ld. Commissioner of Income Tax (Appeals) had decided the issue in favour of the appellant. The facts of the case in this year also are similar as to those in the earlier years. b) From the facts it is also clear that the Assessing Officer has accepted that the assessee had accepted the claim of all the share transactions which have been shown as long term capital gain. However, the Assessing Officer has not accepted the claim of short term capital gains, even though these shares had been shown as investment in the balance sheet. The Ld. Authorised Representative has strongly contended that the valuation of these shares had been shown in the balance sheet by treating this as investment and a consistent policy with regard to such shares have been followed by the appellant for the past several years. Accordingly it is also observed that the Assessing Officer has not brought out any differentiating facts as to how and why under similar circumstances though the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has rightly treated the gain on sale of shares as short term capital gain. Accordingly, we find no infirmity in the order of the ld. CIT(A). Thus, the grounds raised by the Revenue in are dismissed. ITA No. 3897/DEL/2010 [A.Y. 2006-07] 11. The Grounds of appeals raised by the Revenue are as under: The Grounds of appeals raised by the Revenue are as under: 1. On the facts and circumstances of the case and in law, the order of the ld. CIT(A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. 2. The ld. CIT(A) erred in law and facts in directing the Assessing Officer to treat the short term capital gains shown by the assessee as business income, ignoring the fact that during the year under consideration the assessee had sold shares and securities which were purchased primarily during the year itself . 12. The issues raised in this appeal are identical to the issues involved in the assessment year 2005-06 in ITA No. 2727/DEL/2008 decided by us hereinabove. Accordingly, our order hereinabove on these issues shall be identically applicable in this year also. Grounds raised by the Revenue stand dismissed. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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