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TMI Blog2018 (6) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... investment and there is not stock in trade portfolio - the assessee is consistently valuing investment at cost and does not claim the diminution in valuing of investment - we have noted the intention of the assessee that the Board of Directors of the assessee company has passed the resolution stating that the motive of the company is to deal in investment and not to trade in shares - hence assessee’s income i.e Short term Capital Gain by way of sale of investment should be assessed under the head ‘capital gain’ instead of ‘business income - Decided in favor of assessee. - ITA No.1003/Kol/2016 - - - Dated:- 13-6-2018 - SHRI S. S. VISWANETHRA RAVI, JM AND DR. A.L.SAINI, AM For The Appellant : ShriV. N. Purohit, AR For The Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer asked the assessee to furnish the details of buying and selling of shares. In response, the assessee company furnished a statement showing the details of purchase and sale of shares. Considering the volume, frequency, continuity and regularity of transaction of purchase and sale of shares, the assessee company was further asked to explain why the gain arising out of buying and selling of shares should not be treated as business income instead under the head capital gain. In response, the assessee company furnished a written reply stating that during the F.Y 2009-10 relevant to the Assessment Year 2010-11, the company has acquired only three shares, viz. (i) Gati Ltd., (ii) TCI Finance, (iii) TCI Industries Ltd. and all these th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of PVS Raju Anr. Vs. Addl. CIT 340 ITR 75 (AP): (i) The frequency of buying selling of shares; (ii) The period of holding; (iii) The quantum of turnover; (iv) The intention of the assessee to make quick profits; (v) Purchasing selling of same script repeatedly; (vi) Mere classification of share transaction as investment in the books of accounts of one is not conclusive; (vii) The intention of the assessee at the time of purchase sale; Therefore, considering the judgment of Hon ble Andhra Pradesh High Court (supra), the Assessing Officer treated the income on account of purchase and of shares under the head business income instead of under the head capital gain as claimed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments are valued by the assessee at cost and the assessee is not claiming diminution in value of investment shown in the books of account. The assessee company does the entry in the books of account as an investment and has been showing as an investment in the balance sheet. Therefore, the ld. counsel submitted before us that the shares purchase by the assessee company is only for investment purpose not to do the trading in shares and, therefore, gain on sale of shares should be treated under the head short term capital gain . In addition to this, the ld. counsel for the assessee relied on the judgment of the Hon ble ITAT, Kolkata in ITA No.431/Kol/2011for Assessment Year 2007-08 wherein it was held that assessee did not claim any loss du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the motive of the assessee company is to keep the shares as an investment not as stockin- trade. 9. We note that in subsequent assessment years i.e. Assessment Year 2011-12, the assessment was completed u/s 143(1) of the Act and the Department has accepted the treatment of the assessee under the head Short Term Capital Gain .In subsequent assessment year i.e. Assessment Year 2012-13, whichhas been completed u/s 143(3) of the Act and the Department has accepted the stand of the assessee to show the investment under the head Short Term Capital Gain . Likewise, in Assessment Year 2014-15, the assessment was completed u/s 143(1) of the Act and the Department has accepted the stand of the assessee to show the income of the investment under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, the treatment in the books of accounts of the assessee. We note that since, the assessee has shown the investment in its books of accounts under the head investment and not under the head stock in trade, therefore, the intention of the assessee is not to trade in shares but to treat them as an investment. 7. We also note that the CBDT has issued Circular No.6 of 2016 wherein it has been provided as follows: 2 ..However, this stand, once taken by the assessee in a particular assessment year shall remain applicable in subsequent assessment years also and the taxpayer shall not be allowed to adopt a different/contrary stand in subsequent assessment years . This Circular is in respect of how to treat the income from s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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