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TMI Blog2019 (1) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... sment Year 2010-11. Now we take up the appeal raised by the Revenue for the Assessment Year 2011-12. Both the parties have not disputed the fact that the issues raised for Assessment Year 2011-12 is similar to that of 2010-11 which relates to taxability of capital gain from sale of equity shares of M/s. FCS Software Ltd. As the facts and as issues remain the same, we are of the considered opinion that the decision given by us in preceding para while adjudicating the issue for 2010-11 in the case of assessee shall apply mutatis mutandis on the appeal for Assessment Year 2011-12. Therefore no interference is called for in the finding of CIT(A) holding that the gain has been rightly shown by the assessee as Short Term Capital Gain and is not taxable as business profit. The appeal raised by the revenue for Assessment Year 2011-12 also deserves to be dismissed. - ITA (SS) No.202 And 203/Ind/2016 - - - Dated:- 24-1-2019 - KUL BHARAT, JUDICIAL MEMBER AND MANISH BORAD, ACCOUNTANT MEMBER For The Revenue : Smt. Ashima Gupta, CIT For The Assessee : Shri Sumit Nema, Sr.Adv And Ayush Gupta, Adv. ORDER PER MANISH BORAD, AM. The above captioned TWO appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously and most of the concerns and individuals are interconnected and have business connections, they have been clubbed under the overall name Apollo (Pumarth) Group of Indore. The assessee company is one of the companies of Pumarth Group of Indore. The company was incorporated on 13/01/1995 and as per memorandum of association, the company is a registered share stock broker and depository participant. Consequent to search notice u/s 153A of the Act was issued to the assessee to file the return. Assessee filed return u/s 153A of the Act on 12.7.2013 declaring the same income of ₹ 36,61,040/- as was declared at the time of original return of income. Thereafter notice u/s 143(2) and 142(1) of the Act were duly served upon the assessee. During the course of assessment proceedings Ld. A.O observed that the assessee has sold the share of M/s. FCS Software Ltd which were shown as investment in the balance sheet and gain from the sales of these share was offered as Long Term Capital Gain at ₹ 1,09,16,692/- which was claimed exempt u/s 10(38) of the Act. On 30.12.2014 show cause notice was issued to the assessee as to why the claim of Long Term Capital Gain should not be reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 (I.T.A.T.- Indore) 10. We have heard rival contentions and perused the records placed before us and also gone through the cases referred and relief by the Ld. Counsel for the assessee. Revenue s sole grievance is that the Ld. CIT(A) erred in holding that the gain of ₹ 1,09,16,692/- from the sale of shares of M/s. FCS Software Ltd has been rightly claimed by the assessee as Long Term Capital Gain exempt u/s 10(38) of the Act. Revenue has contended that the alleged gain should be taxable as business profit as the motive of the assessee was not investment to earn dividend but the actual motivation was to earn maximum profits. 11. It is not disputed that the assessee company s main object is of trading in equity shares and NSE derivatives. During the year under consideration assessee has sold the shares of M/s. FCS Software Ltd which was shown as investment in balance sheet. Ld. CIT(A) held the gain from sale of shares of M/s. FCS Software Ltdd as Long Term Capital Gain exempt u/s 10(38) of the Act observing as follows; 3.3 I have gone through the assessment order and the appellant's written submissions and verbal submissions made in the appeal proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of Bombay High Court has been dismissed. Also the decision of the Hon'ble ITAT, Indore in the case of ACIT vs. Om Prakash Suri (2010) 16 ITJ 185 which has been affirmed by Hon'ble M.P. High Court (2013) 359 ITR 0039 (MP) is squarely applicable to the facts of the case. 3.6 In view of the facts of the case and the judicial decisions referred to above, the addition of ₹ 89,48,740/_ made on account of treating the Short Term Capital Gain on sale of shares of M/s FCS Software Ltd. as business income is deleted. Ground nos. 1 and 2 are allowed . 12. Before examining the facts we will first like to refer the judgments of Hon'ble High Court of Bombay in the case of CIT V Gopal Purohit (supra) wherein Hon'ble High Court upheld the view taken by the Tribunal that it has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate portfolios, one relating to investment in shares and another relating to business activities involving dealing in shares. Hon'ble Court also held that the delivery based transactions should be treated as investment transactions and the profit received there from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent (capital asset) and shares held as stock-in-trade (trading asset). In the light of a number of judicial decisions pronounced after the issue of the above instructions, it is proposed to update the above instructions for the information of assessees as well as for guidance of the assessing officers. 15. Hon'ble Supreme Court in the case of CIT V/s Associated Industrial Development Company(P) Ltd, 82 ITR 586 observed that Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-intrade and those which are held by way of investment. 16. Hon ble Supreme Court in the case of CIT Vs H Holck Larsen, 160 ITR 67 observed that; The High Court, in our opinion made a mistake in observing whether transactions of sale and purchase of shares were trading transactions or whether these were in the nature of investment was a question of law. This was a mixed question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recognised stock exchange and DMAT account maintained by the assessee for the purpose of investment portfolio. 17. Our view is further supported by the Hon ble jurisdictional High Court in the case of CIT V/s Commissioner of Income Tax Vs Om Prakash Suri (2014) 46 Taxman 242 (MP) wherein Hon ble Court held that a tax payer can use two portfolios which are to be treated as capital assets and trading portfolio comprising the securities which are to be treated as capital assets and portfolio comprising of stock in trade has to be treated as trade assets . 18. We therefore in the given facts and circumstances of the case as well as respectfully following the judgments referred above find no reason to interfere in the finding of Ld. CIT(A) that the gain from sale of equity shares of M/s. FCS Software Ltd at ₹ 1,09,16,692/- has been rightly claimed by the assessee as Long Term Capital Gain exempt u/s 10(38) of the Act as the assessee is consistently carrying out such transactions of purchase and sale and equity shares under the investment portfolio and separate details are maintained for the trading of shares on behalf of the customers. We therefore find no merit in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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