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TMI Blog2019 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... cribe to shares, subject to fulfilment of certain conditions. Further, it is observed that assessee sold shares invested in these companies to India Advantage Fund-V, a trust holding majority of shares of assessee. To verify actual intention of assessee behind these investments, we called for agreements entered into by assessee with these companies. Ld.AR produced all agreements relevant for years under consideration, and also submitted that, these were not considered by Ld.AO/Ld.CIT (A). We are therefore inclined to set aside this issue back to Ld.AO. Ld.AO shall verify agreements and ascertained true intention of assessee behind such huge investments. Assessee shall by way of corroborative evidences establish its claim and if satisfied Ld.AO shall consider the issue on the tests laid down by various courts relied upon by assessee. Appeal filed by assessee allowed for statistical purposes. - ITA Nos.408, 2677(Bang)/2017 & 976(Bang)/2018 - - - Dated:- 31-7-2019 - Shri B.R. Baskaran, Accountant Member And Smt. Beena Pillai, Judical Member For the Appellant : Shri H.N. Khincha, CA For the Revenue : Miss. Neera Malhotra, CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) the shares and units of mutual fund held were capital assets and not of business asset. b) the appellant has shown these shares as investments and not as stock in trade. c) the shares were held for a significant period of time. d) there are no borrowed funds On proper appreciation of facts and circumstances of the case and the law applicable, it would be clear that the gains on sale of shares and units of mutual fund are to be taxed as capital gains only. 2.4. The learned authorities below have erred in holding that: e) the appellant is engaged in medical and health care services; f)investing in the shares of similar company would amount to business activity; g)the gains on sale of such shares and units of mutual fund is of the nature of business income; Such conclusions being erroneous on facts and contrary to applicable law are to be disregarded. 2.5. The appellant never carried on any business in dealing in shares / mutual funds. There was no adventure in the nature of trade or commerce. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount to business activity; 3. the gains / loss on sale of such shares is of the nature of business income; and the learned CIT(A) has erred in confirming the same relying upon the appellate orders of the earlier years. Such an action being contrary to both on facts and law applicable are to be negated. 4) In any case and without prejudice the assessing officer had erred in considering the income/loss from transfer of share at Nil, thus ignoring the very cost incurred to acquire such shares and the learned CIT(A) has erred in confirming the same on the ground that the purchase of shares was made in FY 2007-08 and such cost relates to relevant year. The conclusion drawn is totally erroneous both on facts and law applicable is to be ignored and the calculation as done/ confirmed by the authorities below is to be rejected. 5)The appellant has computed the Long Term Capital Loss of ₹ 4,13,44,586/- in accordance with law and is eligible to carry forward the same to next year as claimed in the return of income and same is to be allowed without any variation. 6) In view of the above and on other grounds to be add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that: a) the appellant is engaged in medical and health care services; b) investing in the shares of similar company would amount to business activity; c) the gains on sale of such shares and units of mutual fund is of the nature of business income; Such conclusions being erroneous on facts and contrary to applicable law are to be disregarded. 2.5. The appellant never carried on any business in dealing in shares / mutual funds. There was no adventure in the nature of trade or commerce. Thus the treatment of capital gains as business income is totally erroneous both on facts and law is to be rejected. 2.6 The learned authorities below have erred in not considering the facts that the gains on sale of units of mutual fund was accepted and assessed as income in nature of capital gain during the earlier years. 2.7 In any case and without prejudice, the learned authorities below have erred in not considering the Circular issued by CBDT that gain on transfer of unlisted shares are to be taxed under the head capital gains only. The action of the authorities below b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tres and facilities for manufacturing medical equipment etc; to provide, encourage, any shade or promote facilities for the discovery, improvement or development of new method of diagnostic, understanding and prevention and treatment of diseases. 2.1 Amongst ancillary objects, it has been submitted that assessee performs following functions: to conduct and to carry out experiments and to provide funds for research work and for scholarships, stipend, remuneration and/or other payments or aided to any person or persons engaged in research work, or work connected with or conducive to research and to encourage and to improve knowledge of the persons who are engaged or likely to be engaged in any medical or related profession so as to make available medical relief to the public at large. To promote, manage, cooperate with or afford assistance to or otherwise assist the work of any other foundation, institution or body engaged in medical research treatment It has been submitted that assessee invested in following healthcare provider companies by investing in shares, which stands duly reflected in the balance sheet under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, India Advantage Fund-V. It has been submitted that assessee do not have any other investments carried out in any other companies other than healthcare companies, and that assessee did not have any intention to trade in shares. It is thus submitted that the activity carried on by assessee cannot be treated as business income. He placed reliance on various authorities in support of the contentions as under: Sl.No Particulars 1 PCIT Vs Bhanuprasad D Trivedi (2018) 94 Taxmann.com 114(SC) 2 PCIT Vs Bhanuprsad D Trivedi (HUF)(2018) 87 Taxmann.com 137 (Gujarat) 3 PCIT Vs Telestar Investments (P)Ltd., (2017) 81 Taxmann.com 89 (Kar.) 4 CIT Vs Tejas Securities (2017) Taxman.com 486 (Ka.) 5 CIT Vs Bagmane Developers (P)Ltd., (2017) 88 Taxmnn.com 105(Pune-Trib.) 6 Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing its business in healthcare sector. Further, it is also not denied that, these investments in specific companies are part of business agreement, as per its commitment to subscribe to shares, subject to fulfilment of certain conditions. Further, it is observed that assessee sold shares invested in these companies to India Advantage Fund-V, a trust holding majority of shares of assessee. 8.1 To verify actual intention of assessee behind these investments, we called for agreements entered into by assessee with these companies. Ld.AR produced all agreements relevant for years under consideration, and also submitted that, these were not considered by Ld.AO/Ld.CIT (A). 8.3 We are therefore inclined to set aside this issue back to Ld.AO. Ld.AO shall verify agreements and ascertained true intention of assessee behind such huge investments. Assessee shall by way of corroborative evidences establish its claim and if satisfied Ld.AO shall consider the issue on the tests laid down by various courts relied upon by assessee. Grounds relating to interest u/s.234 is consequential in nature. Accordingly we allow these gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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