2010 (10) TMI 1205

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..... The assessee is a non-banking financial corporation and engaged in the activity of investment in shares. According to the assessee, the shares acquired by the assessee company for the period from 1992 to 2002 have been shown as capital assets in the nature of investments. The profit or loss arising on transfer of those shares used to be offered by the assessee as capital gains. In the previous year 2002-03, relevant for the assessment year 2003-04, the assessee company designated an amount of ₹ 1 Crore to impress under portfolio management scheme. It was shown by the assessee company as utilized for business activities. The shares held under the portfolio scheme with M/s. Kotak Securities was shown as stock-in-trade for assessment ye .....

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..... he two assessment years 2003-04 and 2004-05, the assessee has treated a portion of its shares held under the portfolio management with M/s. Kotak Securities, as stock-in-trade. After treating that portion of shares as business assets, the company found that it was not in a position to carry on the said business even under the portfolio management scheme. Accordingly it was decided that the shares should be henceforth treated as investments, so that the incidental business could be terminated. This decision has been reflected in the resolution passed by the Board of Directors. It is for the assessee company to decide whether to hold shares as investments or to hold shares as stock-in-trade. The composition of holdings could be changed by the .....

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..... s planning its affairs from time to time for its own advantage by using these colourable devices to reduce the tax burden. She, therefore, submitted that the orders of the lower authorities may be confirmed on this point. 7. We considered the issue in detail. The assessee company had acquired certain shares under portfolio management scheme and those shares were treated by the assessee and accepted by the Department as stock-in-trade for assessment years 2003-04 and 2004-05. There is no dispute on this fact. In the previous year relevant to the assessment year under appeal the assessee company converts those stock-in-trade shares into investments. The assessee has changed the character of its asset. The character has been changed from st .....

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