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TMI Blog2022 (6) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... stand in subsequent years by treating the transaction in shares as income under the head business and hence the CIT(A) ought not to have accepted the claim of the assessee to treat the transaction under the capital gains for the instant assessment year under consideration. 2.3 Having regard to the Hon'ble supreme court's decision in the case of CIT vs Sutlei Cotton Mills Supply Agency Limited reported in 100 ITR 706, the CIT(A) ought to have upheld the contention of the AO that the transactions in shares are in assessee's ordinary line of business and hence should be assessable as such. 3 The CIT(A) erred in holding that the transactions with the holding company, M/s. Integrated Enterprises lndia Ltd. will not amount to transfer, within the meaning of Sec. 145 of the IT Act. 4 Having regards to the provisions of Rule 46A of the IT Rules, the CIT(A) ought to have forwarded the new evidences which were produced before him for the first time, for examination of the Assessing Officer 5 For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the learned Commission of Income Tax (Appeals) be set aside and that of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us judicial decisions to support the action. 2.3. However, after perusal of assessee's main objects, Ld. AO observed that the assessee was formed with the main objects of dealing in shares and other securities. The treatment of transactions in Balance Sheet would not be decisive. The sale of shares was assessee's ordinary line of business and therefore, the gains were to be treated as Business Income only. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT V/s Sutlej Cotton Mills Supply Agency Ltd. (100 ITR 706) to support the same. Proceeding further, it was noted that entire sale had been made to a group concern namely M/s. Integrated Enterprises India Ltd. (IEPL) through off-market trades. The shares of CUBL were sold at price of Rs. 190/- per share as against prevailing market price of Rs. 222/- per share. Accordingly, the difference of Rs. 32/- per share was also added to the income of the assessee. The same resulted into another addition of Rs. 240 Lacs in the hands of the assessee. Finally, the Business Income was determined as Rs. 803.36 Lacs. Appellate Proceedings 3.1. During appellate proceedings, the assessee reiterated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was noted by Ld. CIT(A) that the transaction will not amount to transfer within the meaning of Sec. 45 of the Act and consequently, there would be no charge of capital gains on the impugned transaction. Thus, the 'capital gains' on these transactions were not to be computed. Consequently, the issue of price differential of share was held to be infructuous. 3.5. The relevant adjudication of Ld. CIT(A) was as under:- 5.1 The matter is considered. The recent CBDT Circular No. 6/2016 dated 29.02.2016 deals with the issue of taxability of surplus on sale of shares and securities and their assessability under Capital Gains or Business. The relevant portion of the Circular is reproduced as under: b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee, desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiary company is held by the holding company, and (b) the holding company is an Indian company: Provided that nothing contained in clause (iv) or clause (v) shall apply to the transfer of a capital asset made after the 29th day of February, 1988, as stock-in-trade; 5.4. In view of the provisions of Section 47(v), the impugned transaction between the holding company and the appellant subsidiary company will not amount to transfer within the meaning of Section 45 of the Act. Consequently, there can be no charge of capital gains on the impugned transaction. These grounds are allowed. 6. Sale Price of Shares of M/s. City Union Bank Limited: As I have held that there is no transfer with regard to the transaction in shares of M/s. City Union Bank Limited in the light of provisions of Section 47(v) of the Act, the issue of adjudication on the sale price of the shares for computational purposes, become infructuous, and therefore does not require adjudication. 7. In the result, the appeal is allowed. This order is passed under section 250 read with section 251 of the Act. Aggrieved, the revenue is in further appeal before us. Our findings and Adjudication 4. Upon careful co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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