MEENA PANKAJ TANNA,MUMBAI vs. DCIT 17(1), MUMBAI

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ITA 6589/MUM/2012Status: DisposedITAT Mumbai19 October 2016AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once the intention of investment is established, all transactions should be treated as capital gains, regardless of the holding period. Therefore, the profit from the sale of shares should be treated as capital gain.

What were the facts?

The assessee offered profit on sale of shares as capital gain, but the AO treated it as business income. The assessee's intention was to invest in shares, not to trade them.

What were the issues?

Whether profit on sale of shares should be treated as capital gain or business income. The key issue is the assessee's intention behind the share transactions.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM

For Appellant: Ms. Nikita Agarwal
For Respondent: Shri Neil Philip
Hearing: 21/07/2016Pronounced: 19/10/2016

Assessee by : Ms. Nikita Agarwal Revenue by : Shri Neil Philip Date of Hearing : 21/07/2016 Date of Pronouncement 19/10/2016 आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the Assessment Year 2008-2009 in the matter of order passed under section 143(3) of the IT Act.

2.

The only grievance of the assessee relate to treatment of profit on sale of shares offered as capital gain which was treated by the AO as business income.

3.

At the outset, learned AR placed on record the order of the Tribunal in assessee’s own case for the assessment year 2005-2006 wherein assessee’s claim for 2 Meena Pankaj Tanna, Mumbai treatment of capital gains was accepted by the Tribunal in ITA No.1604/Mum/2015 vide its order dated 11/02/2015 after having the following observation. “5.2 We have heard the rival contentions. We find from the order of the CIT(A), that the ld. CIT(A) after discussion of the over all facts and circumstances of the case has given a categorical finding that it has been established with sufficient evidence, that the assessee's intention was of investment and not in trading in shares. He, however, treated the income from sale of shares which were held by the assessee for less than 45 days as business income. In our view, once the ld. CIT(A) has held that the assessee was an investor then under such circumstances a different treatment given to the transaction of shares held up to 45 days cannot be said to be justified. It is the intention of the assessee which matters and once such an intention is established, then the assessee is to be treated as an investor. Hence, we set aside the order of CIT(A) on this issue and direct the AO to compute the income of the assessee under the head capital gains as claimed by the assessee.”

4.

During the year under consideration also, we found that assessee’s intention was of investment and not trading in shares. Accordingly, the profits arising out of sale of shares are to be treated as capital gain and not as business income. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal in assessee’s own case, we direct the AO to treat the profit offered on sale of shares as capital gain rather than business income.

5.

In the result, appeal of the assessee is allowed in terms indicated herein above.

Order pronounced in the open court on this 19/10/2016.

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