January 2019

Section 45: Capital gains –Business income- Investment in shares- A company can have two portfolio - investor and a trader at the same time- Investment was held to be assessable as short term capital gains. [Section 28i)]

Ajay R. Singh
Advocate

10. The Pr. CIT-12 vs. Business Match Services (I) Pvt. Ltd [ Income tax Appeal no 699 of 2016  Dated: 27th November, 2018 (Bombay High Court)].

 

 [Business Match Services (I) Pvt. Ltd vs. DCIT; dated 19/08/2015 ; ITA. No 7267/M/2010, AY: 2007-08 and 2008-09, Bench B, Mum. ITAT ]

 

Section 45: Capital gains –Business income- Investment in shares- A company can have two portfolio - investor and a trader at the same time- Investment was held to be assessable as short term capital gains. [Section 28i)]


The assessee company is engaged in the business of providing consultancy services in the field of private placement of shares to foreign institutional investors, financial institutions.


During the two years under consideration, the assessee also dealt in purchase and sale of shares. It declared a portion of profits arising on sale of shares as Short term Capital Gain (STCG) and the remaining portion was offered as its business income, i.e. the assessee has maintained separate portfolios for investment and trading assets. In both the years under consideration, the AO did not agree with the claim of STCG declared by the assessee and accordingly assessed the same as business income. 


The CIT(A) confirmed the view of the A.O, upon which, the issue reached the Tribunal at the hands of the Assessee.


Being aggrieved with the order of the CIT(A), the assessee filed the Appeal before ITAT. The Tribunal find that the AO has considered all the shares together to take the view that the assessee has indulged in trading in shares. However, the fact remains that the assessee itself has offered gains arising on shares held as trading stock as its business income. The assessee has claimed the gains arising on sale of Adani Enterprises Limited only as Short Term Capital Gain with the claim that it has held the same as its investme

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