Itxa/2208/2011 Of The Commissioner Of Income Tax -25 v. Kalpesh C. Shah

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.876 OF 2011 The Commissioner of Income Tax-25 ..Appellant. V/s. Kalpesh C. Shah ..Respondent. Ms. Suchitra Kamble for the appellant. Mr. B.V. Jhaveri for the respondent. CORAM : J.P. DEVADHAR AND K.K. TATED, JJ. DATED : 5TH SEPTEMBER, 2011 P.C. :- 1.The question of law raised by the revenue in this appeal reads thus:- “ Whether on the facts and circumstance of the case and in law, the ITAT is justified in holding that the assessee had rightly lodged a claim for long term and short term capital gain instead of assessing officer’s finding that the income earned in the activity of sale and purchase of shares can be classified only under the head ‘income from business and profession’ and not ‘short term capital gains’ or ‘speculative profit’ ? “ The assessee, an individual, carried on the business as sub- broker trading in shares, securities and derivatives. The assessee had also purchased shares of certain companies as investment, which were duly reflected in the books maintained by the assessee. In the assessment year in question, the assessing officer held that the income received by the assessee on the sale of shares of M/s. Shakun Construction and M/s. Elgi Equipments Ltd. held as investment were liable to be assessed as business income instead of assessing the same as long term capital gains, as claimed by the assessee. The appeal filed by the assessee was also dismissed by the CIT(A). 3.On further appeal filed by the assessee, the ITAT has allowed the claim of the assessee. Perusal of the order passed by the ITAT shows that in the present case, the assessee held the shares of M/s.Shakun Construction and M/s.Elgi Equipments Ltd. for more than one year. Though the assessing officer disputed that the assessee purchased the shares of M/s.Shakun Construction on 2/4/2003, the assessee had produced a certificate from M/s.Shakun Construction to establish that the shares were in fact purchased by the assessee on 28/4/2003. It is not in dispute that apart from dealing in shares as stock the assessee maintained proper books showing investment in shares and in the past, the income arising on sale of shares held as investment have been assessed as long term capital gain / short term capital gain, as the case may be. In these circumstances, the decision of the ITAT in holding that the income earned by the assessee on the sale of shares of M/s.Shakun Construction and M/s.Elgi Equipments Ltd. held as investment are liable to be assessed as income from long term capital gains / short term capital gains cannot be faulted. In the result, the appeal is dismissed with no order as to costs. (K.K. TATED, J.) (J.P. DEVADHAR, J.)