Madhya Pradesh H.C : Where assessee carried out delivery based share transactions with an investment motive, in view of fact that period of holding in said transactions was less than one year, income arising from those transactions was to be taxed as short-term capital gain

High Court Of Madhya Pradesh

CIT VS. Om Prakash Suri (No. 1)

Assessment Year : 2005-06

Section : 28(i), 45

Shantanu Kemkar And Prakash Shrivastava, Jj.

IT Appeal No. 4 Of 2011

November 24, 2011


1. Shri R.L Jain, learned senior counsel with Ms. Veena Mandlik, learned counsel for the appellant.

2. Heard on the question of admission.

3. By this appeal filed under section 260A of the Income-tax Act, 1961, the appellant-Revenue has challenged the order dated August 4, 2010, passed by the Income-tax Appellate Tribunal Indore Bench (for short, “the Tribunal”) in Income Tax Appeal No. 433/IND/2009 for the assessment year 2005-06.

4. Having heard the learned senior counsel for the appellant, we find that the Commissioner of Income-tax (Appeals) as also the Tribunal, after due appreciating all the facts, have correctly recorded the finding that the delivery based transactions were made with an investment motive and as such, the income therefrom was in the nature of short-term capital gains whereas the income from F & O transactions and daily trading in shares were with the business motive,, which were showed as business income only, which were mainly through stockbroker Arihant Capital Market Ltd”. registered with the NSC, NSE and BSE. The Commissioner of Income-tax (Appeals) and the Tribunal have considered the Board Circular No. 4 of 2007, dated June 15, 2007, emphasizing that it is possible for a taxpayer to have two portfolios, namely, an investment portfolio comprising the securities, which are to be treated as capital assets and trading portfolio comprising stock-in-trade, which are to be treated as trade asset.. The clarification issued by the Board was also considered, stating therein that no single principle would be decisive and the total proposition is to be considered. The authorities below have taken into consideration that the respondent-assessee had maintained only trade portfolio and claimed that to be an investment portfolio and undisputedly, the period of holding is less than one year. Having regard to the aforesaid, the Commissioner of Income-tax (Appeals) and the Tribunal have held that there is no infirmity in holding that these transactions would be treated as short-term capital gains.

5. In view of the aforesaid finding of fact recorded by the Commissioner of Income-tax (Appeals) affirmed by the Tribunal, we find no ground, much less substantial question of law, in the matter.

6. Accordingly, the appeal fails and is hereby dismissed.

[Citation : 359 ITR 39]