Pr. CIT Vs M/s Viksit Engineering Ltd. (Bombay High Court)
We note the fact, that the issue of classification of income on sale of shares as business income or as short term capital gains is to be decided the facts of each case. The tests to be applied for such determination is provided in CBDT Circular No.4 of 2007. We note that the Triunal kept in mind the tests as provided in the above Circular in the context of the facts and found is that these investments were out of its own funds and not borrowed funds, further it maintained a distinction between trading in shares and investments. Thus two portfolios one for “Investment” and other for “Trading”. Besides for the earlier years the Revenue accepted the claim of short term capital gain. Thus the income has to be taxed as short term capital gain. We are of the view that respondent holding the shares for a short period, will not convert the capital gain into business income. This would be contrary to be legislative mandate which itself provides that when the investment is held for less than 12 months, it is to be termed as short term capital gain. Moreover, the impugned order of the Tribunal also in the present facts correctly placed reliance upon the decision of this Court in the case of CIT Vs. Gopal Purohit.
