Growmore Research and Assets Management Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that as per circular no. 6 of 2016 dated 29th February 2016, it is clear that it is the assessee who decides whether the shares are held as investment or stock-in-trade. Thus, here since shares are held as investments, gains are taxable as capital gains.
Facts- The present appeal is preferred by the appellant mainly contesting that CIT(A) has erred in confirming the addition made by AO as ‘business income’ in respect of gain aggregating to Rs. 1,98,99,186/- arising on sale of shares of Grasim Industries and Ambuja Cement instead of taxing the same as ‘Capital Gains’. It is also contested that CIT(A) has erred in confirming the addition made by the Assessing Officer of Rs. 16,56,000/- in respect of alleged profit on sale of shares of Reliance Petro Chemicals Ltd.
Conclusion- Held that as per circular no. 6 of 2016 dated 29th February 2016, it is clear that it is the assessee who decides whether the shares are held as investment or stock-in-trade and if the assessee decides that the shares are held as investments, the AO has to assess the gains as such. From the above charts it can be seen that the assessee has earned long term capital gains on sale of shares of Grasim Industries and Gujarat Ambuja Cement. The said capital gains from two companies were included in the aggregate long term capital gain of Rs. 2,70,97,356/- earned by the assessee during the year which can be seen from the copy of computation of income. From the above chart it can be seen that the shares of Grasim Industries Ltd. were purchased on 03/04/1991. The assessee has purchased 60000 shares. Copy of the contract note placed on record evidence the said purchases. Out of the said holding, the assessee sold 7850 shares during the year which is also evidenced from copy of the contract notes. Similarly, purchase of shares of Gujarat Ambuja Cements are also evidenced by the copies of the contract notes on record. Interestingly, the residual investment in the shares of the aforementioned companies have been sold in the subsequent assessment years where the capital gains offered by the assessee have been accepted as such.
