By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
fiogf49gjkf0d
Sections 28(i) and 45 of the Income-tax Act, 1961 — If the assessee has maintained the investment portfolio separately and income from which was offered as capital gains and was also assessed as capital gains in successive assessments, then the income will be assessed as capital gains and not as business income.
For the assessment years 2005-06 and 2006-07, the Assessing Officer treated income from sale of shares as business income as against income from capital gains. The CIT(A) held in favour of the assessee.
The Tribunal also held in favour of the assessee. The Tribunal noted as under:
(1) The assessee is a broker as well as an investor. It has maintained the investment portfolio separately, income from which was liable to be taxed as capital gains, since the intention in respect of this was to hold the investment as investment only and was shown as such in the books of account and income therefrom was shown and treated as capital gains in the successive assessments.
(2) The schedule of investments was duly appended in the balance sheet.
(3) The assessee has also maintained separate D-mat accounts for investment and for trading. Therefore, the assessee has distinctly maintained investment account and trading account.
(4) The assessee was holding certain stock for the purpose of doing business of buying and selling and at the same time it was holding other shares as its capital for the purpose of dividend income.
Therefore, the CIT(A) has rightly held that the income is to be treated as capital gains and not as business income.
