COMMISSIONER OF INCOME TAX Vs. SURESH R. SHAH

JUDGEMENT

(1.) THIS appeal by the Revenue under Section 260A of the Income Tax Act (hereinafter referred to as the "said Act") is from the Order dated 10/11/2010 of the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal) relates to Assessment Year 2006-07 (previous year ending 31/3/2006). Being aggrieved by the Order dated 10/11/2010, the appellant has formulated the following questions of law for consideration by this Court:

(2.) THE respondent is engaged in textile business. By an order dated 23/12/2008 passed under Section 143(3) of the said Act the Assessing officer took a view that the respondent was not an investor in shares but dealer in shares and therefore, rejected the claim of the respondent for being taxed under the head capital gains in respect of the income earned from purchase and sale of shares. This was inter alia on the basis that the respondent had also returned speculation loss of Rs. 13,483/-. Consequently by the above assessment order the total income assessed was Rs.1.92 crores as against the returned income of Rs. 36,213/-.

(3.) BEING aggrieved, the revenue/appellant preferred an appeal to the Tribunal. On 10/11/2010 the Tribunal after examining the evidence upheld the order of CIT(A) and concluded that the respondent was an investor in shares and entitled to be taxed under the head capital gains in respect of purchase and sale of shares. The Tribunal after examining the facts found that the respondent had not borrowed any funds for its investments and that the long terms gains were attributable to only shares of 4 companies and 3 of them were held for a period of about 5 to 12 years. So far as short terms capital gains were concerned the Tribunal held that about 93% of the short terms gain/loss was attributable to shares of six companies and in any case all the shares were held for periods ranging in excess of 1 month. With regard to the fact that the respondent had returned speculation loss in his return, the Tribunal followed the decision of this Court in the matter of CIT V/s. Gopal Purohit reported in 228 CTR (Bom.) 582 to hold that there is no bar for an assessee to maintain two separate portfolios, one relating to investment in shares and another relating to business activities involving dealing in shares. Further this Court also held that the aforesaid finding is a pure finding of fact.