Appellant: Arunima Adcon Services Pvt Ltd, D-9, 2nd Floor, Nangal Dewat, Vasant Kunj, New Delhi
Respondent: ACIT, Circle – 20(2), New Delhi
Representatives: Assessee by Shri Gaurav Jain, Adv, Ms. Shweta Bansal, CA; Department by Shri Vivek Vardhan, Sr. DR
Date of Hearing: 21.09.2023
Date of Pronouncement: 25.09.2023
PER N.K. BILLAIYA, ACCOUNTANT MEMBER: This cross appeal by the assessee and the Revenue stems from the order of the ld. CIT(A) – 7, New Delhi dated 24.01.2020 for AY 2015-16. The crux of the matter concerns the classification of profits from the sale of shares, contested as either capital gains or business income.
The assessee had declared significant gains from both long-term and short-term capital gains on shares, which were disputed by the AO as business income due to the nature of the assessee’s business in trading securities. Despite detailed submissions supporting their claims that certain stocks had been converted to capital assets, the AO treated these as business income.
The ld. CIT(A) partly accepted the assessee’s arguments, particularly acknowledging the long-term capital gains as such but maintained short-term gains as business income, drawing a distinction based on the duration of holding and the nature of transactions.
The Tribunal considered the comprehensive details, including board resolutions at the start of the year that explicitly re-categorized certain trading stocks as investments. Supported by the CBDT Circular No. 6/2016, which clarifies treatment for listed securities held for over 12 months as capital assets, the Tribunal found substantial grounds to overturn the AO’s classification for short-term gains as well.
Ultimately, the Tribunal upheld the assessee’s classification of both long-term and short-term capital gains, directing a revision of the tax liabilities accordingly. This decision underscores the importance of intent and documentation in determining the tax treatment of income from securities.
Order pronounced in the open court on 25.09.2023.
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