M/s Satabdi Investments Pvt. Ltd., Bangalore V. DCIT, Bangalore

ITA 605/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0427 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: PRASHANT G S
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEOERGE, ACCOUNTANT MEMBER ITA NO.605/BANG/2014 ASSESSMENT YEAR : 2008-09 M/S. SATABDI INVESTMENTS PVT. LTD. (NOW KNOWN AS M/S. PROLIFIC FINVEST PVT. LTD.), NO.15, 4 TH FLOOR, OPP. SHOPPERS STOP, BANNERGHATTA ROAD, 3 RD PHASE, J.P. NAGAR, BANGALORE 560 078. PAN: AAACY 2955M VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PRASHANT, G.S., CA RESPONDENT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) DATE OF HEARING : 03.05.2016 DATE OF PRONOUNCEMENT : 11.05.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(APPEALS)-VI, BANGALORE DATED 24.2.2014 INTER ALIA ON THE FOLLOWING GROUNDS:- ITA NO.605/BANG/2014 PAGE 2 OF 10 1. THE APPELLATE ORDER PASSED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AND ERRONEOUS AS - CIT (A) DID NOT CONSIDER THE GROUNDS WHICH WERE B ROUGHT IN THE GROUNDS OF APPEAL AND WRITTEN SUBMISSION FILED. 2. BOTH THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) AND THE LEARNED ASSESSING AUTHORITY ERRED IN LAW BY TREATING CAPITALS GAINS EARNED BY THE APPELLANT AS BUSINESS INCOME. 3. BOTH THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) AND THE LEARNED ASSESSING AUTHORITY IGNORED THE FAC T THAT APPELLANT'S CONSISTENT PRACTICE OF TREATING THE AMO UNTS INVESTED IN SHARES/SECURITIES AS INVESTMENTS AND OFFERED THE GA INS FOR TAX UNDER THE HEAD CAPITAL GAINS. 4 IN GULMOHAR FINANCE LIMITED 170 TAXMAN 483 (DELHI ), IT WAS HELD THAT 'IF SHARES ARE SHOWN AS A CAPITAL ASS ET IN THE BALANCE SHEET FROM THE DATE OF PURCHASE AND NO OBJECTION WA S TAKEN BY THE AO IN THE EARLIER YEARS, HE CANNOT HOLD IT TO BE ST OCK-IN-TRADE WITHOUT THERE BEING ANY CHANGE IN FACTS. THE SAID D ECISION WAS FOLLOWED IN CIT VS PNB FINANCE & INDUSTRIES (DELHI HIGH COURT) WHERE IN IT WAS HELD THAT 'ON FACTS, AS THE SHARES WERE HELD FOR A LONG PERIOD AND THERE WAS NO EVIDENCE TO SHOW REGULAR DEALINGS IN SHARES, THE GAINS HAD TO BE ASSESSED AS LTCG.' 5. THE CIT(APPEALS) ERRED IN NOT OBSERVING THAT THE RE WERE NO REGULAR DEALINGS IN SHARES AS BROUGHT IN PARA 5. 4 OF THE APPELLATE ORDER AND OUGHT TO HAVE HELD THE SURPLUS ON SALE OF INVESTMENTS AS 'CAPITAL GAINS'. 6. THE CIT(APPEALS) ERRED IN NOT OBSERVING THAT 'L ARGE VOLUME OF PURCHASE AND SALE OF SHARES DOES NOT PER SE MEAN ACTIVITY IS BUSINESS' AS HELD BY THE ITAT, MUMBAI I N THE CASE OF DCIT VS SMK SHARES & STOCK BROKING. 7. THE CIT(APPEALS) ERRED IN IGNORING THE UNIFORMI TY IN TREATMENT AND CONSISTENCY FOLLOWED BY THE APPELLANT AS HELD BY THE ITAT, MUMBAI IN THE CASE OF DCIT VS SMK SHARES & STOCK BROKING. 8. WITHOUT PREJUDICE TO THE ABOVE, BOTH THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE LEARNE D ASSESSING AUTHORITY ERRED IN LAW BY NOT ALLOWING DE DUCTION FOR THE ITA NO.605/BANG/2014 PAGE 3 OF 10 AMOUNT OF INTEREST & STT WHILE TREATING THE SAME AS 'BUSINESS INCOME'. 9. FOR ALL THESE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF THE PERSONAL HEARING, THE APPEAL MAY BE ALL OWED AND JUSTICE RENDERED. 10. THE APPELLANT PRAYS THAT HE MAY BE PERMITTED TO RAISE ADDITIONAL GROUNDS, WITHDRAW GROUNDS AND ADDUCE ADD ITIONAL STATEMENTS/EVIDENCE AT THE TIME OF THE PERSONAL HEA RING. 2. THE CONTROVERSY INVOLVED IN THIS APPEAL IS WITH REGARD TO NATURE OF RECEIPT OF SALE PROCEEDS ON THE SALE OF SHARES HELD BY THE ASSESSEE. ACCORDING TO ASSESSEE, THE ASSESSEE HAS PURCHASED T HE SHARES OF KARNATAKA BANK, KARUR VYSYA BANK LTD. AND JAGATHI P UBLICATIONS ISSUES, WHICH WERE HELD AS INVESTMENT AND LATER ON IT WAS S OLD AND ASSESSEE HAS CLAIMED THE CAPITAL GAIN ACCRUED ON THIS SALE TRANS ACTION. HAVING NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE, THE ASSES SING OFFICER TREATED THESE TRANSACTIONS AS BUSINESS TRANSACTION AND THE PROFIT EARNED BY THE ASSESSEE WAS CONSIDERED TO BE THE BUSINESS PROFITS. WHILE DOING SO, THE AO HAS OBSERVED THAT THE ASSESSEE IS A NON-BANKING FINANCIAL INSTITUTION AND THE SALE TRANSACTIONS ARE REFLECTED IN THE PROF IT & LOSS ACCOUNT AS PROFIT OR LOSS ON SALE OF SHARES. HE HAS ALSO OBSERVED TH AT WHILE PURCHASING THE SHARES, THE ASSESSEE HAS BORROWED SUBSTANTIAL LOAN ON WHICH INTEREST WAS PAID. 3. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ASS ESSMENT ORDER, BUT DID NOT FIND FAVOUR WITH THE CIT(APPEALS). ITA NO.605/BANG/2014 PAGE 4 OF 10 4. NOW THE ASSESSEE IS BEFORE US AND INVITED OUR AT TENTION THAT THE ASSESSEE HELD THESE INVESTMENTS IN SHARES AS INVEST MENT IN THE BALANCE SHEET. THE SHARES OF KARNATAKA BANK WERE ACQUIRED DURING THE PERIOD FROM 29.3.2005 TO 10.6.2007 AND THEY WERE SOLD BETWEEN 2 5.9.2007 TO 15.2.2008. SIMILARLY, THE SHARES OF KARUR VYSYA BA NK LTD. WERE ACQUIRED ON 13.2.2003 AND 28.4.2003 AND WERE SOLD ON 15.02.2 008, MEANING THEREBY THAT MOST OF THE SHARES WERE HELD FOR MORE THAN TWO YEARS. THE SHARES OF JAGATHI PUBLICATIONS WERE PURCHASED DURIN G THE IMPUGNED ASSESSMENT YEAR AND WERE ALSO SOLD ON 27.3.2008. A CCORDINGLY, ASSESSEE HAS OFFERED LONG TERM AND SHORT TERM CAPITAL GAINS ACCRUED ON THESE SHARE TRANSACTIONS. DURING THE COURSE OF HEARING, THE LD . COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO CIRCULAR NO.6 /2016 AND CIRCULAR DATED 2.5.2016 IN WHICH THE CBDT HAS CLARIFIED THAT IF TH E ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM TRANSFER OF LISTED SH ARES AND SECURITIES HELD FOR A PERIOD OF MORE THAN 12 MONTHS AS CAPITAL GAIN, TH E SAME SHALL NOT BE PUT TO DISPUTE BY THE ASSESSING OFFICER. IT WAS FURTHE R CLARIFIED THAT ONCE A STAND IS TAKEN BY THE ASSESSEE IN A PARTICULAR ASSE SSMENT YEAR, IT SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSMENT YEARS AL SO AND THE TAXPAYERS SHALL NOT BE ALLOWED TO ADOPT A DIFFERENT AND CONTR ARY STAND IN THE SUBSEQUENT YEARS. IN THE CIRCULAR DATED 2.5.2016, THE BOARD HAS FURTHER CLARIFIED THAT CONSISTENCY IN APPROACH IN ASSESSMEN TS IS TO BE MAINTAINED AND THE INCOME ARISING FROM TRANSFER OF LISTED SHAR ES AND SECURITIES WHICH ARE HELD FOR MORE THAN 12 MONTHS WOULD BE TAXED UND ER THE HEAD CAPITAL ITA NO.605/BANG/2014 PAGE 5 OF 10 GAIN, UNLESS THE TAXPAYER ITSELF TREATS THESE AS IT S STOCK-IN-TRADE AND TRANSFER THEREOF AS ITS BUSINESS INCOME. FOR DETERM INING TAX TREATMENT OF INCOME ARISING FROM TRANSFER OF UNLISTED SHARES FOR WHICH NO FORMAL MARKET EXISTS FOR TRADING, THE BOARD HAS DECIDED THAT INC OME ARISING FROM TRANSFER OF UNLISTED SHARES WOULD BE CONSIDERED UNDER THE HE AD CAPITAL GAIN, IRRESPECTIVE OF PERIOD OF HOLDING, WITH A VIEW TO A VOID DISPUTES/LITIGATION AND TO MAINTAIN UNIFORM APPROACH. 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED THAT IN LIGHT OF THE AFORESAID CIRCULARS, THE CLAIM OF ASSESSEE SHOULD H AVE BEEN ACCEPTED BY THE REVENUE AUTHORITIES AS THE ASSESSEE HAS BEEN SH OWING IT IN THE BALANCE SHEET AS ITS INVESTMENT IN SHARES. 6. THE LD. DR, BESIDES PLACING RELIANCE UPON THE OR DER OF CIT(APPEALS), HAS CONTENDED THAT FOR MAKING THE INVESTMENT, THE A SSESSEE HAS BORROWED A SUBSTANTIAL AMOUNT ON WHICH INTEREST WAS PAID. T HEREFORE, THE LOWER AUTHORITIES WERE RIGHT IN HOLDING THAT TRANSACTION IN SHARES ARE IN FACT BUSINESS TRANSACTION IN WHICH THE ASSESSEE HAS EARN ED THE PROFIT. 7. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSEE HA S SHOWN THE INVESTMENT IN SHARES AS PART OF CAPITAL INVESTMENTS. FROM THE STATEMENT OF CAPITAL GAINS FOR THE PERIOD 1.4.07 TO 31.3.08, IT IS NOTIC ED THAT THE SHARES OF KARNATAKA BANK AND KARUR VYSYA BANK LTD. WAS MORE T HAN TWO YEARS AND THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAINS O N THE INCOME EARNED ITA NO.605/BANG/2014 PAGE 6 OF 10 ON SALE OF THESE SHARES. SO FAR AS THE SHARES OF J AGATHI PUBLICATIONS ARE CONCERNED, THEY WERE ACQUIRED DURING THE YEAR AND W ERE ALSO SOLD WITHIN A SHORT SPAN AND THE ASSESSEE HAS EARNED THE INCOME O N SALE OF THESE SHARES ALSO. IN ORDER TO RESOLVE THE CONTROVERSY O N THIS ISSUE, THE BOARD HAS ISSUED CIRCULAR NO.6 OF 2016 DATED 29.2.2016 TH ROUGH WHICH IT HAS BEEN CLARIFIED THAT LISTED SHARES AND SECURITIES HE LD FOR A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF IT S TRANSFER, AND IF THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM T HE TRANSFER THEREOF AS A CAPITAL GAIN, THE SAME SHALL NOT BE PUT TO DISPUTE BY THE AO AND THIS STAND SHALL REMAIN APPLICABLE IN THE SUBSEQUENT ASSESSMEN T YEARS OF ASSESSMENT AND TAXPAYER SHALL NOT BE ALLOWED TO ADOPT A DIFFER ENT AND CONTRARY STAND IN SUBSEQUENT YEARS. THE RELEVANT PORTION OF THE CIRC ULAR IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 3. DISPUTES, HOWEVER, CONTINUE TO EXIST ON THE AP PLICATION OF THESE PRINCIPLES TO THE FACTS OF AN INDIVIDUAL CASE SINCE THE TAXPAYERS FIND IT DIFFICULT TO PROVE THE INTENTION IN ACQUIRING SUCH SHARES/SECURITIES. IN THIS BACKGROUND, WHILE RECOGNIZING THAT NO UNIVERSA L PRINCIPAL IN ABSOLUTE TERMS CAN BE LAID DOWN TO DECIDE THE CHARA CTER OF INCOME FROM SALE OF SHARES AND SECURITIES (I.E. WHETHER THE SAM E IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS INCOME), CBDT REALIZING TH AT MAJOR PART OF SHARES/SECURITIES TRANSACTIONS TAKES PLACE IN RESPE CT OF THE LISTED ONES AND WITH A VIEW TO REDUCE LITIGATION AND UNCERTAINT Y IN THE MATTER, IN PARTIAL MODIFICATION TO THE AFORESAID CIRCULARS, FU RTHER INSTRUCTS THAT THE ASSESSING OFFICERS IN HOLDING WHETHER THE SURPLUS G ENERATED FROM SALE OF LISTED SHARES OR OTHER SECURITIES WOULD BE TREAT ED AS CAPITAL GAIN OR BUSINESS INCOME, SHALL TAKE INTO ACCOUNT THE FOLLOW ING- A) WHERE THE ASSESSEE ITSELF, IRRESPECTIVE OF THE PERIOD OF HOLDING THE LISTED SHARES AND SECURITIES, OPTS TO T REAT THEM AS STOCK-IN-TRADE, THE INCOME ARISING FROM TRANSFER OF SUCH SHARES/SECURITIES WOULD BE TREATED AS ITS BUSINESS INCOME, ITA NO.605/BANG/2014 PAGE 7 OF 10 B) IN RESPECT OF LISTED SHARES AND SECURITIES HELD FOR A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER, IF THE ASSESSEE DESIRES TO TREAT THE INCO ME ARISING FROM THE TRANSFER THEREOF AS CAPITAL GAIN, THE SAME SHALL NOT BE PUT TO DISPUTE BY THE ASSESSING OFFICER. HOWEVER , THIS STAND, ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR A SSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQUENT ASSESSM ENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED T O ADOPT A DIFFERENT/CONTRARY STAND IN THIS REGARD IN SUBSEQUE NT YEARS; C) IN ALL OTHER CASES, THE NATURE OF TRANSACTION ( I.E. WHETHER THE SAME IS IN THE NATURE OF CAPITAL GAIN OR BUSINESS I NCOME) SHALL CONTINUE TO BE DECIDED KEEPING IN VIEW THE AF ORESAID CIRCULARS ISSUED BY THE CBDT. 4. IT IS, HOWEVER, CLARIFIED THAT THE ABOVE SHALL NOT APPLY IN RESPECT OF SUCH TRANSACTIONS IN SHARES/SECURITIES WHERE THE GE NUINENESS OF THE TRANSACTION ITSELF IS QUESTIONABLE, SUCH AS BOGUS C LAIMS OF LONG TERM CAPITAL GAIN / SHORT TERM CAPITAL LOSS OR ANY OTHER SHAM TRANSACTION. 5. IT IS REITERATED THAT THE ABOVE PRINCIPLES HAVE BEEN FORMULATED WITH THE SOLE OBJECTIVE OF REDUCING LITIGATION AND MAINT AINING CONSISTENCY IN APPROACH ON THE ISSUE OF TREATMENT OF INCOME DERIVE D FROM TRANSFER OF SHARES AND SECURITIES. ALL THE RELEVANT PROVISIONS OF THE ACT SHALL CONTINUE TO APPLY ON THE TRANSACTIONS INVOLVING TRA NSFER OF SHARES AND SECURITIES. 8. THROUGH CIRCULAR DATED 2.5.2016, IT HAS FURTHER BEEN CLARIFIED THAT CONSISTENCY IN APPROACH IN ASSESSMENTS IS TO BE MAI NTAINED AND THE INCOME ARISING FROM TRANSFER OF LISTED SHARES AND S ECURITIES WHICH ARE HELD FOR MORE THAN 12 MONTHS, WOULD BE TAXED UNDER THE H EAD CAPITAL GAIN, UNLESS THE TAXPAYER ITSELF TREATS THESE AS ITS STOC K-IN-TRADE. IT WAS FURTHER CLARIFIED THROUGH THIS CIRCULAR BY THE BOARD THAT F OR DETERMINING THE TAX TREATMENT OF INCOME ARISING FROM TRANSFER OF UNLIST ED SHARES FOR WHICH NO FORMAL MARKET EXISTS FOR TRADING, THE INCOME ARISIN G FROM SUCH TRANSFER OF ITA NO.605/BANG/2014 PAGE 8 OF 10 UNLISTED SHARES WOULD BE CONSIDERED UNDER THE HEAD CAPITAL GAIN, IRRESPECTIVE OF PERIOD OF HOLDING, WITH A VIEW TO A VOID DISPUTES. THE CIRCULAR DATED 2.5.2016 IS EXTRACTED HEREIN FOR THE SAKE OF REFERENCE:- F.NO.225/12/2016/ITA.II GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE (CBDT) NEW DELHI NORTH BLOCK, NEW DELHI, DATED THE MAY 2, 2016 TO PRINCIPAL CHIEF-COMMISSIONERS OF INCOME-TAX/ PRINCIPAL DIRECTORS GENERAL OF INCOME-TAX SUBJECT: - CONSISTENCY IN TAXABILITY OF INCOME/LOSS ARISING FROM TRANSFER OF UNLISTED SHARES UNDER INCOME-TAX ACT, 1 961-REGD. REGARDING CHARACTERISATION OF INCOME FROM TRANSAC TIONS IN LISTED SHARES AND SECURITIES, CENTRAL BOARD OF DIRE CT TAXES ('CBDT') HAD ISSUED A CLARIFICATORY CIRCULAR NO. 6/2016 DATED 29TH FEBRUARY, 2016, WHEREIN WITH A VIEW TO REDUCE LITIG ATION AND MAINTAIN CONSISTENCY IN APPROACH IN ASSESSMENTS, IT WAS INSTRUCTED THAT INCOME ARISING FROM TRANSFER OF LIS TED SHARES AND SECURITIES, WHICH ARE HELD FOR MORE THAN TWELVE MON THS WOULD BE TAXED UNDER THE HEAD 'CAPITAL GAIN' UNLESS THE TAX- PAYER ITSELF TREATS THESE AS ITS STOCK-IN-TRADE AND TRANSFER THE REOF AS ITS BUSINESS INCOME. IT WAS FURTHER STATED THAT IN OTHE R SITUATIONS, THE ISSUE WAS TO BE DECIDED ON THE BASIS OF EXISTING CI RCULARS ISSUED BY THE CBDT ON THIS SUBJECT. 2. SIMILARLY, FOR DETERMINING THE TAX-TREATMENT O F INCOME ARISING FROM TRANSFER OF UNLISTED SHARES FOR WHICH NO FORMAL MARKET EXISTS FOR TRADING, A NEED HAS BEEN FELT TO HAVE A CONSISTENT VIEW IN ASSESSMENTS PERTAINING TO SUCH INCOME. IT H AS, ACCORDINGLY, BEEN DECIDED THAT THE INCOME ARISING F ROM TRANSFER OF UNLISTED SHARES WOULD BE CONSIDERED UNDER THE HE AD 'CAPITAL GAIN', IRRESPECTIVE OF PERIOD OF HOLDING, WITH A VI EW TO AVOID DISPUTES/LITIGATION AND TO MAINTAIN UNIFORM APPROAC H. ITA NO.605/BANG/2014 PAGE 9 OF 10 3. IT IS, HOWEVER, CLARIFIED THAT THE ABOVE WOULD NOT BE NECESSARILY APPLIED IN THE SITUATIONS WHERE: I. THE GENUINENESS OF TRANSACTIONS IN UNLISTED SHA RES ITSELF IS QUESTIONABLE; OR II. THE TRANSFER OF UNLISTED SHARES IS RELATED TO AN ISSUE PERTAINING TO LIFTING OF CORPORATE VEIL; OR III. THE TRANSFER OF UNLISTED SHARES IS MADE ALONG WITH THE CONTROL AND MANAGEMENT OF UNDERLYING BUSINESS AND THE ASSESSING OFFICER WOULD TAKE APPROPRIATE VI EW IN SUCH SITUATIONS. 4. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL F OR NECESSARY COMPLIANCE. SD/- (ROHIT GARG) DEPUTY SECRETARY TO THE GOVERNMENT OF INDIA 9. WE HAVE ALSO EXAMINED THE ORDER OF TRIBUNAL RELI ED UPON BY THE REVENUE IN THE CASE OF SANJAY KUMAR DHABAK V. DCIT REPORTED AT 44 TAXMAN.COM 464 (MUMBAI TRIB.) . THIS ORDER WAS PASSED ON 14.3.2014, BEFORE THE AFORESAID CIRCULARS ISSUED BY THE CBDT. THEREFORE, THE ORDER OF THE TRIBUNAL WOULD NOT RENDER ANY ASSISTANCE TO THE REVENUE. 10. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER A UTHORITIES IN LIGHT OF RIVAL SUBMISSIONS AND CIRCULARS ISSUED BY THE CBDT, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE HELD THE SHARES AS CAPITAL INVESTMENT IN ITS BOOKS OF ACCOUNT, THE INCOME EARNED THEREFROM ON ITS SALE SHOULD BE TREATED TO BE THE CAPITAL GAIN. THE PERIOD OF HOLDING OF THE S HARES CANNOT BE A DECIDING ITA NO.605/BANG/2014 PAGE 10 OF 10 FACTOR FOR THE NATURE OF RECEIPT ACCRUED ON ITS TRA NSFER/SALE. THEREFORE, WE DO NOT FIND OURSELVES IN AGREEMENT WITH THE ORDER O F THE LD. CIT(APPEALS) AND ACCORDINGLY SET ASIDE HIS ORDER AND DIRECT THE AO TO TREAT THE INCOME EARNED BY THE ASSESSEE ON SALE OF SHARES AS CAPITA L GAIN. 11. ACCORDINGLY, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF MAY, 2016. SD/- SD/- ( ABRAHAM P. GEORGE ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDICIA L MEMBER BANGALORE, DATED, THE 11 TH MAY, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.