M/s. Nikhat Fatima, V. The ACIT, Range-9,

ITTA/336/2011

AI Insights

The case involves an appeal by M/s. Nikhat Fatima against the order of the Income Tax Appellate Tribunal, Hyderabad, which rejected the appellant's claim that the income from the sale of shares should be treated as capital gains rather than income. The shares in question were sold in 2003, and the income was assessed for the year 2005-06. The assessing authority, the appellate Commissioner, and the Tribunal all found that the shares were part of a business activity rather than an investment, as evidenced by the appellant's actions of selling shares before receiving dividends and treating these shares as equity in her balance sheet. The Tribunal concluded that the appellant's intention was to engage in the business of buying and selling shares, not to invest in them.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 746362 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 29-09-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Assessment Year 2005-06; Share transaction; Speculative business; Income vs Capital Gain
• Section: 260-A

Judgement Text

"THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA INCOME TAX TRIBUNAL APPEAL NO.336 OF 2011 29TH September, 2011 BETWEEN : M/s. Nikhat Fatima Hyderabad. …Appellant AND The ACIT, Range-9, Hyderabad. …Respondent THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE B.N. RAO NALLA INCOME TAX TRIBUNAL APPEAL NO.336 OF 2011 ORDER : (Per THE HON’BLE SRI JUSTICE GODA RAGHURAM) This is an appeal under section 260-A of the Income Tax Act, 1961 by the unsuccessful assessee aggrieved by the order of the Income Tax Appellate Tribunal, Hyderabad Bench dated 31.01.2011 rejecting I.T.A.No.431/Hyd/2009; an appeal preferred against the order passed by the CIT(A), Vijayawada dated 30-1- 2009 rejecting an appeal against the order of assessment dated 18.12.2007, in respect of the assessment year 2005-06, wherein sale by the assessee of 58,000 shares of Offshore Finvest on 21.3.2003 and 6.5.2003 for a total consideration of Rs.1,04,99,400/- was treated as income instead of capital gain as claimed by the appellant herein. The assessing authority, the appellate Commissioner and the learned Tribunal concurrently found a conclave of circumstances viz., the assessing authority and the appellate Commissioner concurred that the product of the transaction was income having regard to the fact that the shares were sold even before dividend thereon was received; the assessee was in the business of transaction of sale and purchase of shares and these shares were reflected in the balance sheet of the assessee as equity shares and not as capital asset through it was claimed by the appellant herein that the shares were not purchased out of the borrowed funds but from the own funds of the assessee. The learned Tribunal independently assessed the material on record and concluded that the settled principle is that the intention of the assessee has to be ascertained at the time of purchase of shares to discern whether there was investment or trading in shares. On the material on record, the intention of the assessee in purchasing the shares is to do business in purchase and sale of shares and not as investment. The intention of the assessee at the time of purchase of the shares is apparently to deal with the shares and this inference is compelling since she sold the entire shares even without waiting for receipt of dividend thereon; she has also been actually buying and selling shares without taking delivery and involved in speculative business and not with an intention to hold the shares. The Tribunal concurred with the legitimate inference and conclusions recorded by the assessing and appellate authorities and hence no appealable error is discernible. On the aforesaid analysis, this Court finds no substantial error of law warranting consideration of this appeal under Section 260-A of the Income Tax Act, 1961. This appeal is accordingly dismissed at the state of admission. __________________ GODA RAGHURAM, J ________________ B.N.RAO NALLA, J September 29th, 2011. TNB/NDR THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA INCOME TAX TRIBUNAL APPEAL NO.336 OF 2011 O R D E R : (PER THE HON’BLE SRI JUSTICE GODA RAGHURAM) 29th September, 2011 Tnb/ndr "