The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the share held as an investment can be allowed as a long-term capital gain.
Shri Dipakbhai Harishchandra Shah, the assessee challenged the order passed by the Commissioner of Income Tax(Appeals), Gandhinagar (CIT(A)) under section 250(6) of the Income Tax Act, 1961.
The AO noted that the assessee has shown long-term capital gain on the sale of shares amounting to Rs.1,32,859/-. He further noted that the assessee had been reflecting share transactions both as business and as a long-term capital gain.
The AO brought long-term capital returned by the assessee to tax as business income of the assessee. Before the CIT(A) the assessee contended that the long-term capital gain was claimed by the assessee on shares held as investment acquired by the assessee before 1.4.1981.
It was contended that trading in shares was commenced during the relevant year only, and he stated that the assessee had reflected share investment in his balance sheet also. The CIT(A) rejected the contentions of the assessee stating that the assessee had not filed any bifurcation of shares held as stock-in-trade and as an investment.
A Coram comprising of Smt Annapurna Gupta, Accountant Member observed that the basic point for the AO for rejecting the assessee’s claim of long-term capital gain being that the assessee could not have held shares both as investment and stock-in-trade was dismissed by the CIT(A).
The Tribunal found that the assessee repeatedly asserted to the authorities below that it had treated shares held before 1.4.1981 as investment and reflected in its balance sheet also. The ITAT set aside the order of CIT(A) rejecting the assessee’s claim of long-term capital gain amounting to Rs.1,32,834/- and directed the AO to allow the said claim to the assessee.
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