Sale of listed shares held more than 12 months treated capital gain not business income by Allahabad High Court

Sale of listed shares held more than 12 months treated capital gain not business income by Allahabad High Court in view of CBDT Circular No. 06/2016

ABCAUS Case Law Citation:
ABCAUS 1242 (2017) (05) ITAT

The Grievance:
The appellant Revenue was aggrieved by the order passed by the Income Tax Appellate Tribunal (‘ITAT’) treating the sale of equity shares as Long Term Capital Gain instead would be business income.

Assessment Year : 2005-06
Date/Month of Pronouncement: May, 2017

Observations made by the High Court:
The High Court observed that the order of the Tribunal disclosed that the equity shares were held by the assessee company as a long term investment for a period of more than one year prior to the assessment in question and that the said equity shares were transferable through recognised stock exchange meaning thereby that they were listed shares. 

The High Court further observed that CBDT vide Circular No.6 of 2016 dated 29th February, 2016 referring to the earlier circular No. 4 of 2009 dated 15th June, 2007 has laid down that in order to reduce litigation, the sale of listed shares would be treated as capital gain if they are held by the assessee for a period of more than 12 months immediately preceding the date of these transfers. 

The High Court opined that in view of above circular and the admitted fact that the assessee had held the said equity shares not only for one year but for more than 16 years and that the shares were listed shares, the income derived from their transfer had rightly been treated as Long Term Capital Gain and not as business income. 

Held:
The appeal of the Revenue dismissed as devoid of any merit.