Where assessee's major income constituted of income from sports endorsement and that entire investment in shares was made out of his own funds and investment in shares with Portfolio Managers was a meagre percentage of assessee's total investments, income on sale of shares and mutual funds was to be taxable under head capital gains and not business income
• The Assessing officer had treated gains arising on sale of shares as business income on ground that assessee had engaged the services of Portfolio Managers (PM) for which a huge amount of PMS charges were paid to them. However, it was noted that investment in shares with PM was merely to the extent of 4.8 per cent of assessee's total investments. Further, it was also noted that assessee had always disclosed amounts invested in shares under the head investments. Moreover, in view of CBDT Circular No.6 of 2016 dated 29-2-2016) and Circular No.4 of 2007 dated 15-6-2007, the initial choice of characterization of share portfolio as investment or stock in trade was with assessee and the assessee had exercised its choice and kept the same as part of investments. The Assessing Officer did not have liberty under the law to thrust his opinion upon the assessee, so long as the assessee followed his choice on consistent basis. Thus, income on sale of shares and mutual funds was to be taxable under head capital gains and not business income
Refer:[2017] 77 taxmann.com 305 (Mumbai - Trib.)
• The Assessing officer had treated gains arising on sale of shares as business income on ground that assessee had engaged the services of Portfolio Managers (PM) for which a huge amount of PMS charges were paid to them. However, it was noted that investment in shares with PM was merely to the extent of 4.8 per cent of assessee's total investments. Further, it was also noted that assessee had always disclosed amounts invested in shares under the head investments. Moreover, in view of CBDT Circular No.6 of 2016 dated 29-2-2016) and Circular No.4 of 2007 dated 15-6-2007, the initial choice of characterization of share portfolio as investment or stock in trade was with assessee and the assessee had exercised its choice and kept the same as part of investments. The Assessing Officer did not have liberty under the law to thrust his opinion upon the assessee, so long as the assessee followed his choice on consistent basis. Thus, income on sale of shares and mutual funds was to be taxable under head capital gains and not business income
Refer:[2017] 77 taxmann.com 305 (Mumbai - Trib.)
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