Facts:
a) During the course of assessment proceedings it was noted by the AO that the Sachin Tendulkar (assessee) had shown capital gains in its return of income.
b) It was noted by AO that Sachin had engaged the services of Portfolio Managers to carry out the transactions of the sale-purchase of shares for which huge amount of PMS charges of Rs.52 lacs were paid. According to the AO, it was not an ordinary thing for a normal investor.
c) Thus, AO issued show cause notice to the Sachin asking him to explain as to why profits on sale of shares/unit should not be treated as 'business income' as against the 'capital gains' as claimed by the Sachin in the return of income.
d) The AO treated such gains as business income. However, the CIT(A) reversed order of AO. The aggrieved-revenue filed the instant appeal before the Tribunal.
The Tribunal held as under:
1. The 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.
2. 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. - [2017] 77 taxmann.com 305 (Mumbai - Trib.)
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