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of <h1>Shares deemed trading assets due to immediate sale post-purchase. Tribunal rejects investment claim.</h1> <h3>Smt. P. Rajyalakshmi, Hyderabad and Shri P.V.S. Raju, Hyderabad Versus Addl. Commissioner of Incometax, Range-6, Hyderabad</h3> The Tribunal held that the shares in question were not held as investments but for trading purposes. It was observed that the assessees sold shares ... - Issues involved: Classification of income from share transactions.Summary:The appeals were directed against a common order regarding the classification of income from share transactions for the assessment years 2005-06 and 2006-07. The main issue was whether the shares were treated as investments or for trading purposes.Arguments by Assessees:The assessees claimed that certain shares were classified as investments and offered as short-term capital gains under Section 111A of the Income-tax Act. They argued that the intention at the time of purchase, as reflected in separate books of account, showed that certain shares were bought solely for investment purposes. They cited the Finance Minister's speech and maintained that the shares were clearly earmarked as investments.Arguments by Departmental Representative:The Departmental Representative contended that the assessees were traders in shares and attempted to claim the benefit of Section 111A by classifying certain shares as investments after its introduction. They pointed out that some shares were sold even before purchase, indicating a trading mindset rather than investment. The representative argued that the profit on the sale of shares should not be treated as short-term capital gains.Judgment:After considering both sides, the Tribunal found that the shares were not held as investments but for trading purposes. The Tribunal noted that the assessees sold shares shortly after purchase, even before some were bought, indicating a trading activity rather than investment. The intention to sell shares immediately upon purchase was evident, leading to the conclusion that the transactions were in the nature of trade, not investment. The Tribunal upheld the lower authorities' orders, rejecting the assessees' claims. Consequently, all three appeals were dismissed.
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