2012 (11) TMI 1161 - AT - Income Tax

Tribunal confirms short-term capital gains treatment for shares sale.

ACIT 18 (1), Mumbai Versus Jaya Talakshi Chheda, Mumbai

The Tribunal upheld the CIT(A)'s decision to treat the income from sale and purchase of shares as short term capital gains, dismissing the appeal filed by ... - Issues involved: Determination of nature of income from sale and purchase of shares - Whether income should be treated as short term capital gain or business income.Assessment Proceedings:- Assessing Officer noticed STCG claim of Rs. 2,78,77,456 under section 111A.- Assessee asked to furnish details of STCG.- Assessing Officer considered frequency of share payments and short holding period.- Assessee asked to justify why STCG should not be considered as business income.- Assessing Officer concluded transactions were in the nature of trade.- CIT(A) found assessee engaged in share transactions for only 69 days in a year.- CIT(A) held assessee as investor, not trader, directing STCG assessment.Arguments:- Revenue supported Assessing Officer's view based on ITAT Jaipur Bench decision.- Counsel for assessee cited jurisdictional High Court decision distinguishing investment and business transactions.Judgment:- Tribunal considered factual situation of majority shares held for long resulting in STCG.- CIT(A) correctly noted limited share transactions by assessee.- Tribunal agreed with CIT(A) that assessee is investor, not trader.- CIT(A)'s direction to assess income as STCG upheld, appeal by Revenue dismissed.Conclusion: The Tribunal upheld the CIT(A)'s decision to treat the income from sale and purchase of shares as short term capital gains, dismissing the appeal filed by the Revenue.