Appellant's Share Sale Profits Treated as Capital Gains

The Tribunal concluded that the appellant's main intention was as an investor, directing the assessment of share sale profits as Capital gains. The order treating Short Term Capital Gains as business income was set aside, and the AO was instructed to assess the profits under the Capital gains category. The appeal by the assessee was allowed on October 16, 2015.

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Issues:
Assessment of Short Term Capital Gains (STCG) from sale of shares as business income.

Analysis:
The appellant challenged the order confirming the AO's decision to treat STCG of Rs. 1.13 crores arising from share sale as business income. The AO observed frequent share trading and short holding periods, concluding it as a trading activity. The appellant argued against this, citing other business activities, lack of borrowed funds for share investment, and past acceptance of capital gains. Reference was made to Gopal Purohit case for consistency. The respondent highlighted high volume and frequency of share transactions, short holding periods, and reliance on specific case laws like Jayashree Pradeep Shah and Karamchand Thapar.

Nature of Transactions:
The Tribunal emphasized determining transaction nature based on various factors, including the assessee's intention at the time of purchase. The balance sheet revealed substantial capital balance and investments, indicating other business activities. Despite short holding periods for some shares, the appellant's claim for Long Term Capital Gains was accepted, suggesting an investor's intent. The Tribunal considered the assessee's limited time spent on share trading, dividend income, and overall conduct to ascertain the investor's role.

Decision:
Considering all factors, the Tribunal concluded that the appellant's main intention was as an investor, warranting assessment of share sale profits as Capital gains. The order of the CIT(A) was set aside, directing the AO to assess the profits under the Capital gains category. The appeal by the assessee was allowed, pronouncing the decision on 16th Oct, 2015.

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