Income from Sale of Shares Classified as Business Income Over Capital Gain

The Tribunal upheld the lower authorities' decision to treat income from the sale of shares as business income rather than short term capital gain. The assessee's quick turnover of shares and lack of intention to hold for appreciation indicated a profit motive, supporting the classification as business income. The Tribunal rejected the plea for consistency based on the assessee's varying treatment of gains in prior years and distinguished the case from a previous Bombay High Court judgment. The decision was grounded in the specific facts and transactions of the case, emphasizing the profit-driven nature of the share dealings.

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Issues:
1. Whether income from Sale of Shares should be treated as Business income or Short Term Capital GainRs.
2. Whether the decision of the Bombay High Court in the case of CIT v/s Gopal Purohit should be followedRs.

Analysis:
1. The assessee claimed short term capital gain on sale and purchase of shares along with speculation income from trading shares. The Assessing Officer (AO) considered the assessee engaged in trading activity with a business motive, treating short term capital gain as business income. The CIT(A) upheld this decision. The assessee argued for consistency, citing past treatment of gains as capital gains. The assessee also highlighted the possibility of maintaining separate portfolios for investment and trading. Various judgments were referenced to support the argument. However, the AO and the D.R. contended that each case should be decided based on its specific facts. The D.R. pointed out the lack of consistency in the assessee's treatment of gains in previous years. Ultimately, the Tribunal found that most transactions were short term, with quick turnovers indicating a profit motive, not investment. The rule of consistency was held against the assessee due to changing treatment of gains in prior years. The Tribunal upheld the lower authorities' decision, dismissing the appeal.

2. The Tribunal noted that the assessee's quick turnover of shares, selling within a week in most cases, demonstrated a profit-driven motive rather than an investment intent. The Tribunal emphasized the lack of intention to hold shares for appreciation, supporting the lower authorities' decision to treat gains as business income. The Tribunal rejected the plea for consistency based on the assessee's shifting treatment of gains in previous years, affirming the business income classification. The judgment of the Bombay High Court in the case of CIT v/s Gopal Purohit was not followed, as the Tribunal found the facts of the present case distinct. The Tribunal's decision was based on the specific facts and transactions of the assessee, concluding that the income from the sale of shares should indeed be treated as business income rather than short term capital gain.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the Tribunal's decision regarding the treatment of income from the sale of shares.

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