TaxTMI 
TaxTMI 
2009 (7) TMI 901
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....h the appeals is against the treatment of profit on sale of shares treated by the assessee as capital gain but assessed by the Assessing Officer as business income. 3. In the case of Shri Rohit Anand (Individual), the assessee declared income from business, income from speculation business, short-term and long-term capital gain. The Assessing Officer noted that the assessee is engaged in the business of trading in gold and gold ornaments and also in investment in shares and mutual funds. The Assessing Officer held that the transaction in shares will amount to business of dealing in shares and hence be taxed accordingly. For this purpose, he referred to the following:- (1)He observed that income from business of jewellery is only Rs. 2....
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.... closing investment as of 31st March of respective year had also been appended as annexure in the respective ITR. 2. The investments are in the nature of independent activity. 3. The investments have always been made with a view towards capital appreciation and earning dividend income from them. During the course of the year certain investments may be bought and sold with a view to enhancing long-term appreciation prospects. Dividend earned in current and earlier years is as under:- F.Y. 2003-04 Rs. 87,45,311 F.Y. 2004-05 Rs. 17,55,463 F.Y. 2005-06 Rs. 31,22,958 4. The scale of activity is not substantial. We also submit that the magnitude of transactions does not change the nature of....
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....ock exchanges in the country like National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)." The Assessing Officer held that just by mentioning the closing stock as investment, it cannot alter the nature of business transaction. The volume of transaction and time devoted towards the activity is not as an investment activity. The scale of activity is substantial considering the transaction to the tune of over Rs. 15.95 crores as holding period for shares bought and sold is not much. Therefore, the inference can be drawn that the nature of transaction is in the course of business and not by way of investment. Accordingly, the short-term and long-term capital gain declared by the assessee is to be assessed as business income. 4. The....
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....e Assessing Officer noted that the long-term capital gain earned by the assessee is Rs. 1,89,00,735. Total value of transaction is Rs. 3,20,36,544 in respect of short-term transaction and total volume of the shares purchased and sold is Rs. 5,13,14,009. These transactions are substantial and hence to be treated as business transactions and not giving rise to capital gain. 6. The learned CIT(A) apart from the facts as noted in the case of individual, also noted that short-term capital gain declared by the assessee is Rs. 2,35,434 and long-term capital gain is Rs. 1,89,00,735. Considering the fact that the shares are held as investment and not out of borrowed funds and being on the same line as in the case of individual, the amount is to b....
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....t is to be noted that the Income-tax Act itself has provided that when the shares are held for a period of one year or more will be treated as long-term capital asset contrary to other assets where the holding period to treat such asset as long-term is more than 36 months. Thus even after holding the shares for more than 12 months and showing such intention from the conduct, the Assessing Officer cannot replace his opinion for that of the assessee in holding that the shares are held as stock-in-trade and profit from which is to be assessed as business income. In all such cases the intention is manifested by the assessee himself by his conduct and other relevant factors as considered by the learned CIT(A). It is also seen that the shares wer....