TaxTMI 
TaxTMI 
2010 (1) TMI 962
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....sale of shares, viz., whether it should be treated as long-term capital gain as declared by the assessees or it should be treated as business income as held by the Assessing Officer. Briefly stated the facts of the case are that the Assessing Officer during the assessment proceedings noted that the assessees were dealing in shares having a large number of transactions with heavy volumes into several scrips. In addition to declaring profit/loss from trading in shares, the assessees also declared long-term capital gain of Rs. 20,89,926 and Rs.4,18,358 respectively arising from several purchases and sales of shares with heavy volume. The Assessing Officer after examining the frequency, volume, quantum of trade and the time spent in share tr....
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.... true nature of the transaction which has to be decided on the principles of law. The assessees undoubtedly were dealing in high volume of shares. Some shares were bought and sold in a few days while others were not sold and were held beyond more than one year due to market conditions. The frequency and volume of transactions was large running into hundreds of scrips. He referred to several judgments to point out that while determining the nature of the transactions, the magnitude of purchase and sale, the period of holding and motive behind it are required to be seen. Considering the volume of transactions, the number of scrips dealt in and the fact that the assessees were already engaged in trading of shares, the Commissioner of Income-ta....
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....-tax (Appeals) was not correct in stating that in earlier years, investments had been accepted summarily under section 143(1). He referred to the copy of the assessment order for the assessment year 2001-02 placed at pages 98 to 102 of the paper book in which the investment and the long-term capital gain had been accepted by the after scrutiny under section 143(3). The learned authorised representative further submitted that no borrowed funds had been utilised for making investments. He referred to the profit and loss account placed at page 32 of the paper book in which the entire interest expenditure had been claimed against the income from trading in shares which showed that no borrowed funds were utilised for making investments. It wa....
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....partmental representative on the other hand strongly supported the orders of the authorities below. He emphasised the volume and number of transactions to argue that these have the attributes of trading transactions. He however agreed that both the cases were identical. We have perused the records and considered the rival contentions carefully. The dispute is regarding nature of income from certain share transactions. The assessees are trading in shares and also making investments for which separate accounts have been maintained about which there is no dispute. In the earlier years similar transactions of investment and trading have been undertaken by the assessees have been accepted by the Department and income from capital gain along w....