TaxTMI 
TaxTMI 
2010 (12) TMI 93
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....arments. It was stated that assessee is only an investor and has not borrowed any money for investing shares. Further assessee was not very much experienced in the share line. Therefore, assessee was also taking services of portfolio management service provider. Most of the investments were had for more than one year and assessee had earned dividend income also. The Assessing Officer did not find force in the submissions and observed that assessee had entered into total 127 purchase transactions and 83 sale transactions which is a very high frequency. No investor indulged in such high frequency of transactions. It was further observed that in the following transactions assessee has not taken even the delivery and the shares was sold immediately. Sl No Name of company No. of shares/ units Purchas e date Purchase value Saledate Salevalue Speculative gain/loss on share trading No. of days 1 TCS Ltd. 10000 17/1/05 13012300.00 17/1/05 12897138.48 -115161.52 0 2 ACC 30000 27/1/05 10354800.00 27/1/05 10357459.00 2659.00 0 23367100.00 23....
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.... 68877234.44 -202063.05 2.3. It was also noted that in almost 88% sales of shares, the same were purchased during the year only. This high ratio of sales within a year indicates that assessee was only a trader in the shares. It was also observed that capital account of the assessee as on 31-3- 2004 shows that the assessee has shares worth Rs.59,98,0717/- and cash at bank Rs.30,00,000/-. Out of the above share holdings the assessee had sold shares worth Rs.2,45,48,256/- for Rs.4,02,20,902. The sale proceeds so received can be deemed to be utilised to buy the shares at cost of Rs.80,23,25,869/- which he continues to hold as on31-3-2005. That leaves the initial cash available of Rs.30,00,000 for trading in share. The assessee utilised this amount by way of turning over and circulating in such a pattern to make total purchases of Rs.23,33,93,616/- in the year and to make sale of Rs.296532998 of shares purchased during the year. This is almost 85 times the capital available. This shows that assessee was frequently turning over his capital and circulating stock-in-trade to maximise the turnover and profit. In this back ground, Assessing Officer after discussing....
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....0 shares may consist of many smaller lots. Then he referred to the Order of the Tribunal in the case of Mr. Vineet M. Shah vs. Addl. CIT ITA. No. 2731/Mum/2009 (copy of which is placed at pages 126 to 136 of paper book) which the case of the assessee's father wherein under similar circumstances, the transactions were held to be in the nature of investment. Similarly in the case of assessee's sister MS. Karishma Shah vs. Addl. CIT ITA. No. 2735/Mum/2009 (copy of which is placed at pages 136a to 136-v of the paper book) wherein again the transactions were held to be investment in nature. Then he referred to pages 157 to 159 of the book which is the chart showing comparison of assessee's case with that of his father and sister and he pointed out how the facts are almost similar. He also relied on the decision of Mumbai bench of Tribunal in the case of Gopal Purohit vs. JCIT 29 SOT 117 wherein it was held that such share transactions will not be held to be business transactions when in the earlier years same were accepted as investment transactions on the principle of consistency. 4. On the other hand, learned DR strongly supported the Orders of the Assessing Officer and learned CIT....
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.... the nuances of share trading. She also did not borrow any monies for the purpose of acquiring the shares and this fact is not disputed on behalf of the Revenue. The shares have been acquired out of the surplus funds left with the assessee. She has disclosed the shares in the Balance Sheet as shares only and not as stock-in-trade. This fact has also been recognized by the Departmental authorities. In paragraph 15 of his order the CIT(A) has observed that the assessee has considered all the purchase of shares only as investments and that they were classified as such in the Balance Sheet. He has also gone on to observe that the assessee had two portfolios, a trade portfolio and an investment portfolio. From the Balance Sheet as on 31.03.2005 it is difficult to find any shares held in the trade portfolio and to this extent the CIT(A) appears to be wrong - i.e., in saying that the assessee had two portfolios. According to the Balance Sheet as on 31.03.2005 the shares costing Rs.12,59,85,603/- were shown as shares and the Balance Sheet also contained the list of the shares of the 26 companies held by the assessee. The Balance Sheet also disclosed Rs.3,79,80,707/- as "other investments" ....
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....ch the broker acquired the shares in the Stock Exchange at different rates. Ultimately the broker had acquired 25000 shares of the company on behalf of the assessee for a total price of Rs.26,80,890/-. Thus it is actually a single transaction for acquiring 25000 shares in a company and not several transactions of acquiring the same company's shares on a single day as assumed by the AO. The assessee has also explained in similar fashion the details of the short term capital gains furnished in pages 17 to 19 of the Paper Book, which has been explained along with the details contained at page 30 of the Paper Book. These details show that the assessee sold 30 scrips during the year, which gave rise to the short term capital gains of Rs.2,25,47,992/-. The sales on the same day but in different lots of the shares of the same company cannot be treated, in our opinion, as separate transactions of sale in order to judge the frequency of the sales. We have already referred to the argument of the learned representative for the assessee that when the shares of Automo Cor were purchased on 25.11.2004 in three lots, they have to be treated as a single purchase transaction and similarly when the ....