TaxTMI 
TaxTMI 
2011 (4) TMI 3
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....er noticed that the assessee frequently transacted in purchase and sale of shares which would amount to trading activity. Since assessee has declared short term capital gains in respect of the shares sold within a span of 12 months, Assessing Officer issued a show-cause notice calling upon the assessee to explain as to why income thereon should not be treated as business income arising out of trading in shares. In response thereto, it was explained that the assessee has treated them as investment in shares and merely because assessee made some profit out of bulk turnover on purchase and sale of shares they should not be taken as criterion to arrive at the nature of the transaction. 3. Assessing Officer however rejected the contention of th....
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....A) partly accepted the contention of the assessee. In this regard, he observed that short term profit on sale of shares held for more than 30 days works out to Rs.28,04,407/- whereas profit on sale of shares for less than 30 days works out to merely Rs.8,57,555/- and going by the circumstances only the shares held for less than 30 days should be treated as income from business. In this regard he observed as under : 4.1. "From the analysis of the data it is clear that this is a case of an investor cum trader. The appellant is an investor who also at times tries his hand at trading in shares. It is a well known fact that the person who is a full time investor would be in a position to understand and take advantage of short term opportunities....
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....n 30 days should be treated as 'stock-in-trade'; whereas, the case of the assessee is that even shares sold within a span of 30 days from the date of purchase should be brought to tax under the head 'short term capital gains', since the pre-dominant intention of the assessee was to hold the shares as investment. 7. We have heard the learned Counsel, appearing on behalf of the assessee as well as learned DR in this regard and carefully perused the record. The issue as to whether profit arising out of purchase and sale of shares is assessable to tax under the head 'capital gains' or 'business income' is a vexed question depending on facts and circumstances of each case, based upon the principles set out by various judicial precedents. In the....