TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 107
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....8 of the Act for both the assessment years and the assessee vide letter dated 12th Dec., 2006 submitted that the return filed earlier year be treated as return in compliance to notice u/s 148 of the Act. The return for the assessment year 2005-06 was filed within the time limit provided under the Act and the case was selected for scrutiny. Since notices u/s 148 were issued for assessment years 2003-04 and 2004-05, therefore, the notices u/s 143(2) were also issued for these two assessment years also. 2.3 The AO received the report from DDIT (Inv.)-II, Jaipur in which it was stated that the Tax evasion petition (TEP) was received in which it was alleged that the assessee has earned lot of unaccounted money from the business of share dealing in multiple D-MAT account, from the rental income, from interest income etc. The enquiries revealed that the assessee was not filing the return of income and the assessee was not having a PAN. It was also found by the Investigation Wing that the assessee has maintained various D-MAT accounts and trading account in her name and in the name of her family members i.e. Kiran Devi Agarwal (mother-in-law) Shri Vishal Agarwal (son) and Shri Vimal Praka....
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....family. The assessee got bonus shares and also got opportunities for obtaining right issue. The assessee is not maintaining any books of account. The income-tax return has been filed on the basis of the statement received from the broker and other information available in the bank statements. The surplus/loss generated on the short-term delivery or non-delivery transactions during the year under reference are based on the information furnished by the concerned stock broker. Along with letter, the assessee's filed the trading account for delivery based transactions for the help of the AO though it was submitted that the assessee has not done any transaction as a trader. 2.7 The AO issued another show cause notice and in response to which the assessee filed reply vide letter dated 13-12-2007. In the letter, the assessee gave the cost price of share holding as on 31-03-04 at Rs. 46,24,055/-. Whenever long-term holding has been offered for sale, the reason is only for blocking of growth of that company or dead lock in the management. On 11-03-2003, the assessee has given the volume of transaction occurred on that day. On that day, the assessee has dealt with three scripts... 2.8 ....
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.... ld. CIT(A), assessee furnished the additional evidence in the shape statement of shareholding, copies of billing statement of depositors , copies of statement of shareholding with the depositors and other documents to establish his claim of an investor . The assessee also filed the revised computation of her income before the ld. CIT(A) as under:- "Particulars A Y 2003-04 A Y 2004-05 A Y 2005-06 Income as per return filed u/s 148 Income after considering additional evidence Income as per return filed u/s 148 Income after considering Additional Evidence Income as per original return Income after considering Additional Evidence Income from House property 59,500/- 59,500/- 98,000/- 98,000/- 1,26,000/- 1,26,000/- Short Term Capital Gain 64,919/- 37,439/- 2,30,134/- 8,53,491/- 4,50,859/- 1,42,429/- Long Term Capital Gain Nil (16,77,477/-) 1,53,164/- (22,96,747/-) 3,69,072/- (1,29,846/-) Business Income Nil Nil Nil 1,58,885/- Nil 86,638/- Income from other sources -for A.Y. 03-04 includes dividend income 2,05,240/- 2,06,280/- 2,07,106/- 96,756/- 96,756/- 10,850/- 10,850/- Deduction under Chapter VI-A 12,000/- 12,000/- 9,816/- 9,816....
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....25]. - The appellant has earned dividend income of Rs. 2,05,240/- for A Y 2003-04, of Rs. 6,01,725/- for A Y 2004-05 and of Rs. 7,78,754/- for A Y 2005-06 which shows prima facie the object in the investment in shares to derive income by way of dividend and as per CBDT Circular No. 4/2007, dated 15.6.2007 the profit accruing by change in such investment by sale of shares will result into capital gain and not into revenue receipt [CIT (A) page 25]. - For A Y 2003-04 there was transfer from the DP account of one family member to the other family member and admittedly the transactions and resultant gain in accounts of all the family members have been considered and taxed in the hands of assessee therefore, such inter deposit transfer cannot be considered as volume of transactions by the appellant because one cannot transact with himself and it is further noticed that out of total transactions shown in the above billing statement of 1134 transactions such transactions were 926 and therefore, the inference drawn by AO that there were such voluminous transactions is not correct [CIT (A) page 26]. - Appellant is not maintaining any office, staff, telephone and other amenities which ....
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....07 issued by the CBDT. If the purchases and sale of shares is with a motive of earning a profit then such transactions should be considered as a trading transactions. 2.13 We have heard both the parties. When shares are purchased then one has to see intention of the assessee for the purpose of purchasing the shares. If the object of investment in shares of a company is to derive the income by way of dividend then such investment is to be considered as capital. A person can be an investor as well as trader in shares. In the paper book filed before us, we have noticed that assessee has sold the shares during the assessment year 2003-04 out of shares which has been acquired in the years 1988 onwards. We had already mentioned the quantum of dividend which the assessee has earned during all the three years. It is an admitted fact that the assessee has been purchasing shares or getting the shares as bonus shares or right shares. The capital gain will depend upon mode of acquisition. In case share is bonus share then the cost will have to be taken as nil or cost of original shares be spread on original shares and bonus shares. In the case of right shares, the cost is to be taken at which....
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....ion must depend upon the collective effort of all the relevant materials brought on record - Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 (SC). 2.14 We have also considered the case laws on which assessee's ld. AR has placed reliance. We are not having benefit of the D-MAT account or the bills of the brokers. After considering the entire facts, we hold as under:- (i) The shares which have been held for more than a year should be treated as shares held as investment. The profit arising from sale of such shares is to be considered as capital gain. It means that Long term capital gain shown by the assessee is to be accepted. (ii) In respect of purchase and sale of the transactions on the same day, the profit and gains arising from such transactions is to be considered as profit or loss from speculative business. (iii) In case the shares have been held for more than 30 days then the profit and loss arising from sale of such shares is to be considered as short capital gain or loss. However, in case the shares have been purchased or sold within 30 days then the profit or loss arising from such purchase and sales of shares is to be considered as business income. (iv) The sha....