TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 468
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.... appeal, but essentially in substance and in effect, the issue relates to assessment of a sum of Rs. 26,63,382 as income from business as against short-term/long-term capital gains as declared by the assessee. The facts, in brief, are that the assessee, an individual, filed his return of income for the assessment year under appeal showing long-term capital gain of Rs. 1,25,336 after claiming exemption under section 10(38) of the Act at Rs. 2,62,630 and short-term capital gain at Rs. 24,00,367 on account sale of shares/securities. During the course of assessment proceedings, the Assessing Officer called for relevant details. The Assessing Officer observed that the assessee had transacted in shares through following share brokers: (i) Prabh....
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....arity, frequency, volume and continuity is very high; (ii) The assessee purchased shares and its dominant intention was to earn profit within minimum time; (iii) The intention of holding the shares for longer period to earn dividend is missing unless the assessee had taken recourse to the benefit of section 94(7) of the Act; (iv) Whether two separate accounts and the entries are made in the books of account, it was found that no separate accounts distinguishing the investment and stock were maintained; (v) The assessee was riding very high in the book period and wanted to make quick bucks. On the basis of the above conclusions, the Assessing Officer held that the transactions in shares whether short-term or long....
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....e-tax (Appeals) observed that if the totality of facts and circumstances in the assessee's case was looked at, it would be absolutely clear that the assessee was engaged in purchase and sale of shares in an organized and systematic manner and such an activity on the part of the assessee was in the nature of trading transaction and constituted business as inclusively defined in sub-section (13) of section 2 of the Act. Further according to the Commissioner of Income-tax (Appeals), the facts in the instant case, inter alia, including the frequency of purchase and sale of shares, utilization of sale proceeds in acquiring further shares, leads to the irresistible conclusion that the assessee was engaged in purchase and sale of shares with a....
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.... permission to carry on business as a dealer in shares/securities, the said activity has to be looked upon as an investment per se. It was also pointed out that the lower authorities have only looked at few of the factors to hold that the assessee is carrying on transactions as a business venture. It was pointed out that the assessee has not raised any borrowed funds so as to undertake an activity as a trader. In this context, it was pointed out that in so far as the activity on futures and options dealt with by the assessee, income thereof has been treated by the assessee himself as business income. Factually, it was pointed out that the assessee is a full time working partner in a partnership firm M/s Bothara Foundry & Machine Works and a....
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....ity and regularity of the transactions. The high frequency of the sales, purchases, and comparative dominance of short-term transactions establish beyond doubt that the activity is carried out in a systematic and organized way which would fall essentially under the category of business activity. The learned Departmental Representative relied on the decisions cited by the Assessing Officer in support of Revenue's stand. He summed up by submitting that the Commissioner of Income-tax (Appeals) was justified in concluding that the transactions carried on by the assessee in acquisition and sale of shares/securities constituted a business. He accordingly defended the orders of the lower authorities. 9. We have carefully considered the rival ....
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.... important factors are to be evaluated and the distinctive factors of a particular case shall be kept in mind while determining the character of the transaction. The assessee has referred to various case laws on the subject which are not being individually dealt with; so, however the sum and substance of the principles laid down is that in each case the total effect of all the relevant facts and circumstances shall determine the character of a transaction. 10. With this background, we may now examine the case set up by the Assessing Officer herein. The overriding factor which prevailed with the Assessing Officer is regularity and the frequency of the transactions which according to him was high. Secondly, the Assessing Officer noted that t....