AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (5) TMI 528
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....al gains. (b) The Appellant prays for the leave to add, amend, alter, delete or modify any of the above grounds. Revenues's Grounds: "1. (i) On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the assessee is both an investor as well as trader in shares and securities. (ii) The ld. CIT(A) has further erred in directing the Assessing Officer to treat the surplus/loss on sale of shares held for less than 30 days in respect of secondary market purchase and sales as business income/loss and to treat the surplus/loss on sale of shares held for more than 30 days as capital gains loss. (iii) The ld. CIT(A) has further erred in directing the Assessing Officer to treat the entire long term capital gains as long term capital gains on sale of shares and give exemption under section 10(38)." 2. The assessee is an HUF. For assessment year 2006-07 it filed the return of income declaring income of Rs. 99,83,834. On perusal of the details the Assessing Officer noticed that the assessee has earned STCG of Rs. 99,18,863 and LTCG of Rs. 3,09,14,236. According to the Assessing Officer on perusal of the capital gain of the assessee fo....
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....ment order and have carefully considered the finding and the conclusion of the Assessing Officer. I have also considered the submissions of the appellant. I have considered the facts of the case. I am of the considered opinion that both the Assessing Officer and the appellant have taken extreme views. While the Assessing Officer has treated the appellant as trader and has treated all the transactions (Short term as well as Long Term) of the appellant as Business income, the appellant has claimed to be an investor and has treated all his transactions as investment transactions and thereby offered gain on sale of shares as Capital Gains. In my considered opinion neither seems to be a correct view, I also find that the Assessing Officer has taken a limited view of the matter by restricting himself to the facts of the year under consideration whereas at times it is necessary to consider the facts of the past and subsequent years also to ascertain the true nature of activities of the appellant. 4.3-1 I have carefully studied the transactions undertaking by the appellant and requested him to give a breakup of transactions of short term capital gains on the basis of period of holding for....
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....m capital gains as long term capital gains on sale of shares and given exemption under section 10(38)." 4. Aggrieved by the finding of the CIT(A) where the holding period of shares was less than 30 days the profit has to be treated as income from business the assessee has field the present appeal before the Tribunal. The revenue has filed the appeal aggrieved by the finding of the CIT(A) that where shares are held for more than 30 days the income on sale of shares has to be considered as STCG and the finding that LTCG declared by the Assessing Officer has to be accepted and exemption under section 10(38) has to be allowed the revenue has filed the appeal before the Tribunal. 5. We have heard the rival submissions. We have considered the rival submission. The issue to be decided is as to whether the STCG on transaction of purchase and sale of shares undertaken by the assessee during the previous year is to be assessed under the head 'Income from business' as claimed by the revenue or income under the head 'Capital gain' as contended by the assessee. Before we deal with the facts of the case of the assessee, we will briefly narrate the principles applicable in deciding the above is....
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....e Cements, SPLIL, TCS and Ultratech. In all there were only 37 transactions which resulted in short term capital gain. The other relevant details are as follows: l Personal Capital Rs. 16,04,60,390 l Investment in shares as at 31-3-2006 Rs. 5,64,28,742 - in Govt., Bond & Units of MF, PPF, LIC Rs. 3,69,32,218 Investment in shares as at 31-3-2005 Rs. 3,67,07,513 - in Govt. Bond & Units of MF, PPF, LIC Rs. 5,00,00,000 ** ** ** (sic) l Selling price of shares sold during the year Rs. 10,39,07,885 - Out of shares purchased in earlier year Rs. 6,03,92,829 - Out of shares purchased in current years Rs. 4,35,15,056 l Cost of shares sold in current year, Purchased in earlier years Rs. 2,58,84,174 l Average holding period of short term Shares sold 121 days. Period of Holding Quantum of STCG per quarter Less than 90 days Rs. 43,83,090 91-180 days Rs. 8,92,580 181-270 days Rs. 10,48,298 271-364 days ....
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.... The purchase and sale of shares was the only activity of the assessee because the kartha of the HUF was in full time employment. (d) The period of holding is not very short and it is reasonable to presume that the purchase was made with an intention to make investment. (e) The scale of activity is not substantial. (f) The transactions were not continuous and regular but were sporadic. (g) Borrowed funds had not been used for purchase of shares. (h) Composition of Long term Capital gain is substantial with a substantially long holding period. (i) The assessee has treated the shares as investments in its books of account. (j) The revenue has disputed the claim of the assessee only in this assessment year. In the past and subsequent assessment years the claim of the assessee has been accepted. (k) Even the holding period of shares which gave rise to STCG was more than 30 days in the majority of the scrips. (l) All transactions were delivery based transactions and the assessee did not indulge in transactions without actual delivery. 9. We are of the view that in the....