2013 (4) TMI 318

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....of CIT(A) reversing the action of AO in treating profit arising out of the sale of shares as business income as against disclosed by the assessee as short term capital gain. For this, revenue has raised following ground: "Ld. CIT(A) is erred not to consider that in some cases shares were sold on the date of purchase itself and in some cases shares were sold in 2/3 days from the date of purchase which suggest that the intension of the assessee is to make trading of shares. Loan was taken for the purchase of share. Further assessee showing in these books of accounts opening and closing stock of shares which indicates the motive of making profit for trading of shares." 3. Brief facts leading to the above issue are that during the relevant as....

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....l gain. vii) The principles laid down in the decision of the authority of advance ruling in 228 ITR 641 does not suggest the transaction to be the adventure in the nature of trade." The AO was not satisfied with the above reply treated the sale of shares as business income instead of short term capital gain. Aggrieved, assessee preferred appeal before CIT(A). CIT(A) considering the reply of the assessee as well as the reasons put forward by AO in the assessment order recorded his observation and deleted the addition as under: "4.3. On a careful examination of the reasons put forward by the AO as above, perusing the materials on record and submissions made by the Counsel, my observations are as follows: a) Twenty eight sale transactions in....

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....vidend, is not correct. During the year under consideration, the assessee did earn dividend of Rs. 1,46,995 as also long term capital gain of Rs. 18,18,457. d) The assessee in his submíssion has elaborated that the case laws cited by the A.O. are point to point not applicable to the case of the assessee. e) In brief, the Appellant has submitted that after accepting Long Term Capital gains as such, the motive to make investments in short term shares has been wrongly presumed by the A.O. Appellant has submitted that the purpose of investment in shares is same whether it is long term or for short term at a different rate of taxation. Bifurcation is made only because there is different rate of taxation under Income tax Act. The A.O. ha....

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....n shares is not shown as current assets in its books and true to the accounting principles just like an investor who would make out profit or loss only at the time of actual sale, the appellant was showing the gains/loss accordingly. f) Further during the course of assessment the assessee had filed a reply dated 4.12.2009 wherein he had referred to the principles enunciated by the Authority for Advance ruling 228 ITR 641 which have not been refuted by the A.O. g) In the guidelines of Circular No. 4/2007 of CBDT, it is mentioned that no single principle would be decisive and the total effect of all the principles should be considered. Therefore, considering all the factors as mentioned above, the income of Rs. 42,33,960 is treated as short....