TaxTMI 
TaxTMI 
TaxTMI 
2013 (10) TMI 768
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....cer accepted assessee's claim of exemption u/s 10(38) of the Act in respect of long term capital gain. However, so far as claim of short term capital gain is concerned the Assessing Officer after calling for and examining the details of scrips held, date of purchase and sale, rate at which bought and sold found that frequency of buying and selling of shares by the assessee is very high and the period of holding is very less. The Assessing Officer further noticed that high volume of turnover is on account of frequency of transactions and because of huge amount of investments. The Assessing Officer came to the conclusion from the trading pattern, the intention of the assessee while buying the shares is to hold them for a short period and to derive income by way of profit on sale of shares and not to earn the dividends. The Assessing Officer held that frequent buying and selling of shares for a very short span of time and marginal profit, the entire activity takes the character of trade. The Assessing Officer referring to circular No.4/2007 dated 15-6-2007 observed that for claiming benefit u/s 111 A of the Act the issue that has to be determined is whether the short term capital asse....
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....ration. The learned Departmental Representative submitted that some of the shares were sold on the same day. The learned Departmental Representative submitted that holding shares for short period shows that assessee was not holding them as investment for earning dividend but earning profit as a trader. The learned Departmental Representative submitted that non maintenance of books of accounts does not mean that the assessee is not in to the business of shares. The learned Departmental Representative submitted that income from sale of shares forms a substantial part of assessees income and the same trend is for other assessment years also. The learned Departmental Representative submitted that the assessee also indulged in speculative business. The learned Departmental Representative submitted that from the order of the CIT (A) it is clear that the assessee was following the first in first out method which is followed by persons engaged in business of shares. The learned Departmental Representative also relied upon the following decisions:- i) PVS Raju & Another V/s. Additional. CIT (340 ITR 75) (AP) ii) Dalhouse Investment Trust Co. Ltd. V/s. CIT(68 ITR 486) (SC) iii) New Jehang....
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....s. The learned AR relying upon other decisions of High Court and different benches of Income-tax Appellate Tribunal submitted that frequency and volume of transaction cannot be only determinative factor to hold that sale of shares are in the nature of business. The learned AR distinguishing the decision of Hon'ble AP High Court in the case of PVS Raju V/s. Additional. CIT (340 ITR 75) submitted that it has no precedent value or binding effect as no ratio has been formulated. The learned AR submitted, for the same reason also, decision of Income-tax Appellate Tribunal, Hyderabad Bench in case of Spectra Shares V/s. DCIT (142 TTJ 483) will also not apply. The learned AR summed up his submissions by stating that the assessee had clearly demonstrated that he was only an investor and not a trader in shares as he has shown investment in shares in the beginning and closing of the year as investments only and not as a stock in trade and not claimed rebate u/s 88E of the Act. The assessee has not employed any borrowed funds in purchase of shares. The assessee has not indulged in intra day trading and also took delivery of shares purchased. The holding period of the shares by the assessee wa....
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....upon by the assessee before us) and also different High Courts laid down certain tests/guidelines which are as follows:- (a) The frequency of buying and selling of shares by the appellants were high; (b) The period of holding was less; (c) The quantum of turnover was on account of frequency of transactions, and not because of huge investment; (d) The intention of the assessee to make quick profits on a huge turnover; (e) No. of scrips shares held for fewer days; (f) Whether engaged in dealing in the same scrips frequently; (g) Intention of the assessee in buying shares is not to derive income by way of dividend on such shares, but to earn profits on the sale of the shares; (h) Whether the assessees had indulged in multiple transactions of large quantities with high periodicity. These periodic transactions selecting the time of entry and exit in each scrip, called for regular direction and management which would indicate that it was in the nature of trade; (i) Repeated transactions, coupled with the subsequent conduct of the assessee to re-enter the same scrip or some other scrip, in order to take advantage of market fluctuations lent the flavour of trade to such transactio....