TaxTMI 
TaxTMI 
2014 (1) TMI 1302
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....95,021/- as business income. Without prejudice to this grievance, the assessee has also taken an alternative plea that if the short term capital gain is treated as business income, then the business profit should be arrived at by applying principles for computing business income and valuing the stock of shares at cost or net realizable which is lower. 3. The assessee filed the return of income electronically declaring total income at Rs. 3,41,19,292/-. The return was selected for scrutiny assessment and statutory notices were served upon the assessee. While scrutinizing the return of income, the Assessing Officer observed that the total income of Rs. 3,41,19,292/- consists of short term capital gain on sale of shares amounting to Rs. 3,2....
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.... holding period of the assessee is so less that it cannot be accepted that the assessee is an investor and not a trader. After rejecting the assessee's submission, the AO went on to treat the profit on sale of shares under the head business income. 4. The assessee strongly agitated this matter before the Ld. CIT(A). The assessee reiterated that it has invested in shares and has also classified it as investments in the audited balance sheet. Further no borrowed funds have been utilized by the assessee for investment in shares. It was strongly contended that mere volume and frequency of transaction would not render the share investment activity as trading activity. To further strengthen its views, the assessee submitted that it has receive....
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....erson body corporate etc. and the objects incidental or ancillary to the attainment of the main objects show that the assessee would engage in related activities which are pursuant to the main object of the company. Thus the main object of the company clearly show that it want to carry on financing business other than banking business within the meaning of Banking Regulation Act, 1949. In the light of the Memorandum of Association, we find that in the immediate preceding assessment year and also in the subsequent assessment year, there is not even a single item of income which could be said to be in pursuance of the main object of the company. In all these years, the assessee has shown income only from share transactions. In the immediately....
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.... which was at Nil in the immediate preceding assessment year. Thus the utilization of the borrowed funds could not be properly explained. The only plausible utilization appears towards purchase of shares. The own funds available with the assessee are to the tune of Rs. 8.5 crores whereas the total investment as on 31.3.2007 is to the tune of Rs. 9 crores which in the immediately preceding assessment year was at Rs. 4.41 crores. Thus, the entire borrowed funds have been utilized for the purpose of purchase of shares. 8.3. A perusal of Form No. 3CD attached to the Tax Audit Report exhibited at page-8 of the Paper Book show that the auditors have mentioned under the head Books of Account maintained --- Purchase & sales register, cash and ba....