TaxTMI 
TaxTMI 
2014 (3) TMI 766
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....en though there is closing stock, it was very nominal when compared to the turnover and further entire amount earned was in the nature of short term gain only and dividend earned was very nominal (of Rs.1,19,948/-). Further, A.O. also noticed that assessee has borrowed funds and was also paying interest. He prepared Tables-I and II in analyzing the share transactions and number of days assessee has held shares and number of transactions undertaken in a day and ultimately concluded that the short term capital gain has to be considered as 'income from business' as the assessee indulged in trading of shares. 3. Assessee made detailed submissions before the CIT(A) and countered all the issues considered by the A.O. The learned CIT(A) extracted the entire submissions in para 4 of the order, including the revised table of transactions furnished by the assessee. On that basis, learned CIT(A) came to the conclusion that assessee is not a trader and held that assessee has only earned short term capital gain. Ultimately, her conclusions on the issue in para 8 are as under : "From the aforesaid discussion, it is concluded that frequent sale purchase of shares in high volumes should not be c....
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....ansacting in many number of shares. Only in three company shares assessee had transacted throughout the year and there were repeated transactions in the case of Bhagyanagar Metals as listed by the A.O. in the Table-I. It was further submitted that assessee has borrowed funds from the other firm as given by the A.O. in penultimate page of the assessment order, which aspect learned CIT(A) rejected vide para 7.3 stating that A.O. has not made out any case with regard to the borrowed funds. It was pointed out that assessee not only borrowed funds from the sister concern viz., M/s. SPM Telecom whose ledger extract was analysed by AO and there is no denial that assessee made huge withdrawals at frequent intervals from that account. There is also no denial that assessee has paid interest which was set off in 'income from other sources' from receipts of interest income and referred to the computation of income. It was further submitted that learned CIT(A) wrongly relied on the statement prepared by the assessee to come to the conclusion that there was no day to day trading. Actually there were purchases and sales on the same day and there were repeated purchases in the same scrips thereby,....
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.... amount of gain has been earned. Similarly, in the case of Surana Telecom also there are frequent transactions. Even though, assessee's contention was that assessee has not involved in day trading which is in the nature of speculation, the issue is whether it is a day trading and frequency of transactions. As noted by the A.O. assessee indulged in purchase on 27.07.2006 of 1655 shares and sold scrips on same day to the extent of 4000. Even though purchases came into Demat account but, already acquired shares earlier were sold on that day. This was considered as a day transaction by the A.O. which in our view refers to the purchase and sale on the same day, even though not aspeculative transaction. Likewise, on 28.07.2006 also assessee has purchased 4825 shares and sold 1334 shares on the same day. On 02.08.2006, assessee purchased 12389 shares and sold 850 shares on the same day. On 03.08.2006 assessee purchased 9846 shares and sold 1446 shares on the same day. On 07.08.2006 the purchase was of 200 shares and sale was of 150 shares. On 08.08.2006 there is purchase of 1772 shares and sale of 29231 shares. Like that, assessee has been purchasing and selling shares on the same day whi....
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....ee has started the transactions and as noticed by the A.O. there was no opening balance of shares. Whatever shares assessee was having in earlier years, continuous to be shown in the balance sheet as such. Therefore, these facts are similar to the facts in the case of Smt. Sadhana Nabera vs. ACIT, Mumbai in ITA.No.2586/Mum/2009 dated 26.03.2010. 17. Purchase of shares during the year and selling them frequently in short period do indicate that the assessee has purchased the shares with a motive to earn profit in short period. An interesting aspect noticed from the details of short term capital gains statement filed in this regard ( page 73) is that the assessee has transacted in one share of Hiran Orgo Chem frequently. One argument which was raised before the CIT(A) explaining daily transactions without delivery was that the assessee by mistake has made some investment and realising that the transactions were not gainful immediately sold for a loss on the same day. This argument is to be considered in the light of the transactions entered by the assessee in Hiran Orgo Chem's case. There are purchases and sales of shares on 06.12.2004 to 21.12.2004 on a daily basis and the maximum ....
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....ut borrowing of funds, small amount of dividend when compared to the gain in sales and also the fact that assessee group companies are involved in share trading. In the light of the facts and circumstances considered above, we are of the view that the conclusion of the Revenue authorities that the income from sale of shares declared by the assessee during the year as short term gain is income from business activity is correct and calls for no interference. 18. Now we will deal with the specific decision relied upon by the learned counsel. i.e. decision of the Mumbai Bench of the ITAT in the case of Gopal Purohit 122 TTJ 97 where in respect of share transactions the ITAT accepted as investment and also on the principle of consistency in the matter of assessment. The Tribunal found that the said assessee has consistently been investing in shares and ratio of sales to investment was very less. In the above referred case there was long term capital gain of Rs.1.12 crores which was claimed exempt and long term capital gain taxable at 10% to the tune of Rs.60 lakhs in addition to profit from trading in shares taxable at 10% and short term capital gain at 10% of Rs.57.31 lakhs. In that c....
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....unt all relevant material, and has not taken into account irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with unless, of course, the conclusions arrived at by the Tribunal are perverse. [CIT vs. Karam Chand Thapar & Bros. (P) Ltd. (1989) 76 CTR (SC) 36 : (1989) 2 SCC 31]. 17. The order of the Tribunal ought not to be microscopically scrutinized only to locate some insignificant errors. When viewed in the light of the several findings recorded by them in coming to the conclusion that the shares were held by the appellants as stock-in-trade and not an investment, the erroneous finding of the Tribunal that the appellants had held all the shares for less than two months pales into insignificance. Even otherwise, it is not even the appellants' case that they had held all the shares for a long duration. It is evident from the order of the Tribunal that the voluminous share transactions were in the ordinary line of the appellants' business; purchase of shares by them was not for the purpose of earning dividend, but with the dominant intention of resale in order to earn profits; the profit made by them is not of mere enhancement ....