TaxTMI 
TaxTMI 
2014 (5) TMI 229
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....Vimgi Investments Pvt. Ltd to trade in shares on his behalf, which is supported by the brokers notes and confirmed copy of the account of the broker filed by the assessee by letter dated 10.8.2009. Since the broker had traded on behalf of the assessee, practically on day-to-day basis, the Assessing Officer observed that the appellant is engaged in the activity of sale/purchase of share. Therefore, the AO show caused the assessee why the profit of Rs. 65,45,321/- should not be assessed as business income against the Rs. income shown as short term capital gain. By reply dated 13.11.2009 the assessee contended that the income was shown as short term capital gain because of transfer of short term capital asset as per section 111A, and that all the shares were received and transferred through DEMAT account and that STT was paid on all such transaction of sale and purchase of shares. 3. The assessee's contention was not acceptable to the Assessing Officer on the ground that section 111A prescribes the mode of computation of tax liability and had no relevance in deciding the nature of share transactions, i.e. whether they were taken for investment purpose or for business purpose. Th....
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....sessee had turnover of over of Rs. 1 crores indicates nothing but intention of trade. It may be pointed out that the assessee earned only a meager amount of dividend of Rs. 21,952/- in the year under consideration. A trader in a commodity is basically motivated by profit in selling the commodity on each and every rise in value, which is apparent in the instant case. High frequency, high volume and regularity of transactions are therefore the basic features of a trading transaction. An investor on the other hand makes purchases with a view to earning income from the investments. He is not tempted to sell the commodity to earn quick profit on each and every rise in the value and holds the commodity for a longer period so as to have income as well as appreciation in value. The Ld. CIT(A) pointed out that the assessee has not borrowed any funds for carrying the shares transactions. In our opinion, this is not the crucial factor to ascertain as to whether or not the assessee was an investor in shares or trader. Though the number of scrips is less than 25 as pointed out by the Ld. CIT(A) but the period of holding and the ratio of turnover and stock reflects that the assessee had the pred....
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....as not whether the transaction of buying and selling the shares lacks the element of trading, but whether the later stages of the whole operation show that the first step - the purchase of the shares - was not taken as, or in the course of, a trading transaction. The totality of all the facts will have to be borne in mind and the correct legal principles applied to these. If all the relevant factors have been taken into consideration and there has been no misapplication of the principles of law, then the conclusion arrived at by the Tribunal cannot be interfered with because the inference is a question of law, if such an inference was a possible one subject however, that all the relevant factors have been duly weighed and considered by the Tribunal, the inference reached by the Tribunal should not be interfered with." XXXXXX XXXXXX XXXXXX ..... 6. In view of the foregoing, we are of the opinion that the character of a transaction cannot be determined solely on the application of any abstract test or rule and the cumulative factors affecting the transactions have to be seen. Habitual dealing in a particular item is indicative of the assessee's intention of trading. Merely ....
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....s it was based on plausible reasoning. 6. In CIT v. Associated Industrial Development Co.(Ltd.) (1971) 82 ITR 586 (SC), the Supreme Court observed as follows: "3............it was open to the assessee to contend that even on the assumption that it had become a dealer and was no longer an investor in shares the particular holdings which had been cleared and the sales of which had resulted in the profit in question had always been treated by it as an investment. It can hardly be disputed that there was no bar to a dealer investing in shares. But then the matter does hot rest purely on the technical question of onus which undoubtedly is initially on the revenue to prove that a particular item of receipt is taxable. Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge, of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are he....