2014 (8) TMI 238

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.... dated 04/10/2010. 3. In ground no.1, the assessee has challenged the action of the ld. CIT(A) in confirming the treatment given by the AO to the profit arising from sale of shares amounting to Rs. 6,13,016/- as income from business instead of Short Term Capital Gain. 4. The assessee in the present case is a company which is engaged in the business of trading in shares and securities. It also claims to have made investment in shares. The return of income for the year under consideration was filed by it on 18/10/2007 declaring total income at Rs. 3,07,980/-. In the said return, loss arising from trading in shares amounting to Rs. 4,39,436/-was shown by the assessee under the head of profit and gains of business or profession while the prof....

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....tion and dividend income hence the same cannot be termed as income from business. d. During the year under consideration, the assessee company has earned dividend income of Rs. 994626/- which clearly indicate that the investment in shares has been made for earning capital appreciation and to earn dividend and not for trading purposes. e. In the Audited Balance Sheet the bifurcation of shares which has been purchased for trading has been shown as inventories in schedule-6 and shares which has been purposed for investment purposes has been shown as investments in Schedule-5 which clearly indicate the intention of the management. f. It may also be stated that investment in shares has been valued at cost but in case of inventory which has be....

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....table by the AO. He noted from the details of Short Term Capital Gain furnished by the assessee that majority of the shares were sold within short period and the frequency of transactions in shares was also very high. He therefore held that the intention of the assessee was clearly to trade in shares and it was not a case of investment made by the assessee in shares. Accordingly, the profit arising from the purchase and sale of shares declared by the assessee as Short Term Capital Gain was treated by the AO as business income of the assessee and the same was brought to tax under the head "profit and gains of business or profession". On appeal, the ld. CIT(A), upheld the action of the AO on this issue after taking into consideration the volu....

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....tances, which are similar to the year under consideration i.e. A.Y. 2007-08 and this position is not disputed by the ld. DR at the time of hearing before us. In the case of CIT v/s Gopal Purohit [2011] 336 ITR 287 (Bom), it was held by the Hon'ble Bombay High Court, while dealing with the similar issue, that it was open to the assessee to maintain two separate portfolios, one relating to investment in shares and another relating to business of dealing in shares. It was also held that there should be uniformity in treatment given to such transactions in shares and the rule of consistency should be followed when facts and circumstances for different years are identical, particularly in the case of same assessee. In our opinion, the ratio of t....