TaxTMI 
TaxTMI 
2015 (2) TMI 370
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....his returns. The AO noticed that professional receipts of the appellant amounted to Rs. 7,49,500/-. This was a mere 1/37th of the gains from transactions in shares. Before the AO, the appellant contended that the said amount of Rs. 1,97,17,460/- constituted capital gain and could not be treated as professional or business income. The assessee's primary submission was that in the concerned assessment year, 57 transactions recording sale of shares of various companies held by him, for periods ranging from 366 days to over 1150 days were involved. Consequently, given the settled position in law on the question of whether the income was a capital account or a business income, it had to be treated as capital gain. The AO however rejected this contention and treated the entire amount as business income, thus applying a higher rate of tax. The assessee's appeal to the CIT(Appeals) succeeded. The CIT(Appeals) pertinently held as follows : "That the appellant made investments in shares in last several years and he was lucky enough amongst millions that he sold his investments when the sensex was at fire. During the ....
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....es 11/25/2003 42363 300 6/12/2006 241799 199436 930 12 Hindustan Cons 9/17/2004 191292 10000 3/5/2007 950000 758708 899 13 Crompton Greaves 10/17/2003 67831 500 4/1/2006 525000 457169 897 14 Jindal Steel 7/29/2004 272000 50 1/11/2007 1059612 787612 896 15 Crompton Greaves 11/25/2003 70604 500 4/1/2006 525000 454396 858 16 Havell's India Ltd. 8/20/2004 142420 1000 11/7/2006 307891 165471 809 17 IVRCL Infra 10/20/2004 94279 1875 11/7/2006 641244 546965 748 18 Jindal Steel 7/28/2004 281365 500 8/8/2006 733068 451703 746 19 Kalataru Power 3/16/2005 96847 200 2/28/2007 219071 122224 714 20 Kalataru Power 3/23/2005 231169 500 3/5/2007 497625 266456 712 21 IVRCL Infra 5/3/2005 87136 1000 3/5/2007 276043 188907 671 22 Simplex Const. 5/2/2005 50481 490 2/27/2007 168007 117526 666 23 IVRCL Infra 5/3/2005 130704 1500 2/26/2007 511282 380578 664 24 ....
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....587 423 50 Simplex Const. 4/7/2005 48201 92 5/19/2006 201305 153104 407 51 Ashapura Mine 3/4/2005 70132 765 4/5/2006 189865 119733 397 52 Titan Industries 9/23/2005 239538 500 10/23/2006 395379 155841 395 53 Ansal Properties 12/6/2005 41303 250 12/7/2006 265717 224414 366 Total 17,401,526 3. Likewise the CIT(Appeals) noted that even though certain loans had been availed from banks and private sources - the materials on record did not suggest any link between the acquisition of shares, which were ultimately sold, and the availing of such credit. The CIT(Appeals) pertinently noticed that "It may be worth noting, however, that all the gains resulted during the year in question were from the holdings of the prior period when the credit line from the bankers were started availing by the appellant. Moreover, the interest paid on loans was neither claimed as an expense against LTCG/STCG nor against professional income." 4. The CIT(Appeals) also concluded that apart from....
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....; "2.1 Ground no. 1 challenges the addition of Rs. 2,77,96,322/- on account of considering STCG and LTCG of Rs. 80,02,356/- and Rs. 1,97,93,968/- as business income. In the astt. order, the A.O. has stated that the appellant is a doctor by profession and has been engaged in the business of buying and selling of shares. The professional receipts of the appellant amount to merely Rs. 7,49,500/-. On inquiry about the reasons of low professional income, the appellant explained that the nature of his specialization does not call for much of OPD practice. The A.O. has observed that the appellant does not have much of a practice and consequently he is engaged in share trading on a regular basis. The A.O. has observed that during the year, the assessee had carried on in a systematic and organized manner, numerous transactions of buying and sale of shares, which constitutes his business activities. The A.O. has referred to the chart containing the capital gain statement submitted by the assessee during assessment proceedings and has observed that this clearly indicates that the assessee carried out a large number of transactions with huge volumes and some of the transactions are completed i....
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....will be served if the matter is remitted to the file of the AO. The AO is directed to consider the issue afresh. Needless to add that the assessee should be granted adequate opportunity of being heard. 9. The appellant's counsel urged that all material was produced in the course of the assessment proceedings. He highlighted the fact that of all the share transactions which yielded substantial income, 69% was on account of sale of bonus shares and split shares. Counsel highlighted the CIT (Appeals)'s orders to show that the shares in question were held for a considerable long period ranging from about a year to 1150 days. In fact, it was submitted that the CIT (Appeals) took note of the fact that 11% of the shares were held for more than 36 months and 74% of the shares were held for more than 18 months. Furthermore, given that there was no linkage between the borrowings and the amounts used for acquisition of shares, the confusion in the ITAT's findings stemmed from its mis-appreciation of the facts. 10. Learned counsel for the revenue urged that the AO had also taken note of the previous year's assessments, which had, in turn, noticed that amounts towards capital gains had be....