TaxTMI 
TaxTMI 
2015 (9) TMI 284
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....sole substantive ground challenges the CIT(A)'s order affirming the Assessing Officer's action treating its profits derived from share transaction amounting to Rs. 23,95,926/- as business income instead of short term capital gains. The Revenue's grievance on the other hand seeks to treat the remaining share profits of Rs. 8,52,221/- under the head business income in place of long term capital gains, as held in the lower appellate order. 3. A perusal of the case file reveals that they contain a common backdrop of facts. The assesssee-company trades in shares and securities. It declared business income from shares, short term and long term capital gains of Rs. 4,69,827/-, Rs. 23,95,326 & Rs. 8,52,221/-; respectively. The latter head compri....
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....unts, the assesses classified the transactions under the different fail to understand, as to how learned A.O. has judged the intention at the time of purchase and at the time of finalisation of account. Learned A. O. has not clarified as to how and in what manner he has been able to understand and conclude the intention. The facts of the matter is, in the course of assessment proceedings, various details, including copies from the statutory records like Accounts maintained by us has been provided. From the copies of said Accounts, it is absolutely clear that at the time of purchase, shares acquired as Investments has been taken on the same day to investment Account and shares acquired for the purpose of trading business has been taken to Pu....
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....lt in only 5 scripts, which has been held as investment for more than one year and which has been sold during the year and therefore being long term capital asset, income has been correctly computed under the head long-term capital gain. Similarly, for another 5 scripts, which has been held as investment for a period of less than twelve months and hence income has been correctly computed under the head short term capital gain. From the above facts, your honour would appreciate the basis on which conclusion has been drawn, itself from fact and reality. Thus considering the number of transactions, volume of business, assessee's capital & reserves and f/r%ainly intention of the assessee and accounting treatment given in the books of ....
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....previous year. He has left with making general remark only. Considering all above we request your honour to direct the Ld. AO. to pass an order assessing capital gain as returned. " 5.4 I have considered the facts and submission of the Id. A.R carefully. During the appellate proceedings the Ld. A.R was also asked to file a complete summary of long term and short term capital gains with the period of holding such shares. The summary filed by the Id. A.R is as under: Long Term Capital Gain Sr.No Name of the scrip No. of transactio ns Quantity Period of holding (Approx) Sales Price Purchase Price Gain (loss) 1 Nirma Ltd. 2 1300 32mths 4,69,058 3,27,970 1,41,088 2 Zee Telefilms Ltd.....
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....e surplus of Rs. 8,52,221/- on the sale of such shares as Long term capital gains is justified. In view of this, the A.O is directed to exclude the amount of Rs. 8,52,221/- from the business income of the relevant period and tax it as Long term capital gain as per law accordingly. 5.6 So far as the excess of Rs. 23,95,326/- is concerned which has been claimed as short term capital gain, it is seen from the table above that the approximate holding for these shares is from 2 days to 10 months. It is pertinent to note that the appellant had made seven transactions in case of the shares of Gujarat Heavy Chemicals Ltd. in the span of seven to ten months. The frequency of transactions entered into by the appellant in such a short span clearly ....
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....assessee's identical profits in preceding assessment year stand treated as capital gain only. It entered into 10 transactions in relevant previous year. The former head of long term capital gains comprise of shares held from minimum 15 months to holding period as long as 32 months. The same can in no way be taken an instance of a trading activity. More particularly, when such a long term investment covers almost three assessment years. Thus, Revenue's sole substantive ground fails. Its appeal ITA No. 1028/Ahd/2010 is dismissed. 6. Thus leaves us with the issue of short term capital gains vis-àvis business income qua profits of Rs. 23,95,326/- in assessee's appeal. Suffice to say, these transactions relate to five scripts. This gro....