TaxTMI 
TaxTMI 
2011 (2) TMI 1381
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....f shares be treated as Short Term Capital Gain instead of business income, as held by the assessing officer without considering the fact that magnitude and frequency of purchase and sale of shares, period of their holding and motive to earn profit instead of dividend, clearly suggest that activity of purchase and sale of shares is certainly a business activity carried out by the assessee." 3. The only issue for consideration relates to deleting the addition by holding that income from sale and purchase of shares be treated as short term capital gain instead of business income. The facts of the case stated in brief are that during the course of assessment proceedings the assessing officer found that the assessee had declared short term ca....
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....e facts it was submitted that the assessee was not trading in the shares frequently and the average period of holding was 2-3 months. It was also submitted that the assessee was holding the shares as investments since inception and there was no change in the accounting system. He placed reliance on several decisions to support his contentions that the profits on sale of shares was assessable as income under the head 'capital gains'. However, the assessing officer was of the view that CBDT Circular No. 4 of 2007 dated 15/06/2007, which laid down certain criteria for examining the issue relating to share holding, was applicable to the facts of the assessee's case. The CBDT Circular clarified under what circumstances the shares held by the ass....
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.... IDBI The purchases of these shares were made in FY 2005-06 and were sold in the current year. Therefore, the bulk of the profit on 20,000 shares of IDBI was in respect of shares which were held for over five weeks. Barring this, magnitude of shares sold and profit/loss thereupon was relatively much smaller. It was also submitted that all transactions were subject to STT. Since the frequency of shares was very low, the profit earned on sale of shares was assessable as short term capital gains. The ld. CIT (Appeals) examined the contention of the assessee in the light evidences placed on record. The ld. CIT (Appeals) noted that the assessee - HUF furnished the details of purchase and sale of shares. During the year only 12 strips were bought....
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....or forms part of the stock-in-trade is a matter, which is within the knowledge of the assessee, who holds the shares and should in normal circumstances, be in a position to produce the evidence from the records. The ld. CIT (Appeals) further noted that the assessee had brought out the relevant evidences by giving details of specific transactions, state of affairs of such transactions for the assessee for over a reasonable time of eight years. In addition it was also brought on record that no establishment was run by the assessee - HUF of the nature and extent that is expected from business entity engaged in regular sale / purchase of shares as a part of business activities. Since the AO had not able to bring any cogent evidence or adverse f....
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....t whereas shares of Prakash Industries were sold partially. Therefore, investments in three strips continue to be carried forward. The assessee made investment in the shares of Jindal Stainless Steel, Uttam Steel and Videocon during the year. It was further submitted that the intention of the assessee was always to invest and not to earn quick profits. It was also submitted that the assessee had purchased certain shares and sold them on the same day. The shares were sold as later on the assessee came to know that decision to invest in those shares was not good and, therefore, the same were sold out. Merely because those shares were not credited to DEMAT account, it would not mean that right has not arisen in the shares on the date of purcha....
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....e transactions defined under section 43(5) of the Act. Therefore, the net profit arising on sale of shares purchased and sold on the same day would be in the nature of speculative profit. From the details given in respect of purchase and sale on the same day, we find that such transactions have taken once in a month. In other words, the assessee had purchased and sold shares of Andhra Sugars on 20th November, 2006. Another 2576 shares were purchased and sold on 12th December, 2006. Likewise, shares of IDBI were purchased and sold on 11th January, 2007. 6351 shares of Jindal Steels were purchased and sold on 23rd May, 2006. The assessee also purchased and sold 1,000 shares of Jindal Stainless Steels on 14/12/2006. The transactions of purchas....