TaxTMI 
TaxTMI 
2015 (12) TMI 509
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....pose of all the appeals by a consolidated order and thus proceed with the fact for A.Y. 2006-07. 3. The relevant facts as culled out from the material on record are as under. 4. Assessee is an individual stated to be having income from salary, business of share trading, capital gains and other sources. Assessee filed his return of income for AY 2006-07 on 30.12.2006 declaring total income of Rs. 2,48,57,450/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 30.12.2008 and the total income was determined at the Rs. 2,46,96,280/- by inter alia treating the gains earned from sale of shares as "business income" instead of "short term capital gains" as considered by assessee. Aggrieved by the order of AO, Assessee preferred appeal before ld. CIT(A) who vide order dated 24.2.2010 granted partial relief to the assessee. Aggrieved by the order of ld. CIT(A), Assessee and Revenue are now in appeal before us. The grounds raised by the Assessee in ITA No. 847/Ahd/2010 reads as under:- 1. The learned C.I.T. (Appeals) has erred in confirming the income of Rs. 28,52,583/- arising on account of sale of shares as Business Income in....
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....to gains and that were considered by Assessee as STCG, AO noticed that the transactions of purchases were of Rs. 9.30 crore and sales value were of Rs. 10.89 crores and thus considering the volume involved, AO concluded the shares to be in the nature of commodity for the assessee. He also noticed that Assessee had sold the shares within a short period of their acquisition (the list of shares are reproduced at page 15 & 16 of the assessment order), the main source of the assessee was capital gains on purchase/sale of shares. He also noticed that assessee had utilized borrowed funds for making purchase of shares and had also obtained overdraft facilities and the interest cost incurred was added to the cost of shares or debited the interest account and that the Assessee had advanced funds to the persons involved in IPO scam for subscribing to the IPO and then in turn obtained the shares from those persons and were sold by Assessee. A.O was therefore of the view that the intention of holding the shares for a longer period and enjoying its benefit was missing in the case of Assessee. He accordingly concluded that the motive of the assessee was to earn maximum profits and therefore the p....
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....he present case are required to be examined. In the present case, the appellant has derived surplus of Rs. 28,52,583/- in the sales/purchase of shares of the companies, the shares of which were acquired through IPOs by applying for the same through M/s. IL&FS and M/s. J.M. Financial Services Pvt. Ltd. The financing for such IPOs is partly borne by appellant and partly by IL&FS and M/s. J. M. Financial Pvt. Ltd. These entities are also charging fee of such activities. Therefore, the point for determination is whether such a systematic actively of financing, and making applications in the IPO and thereby, getting shares in the IPO, could be termed as business or adventure in the nature of trade. Incidentally, the business, as defined in section 2(13), "includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." The word "adventure" is defined in the shorter oxford dictionary as a pecuniary venture .................. and the word pecuniary venture, in its turn, is defined as "a commercial enterprise in which there is considerable risk of loss as well as chance of gain." 8.4 In the present case, the appellant has partly f....
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....us of Rs. 1,29,68,597/- as short term capital gains as per provisions of Section 111A. The deduction for STT, if already allowed, should be dealt with as per law. 8. Aggrieved by the order of CIT(A), Assessee and Revenue are now before us. 9. Before us, the Ld AR apart from reiterating the submissions made before AO and CIT(A) further submitted that there are only 57 transactions during the year and the average number of transactions in a month are only 5 and Assessee had also earned huge dividend of Rs. 91.66 lacs. He also submitted on perusing the Balance Sheet it can be seen that against the Investment of Rs. 25.20 crores as on 31.3.2006, Assessee's own capital was Rs. 28.99 crore meaning thereby that most of the investments are out of own funds and not borrowed funds. He further submitted that Assessee had treated the shares as "investment" in his balance sheet since past 15 years and in all those years, the treatment as made by the Assessee has been accepted by the Revenue. He therefore submitted that there are no change in the facts as compared to earlier years and without change in material facts, the Revenue cannot take a different stand. He also relied on the decisions ....
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.... find that ld. CIT(A) has noted and which is not disputed by the Assessee is that Rs. 28,52,583/- has been earned by the Assessee on sale of shares of IDFC Ltd. and Yes Bank Ltd. Ld. CIT(A) has noted that the shares were acquired by the Assessee in IPO, ILFS Ltd. and J M Financial Services Pvt. Ltd. had partly financed the acquisition of those shares, the entities who had financed had charged fees and the shares were sold shortly after their acquisition. The activity of Assessee was held by the ld. CIT(A) to be in an organized and systematic activity with an intention to earn profits and the activity to be in the nature of trade and therefore it was considered to be a business activity. Before us, no material has been placed on record by the Assessee to controvert the findings of ld. CIT(A). In view of the aforesaid facts and the reasoning given by ld. CIT(A), we do not find any reason to interfere in his order. As far as the treatment of the surplus of Rs. 1,29,68,597/- which is held to be "STCG" is concerned, we find that ld. CIT(A) has given a finding of fact that the underlying shares have been acquired by Assessee's own funds and no borrowed funds have been used, the Assessee ....