TaxTMI 
TaxTMI 
2012 (12) TMI 1043
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.... vide letter dt. 18-10-2010 submitted as under: "1.Assessee held the shares as Investment only and not as Stock-in-trade. He has been investing in shares of various companies since last more than 30 years. 2. In all the earlier Assessment his investment in shares has been treated as Investments only and not as Stock-in-Trade. 3. The assessee had never claimed any expenditure against Short Term Capital Gains as it is not allowed under law, even though he made lots of expenditure on Research & Analysis of shares of companies, contribution to Magazines related to Investments etc. 4. Option is given to the assessee about treatment of shares in the books. 5. Assessee has been showing purchase of shares, as Investment in the past and never shown them as Business asset or Stock-in-trade. 6. In earlier years no contrary view has been taken by the department in his Income Tax Assessments of earlier years in respect of treatment given for purchase of shares. 7. The assessee has been always valuing his shares at cost at the end of the year. 3. Besides above, assessee also placed reliance on the decision of Bombay High Court in the case of CIT Vs. Gopal Purohit in the I....
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....a trader. It is also stated the assessee has not borrowed any money and purchases has been made out of own funds only. The number of 65 transactions of sales involving 50 scripts cannot be said to be high frequency or volume. The assessee has earned substantial dividend of Rs. 8,55,430/- which also shows the intention of the assessee to earn the dividend also. The shares have been shown as investment and they have been valued at. cost only and not on the basis of cost or market value whichever is less. The delivery is taken for all the shares purchased during the year. The assessee has also earned substantial Long Term Capital Gain of Rs. 36,83,915/ - which has been accepted by the AO also, which goes to prove that the basic intention of the assessee is investment in shares and therefore there is no reason to treat the assessee as a trader in shares in respect of only those shares which have been held for less than one year. On the principles of consistency also, it has been pleaded that the appellant should be treated as investor only. In the last, it has been contended that the decision of Sadhana Nabera relied by the AO is distinguishable as in that case most of the transactions....
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.... In case of investor also the ratio of turnover to holding is not very high. A trader would normally rotate the stock or his capital several times in a year to achieve the high turnover with low capital or low investment in stock in trade which is not the case with the appellant. The assessee has been regularly earning Long Term Capital Gain as well as Short Term Capital Gain on sale of shares since past several years and in each of the years the Long Term Capital Gain has been higher than the Short Term Capital Gain which will be evident from the chart given as under:- S.No A.Y Short Term Capital Gain Long term capital gain 1 2003-04 360,901.00 1,847,198.00 2 2004-05 4,379,328.00 4,812,844.00 3 2005-06 5,096,044.00 5,807,565.00 4 2006-07 7,637,325.00 14,545,943.00 5 2007-08 4,985,220.00 13,860,367.00 6 2008-09 2,904,561.00 3,694,619.00 The above chart clearly proves that the assessee has intention of enjoying the appreciation in value of shares and merely that some shares have been sold in less than 1 year, cannot lead to conclusion that he had a different intention in respect of such shares. Th....
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.... Departmental Representative (DR) contended that assessee is a Civil Engineer by qualification and is also a partner in the firm of M/s. Shrushti Construction Company which derived income from investment only for the relevant Financial Year. He submitted that the assessee is maintaining an office and carried out substantial number of share transactions i.e., 91 transactions in 50 scripts of purchase and 65 transactions of sales. Therefore, the assessee has carried out systematic course of activity through-out the year and the period of holding is also low. The Ld. DR submitted that the AO considered the case of ITAT Mumbai Bench of Smt. Sadhana Nabera Vs. ACIT (ITA No. 2485/M/09 dt. 26-03-2010) and also the decision of ITAT Mumbai Bench in the case of Shri V. Nagesh (ITA No. 5410/M/2008) wherein it was held that when the assessee is engaged in share business on full scale basis, the assessee cannot treat profit/loss as Short Term Capital Gain/loss. The Ld. DR submitted that the AO has rightly considered the share profit as 'Income from Business activity' and the order of Ld. CIT(A) be reversed. 7. On the other hand, the Ld. Authorised Representative (AR) supported the order of t....
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....hase of shares and no borrowed fund was used by the assessee. The Ld. DR has also not disputed the fact that the assessee has been showing its holdings of shares in its Books of Accounts in the preceding AYs as well as in the AY under consideration under the head 'Investment'. Further, it is also not disputed that the assessee has valued its shares at "cost" and not valued at "cost of market price which-ever is lower". The Department has also not disputed the fact that in the preceding AYs, the Department has considered the profit on sale of shares AYs under the head 'Capital Gain/Loss'. We observe that the Ld. CIT(A) has stated that out of 55 transactions, only 27 transactions are such where the holding period is less than 30 days and it is 30% of the Short Term Capital Gain that has been earned by the assessee. Therefore, majority of the shares are held by the assessee for a longer period and the majority of Short Term Capital Gain has been earned thereon. Therefore, we agree with Ld. CIT(A) that the fact that some shares have been held for less than 30 days, will not make the assessee, a trader in shares. We observe from the table at Pg. No. 10 of the Order of the Ld. CIT(A), th....