TaxTMI 
TaxTMI 
2016 (2) TMI 704
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.... Business or Profession instead of Income under the head "Short Term Capital Gains" as per the return of income filed for the year under reference. 1.2 In doing so, the Commissioner of Income Tax (Appeals) erred in the following respects: 1.2.1 In not appreciating the fact that the appellant is an investor holding investment in shares and securities over a period of years as investment in capital assets and has consistently offered to tax profit on sale of shares under the head Capital Gains which is accepted by the department and not a trader in shares holding shares as stock in trade of business. 1.2.2 In not appreciating the fact that major portion of the shares sold during the year were held by the appellant for a period of 3-4 years and the income under the head Long term Capital Gains far exceeds the amount of profits under the head Short term Capital gains and even in the case of shares short term capital gains on sale of shares held for period less than one year, the major portion of gains is attributable to shares held for period exceeding one month and upto twelve months. 2. RESTRICTING THE DEDUCTION IN RESPECT OF SOCIETY MAINTENANCE CH....
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....d hence the assessee requested that the profit on sale of the shares is in the nature of capital gains. The A.O., however, rejected the contentions of the assessee by relying upon the CBDT Circular No. 4/2007 dated 15-6-2007, which reads as under:- "Section 2(14) of the I. T. Act, 1961 - Capital Asset/Trading Asset - Distinction between shares held as stock in trade and shares held as investment- test for such distinction "In this circular guiding principles, which the AO has to follow while deciding the issue whether the transaction entered into by the assessee in shares and securities amounts to trading or are in nature of investment are enumerated. These guiding principles emanate from the various judicial pronouncements and on the basis of the ratio laid down by the Hon'ble Supreme Court in the case of: 1. Commissioner of Income Tax (Central) Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586) 2. CIT Bombay v. Hoick Larsen (160 ITR 67) and of the Authority for Advance Rulings (AAR) in the case of Fidelity Group. The broad principles can be summarized thus:- a. Whether or not there is frequency in the trans....
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....come from house property at Rs. 8,82,000/-. The assessee has shown rent received at Rs. 14,40,000/- and against such rent, the assessee has claimed an amount of Rs. 1,80,000/- on account of society Maintenance & Other Charges and declared the net annual value at Rs. 12,60,000/-. The assessee was asked by the AO to furnish justification in this regard. In reply, the assessee stated that the maintenance & other charges comprised of municipal taxes of Rs. 62,175/- and other society charges of Rs. 1,17,825/-, which was claimed deduction u/s 23 of the Act. The assessee submitted that that the rent was inclusive of the maintenance charges and municipal taxes and the net rent received after deduction of the society charges is more that municipal valuation. The assessee also placed reliance on the decision of the Tribunal, Mumbai in case of Nandita Banerjee v. ITO. The A.O. held that as per the proviso to section 23 of the Act, for the purpose of computation of annual value, the assessee is allowed deduction only for payment of taxes levied by the local authority in respect of the property. The said proviso speaks specifically about taxes levied in respect of the property. It is not for an....
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....he assessee has been purchasing and selling shares and during the relevant previous year, there were in all about numerous numbers of transactions of purchase and sale of shares. The maximum sale of shares was within very short span of purchase. The volume and ratio of purchase/sale of shares was substantially high compared to volume and ratio of other receipts in the hands of the assessee. The assessee entered into transactions of purchase and sale of shares in respect of delivery based transactions and the assessee is claiming that they were investments and profit on sale of such shares gave rise to capital gains only because of delivery based transactions. The assessee during the relevant previous year had entered into transactions of purchase of shares of about 200 companies. The transactions were effected by taking and giving delivery of shares at the time of purchase and sale. Besides such transactions , the assessee had also entered into transactions of purchase and sale of shares where there was no actual delivery. It was observed by the CIT(A) that both the aforesaid transactions were in respect of transaction of purchase and sale of shares where the holding period was les....
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....es and all the shares sold and purchased were of listed companies (j) composition of the dividend income being meager which shows that the assessee has not locked its funds in the share investment. In the light of the above circumstances, it was held by the CIT(A) vide orders dated 02.12.2011 that the income from sale of shares declared by the assessee as 'short term capital gain' was held to be income from business , as rightly been done by the A.O. 8. With respect to the other issue regarding claim of the assessee for deduction of society maintenance charges and municipal taxes of total amount of Rs. 1,80,000/- , the assessee submitted that the claim was restricted by the AO to the extent of municipal taxes to the tune of Rs. 62,175/- . The assessee submitted that the annual rent amounting to Rs. 14,40,000/- was offered to tax is arrived at after taking into account the municipal taxes and society maintenance charges to be borne by the assessee. The assessee contended that the A.O. while passing the order u/s 143(3) of the Act has restricted the deduction claimed in respect of maintenance charges to the extent of only municipal taxes paid amounting to Rs. 62,175/- while comput....
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....009] 122 TTJ (Mumbai) 87 to contend that the assessee has maintained separate portfolios of shares for offering the same to tax as capital gains or business income. The ld. Counsel submitted that the assessee is regularly dealing in shares for several years to earn capital gain and dividend. The assessee is dealing in shares based upon the delivery taken or given both at the time of purchase and sale of shares. The ld. Counsel made statement before us that own funds are utilized by the assessee for the purpose of making investments and stated that no borrowed funds were utilized for making investment in the shares. The assessee also submitted that in case the shares are sold without effecting delivery, then in that case the assessee has offered the gains (loss) to tax as speculative income. The ld. Counsel also relied upon the decision of the Mumbai Tribunal in the case of Mrs. Shikha Gupta v. ACIT in ITA No. 7711/Mum/2011 for the assessment year 2007-08 order dated 8-5-2013 and also in the case of ACIT v. Mrs. Vineet Sethi in ITA No. 4324/Mum/2010 for the assessment year 2006-07 vide orders dated 24- 1-2014.The ld counsel of the assessee also submitted that decision of the Mumbai ....
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....fecting delivery of shares at the time of purchase or sale of shares, the same is categorized as speculative income and while where the delivery based transactions of sale and purchased are categorized as long term or short term capital gains based on period of holding of the shares as per the Act. The Revenue has accepted long term capital gains of Rs. 42,24,638/- offered to tax by the assessee as long term capital gain chargeable to tax , while short term capital gains of Rs. 6,76,915/- offered for tax , is treated as business income by the Revenue. From the perusal of the statement of short term capital gain, it is observed that the assessee has entered into over 200 transactions of purchase and sale of shares in the previous year relevant to the assessment year. We have observed that the assessee is regularly dealing in shares whereby the period of holding in some cases is even one day. The A.O. observed that out of the total transactions, the period of holding in over 100 instances is less than three months and in 65 instances, the holding period is less than one month. The transaction in the shares are also repetitive like in the shares of Zee Telefilms Limited, Garware Ship,....