TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 1160
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....peal is fixed for hearing before this Tribunal to readjudicate ground no.4 raised by the revenue which is as under :- "4. That the ld. CIT(A) has erred in law as well as on facts by directing the assessing officer to treat the surplus of Rs. 1,62,05,046/- earned by the assessee on sale and purchase of shares as short term capital gain instead of business income." 4. The relevant facts as appeared from the order of this Tribunal in respect of the above issue are as under :- "18. The relevant facts are that the A.0. observed on perusal of Profit & Loss A/c. and also the document produced at the time of hearing that the assessee company purchased and sold the shares of different companies, the details of which are given in table 2 by the A.0. at pages 4 to 5 of the assessment order. On perusal of the said details, the A.O. stated that the assessee-company purchased and sold most of the shares within a range of 1 to 150 days. However, most of the shares were sold within 1 to 10 days after purchase. Therefore, the frequency of purchase and sale of those shares was very high. He further observed that all the shares, details of which are given in the table 2 of the assessment....
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....the A.0. was justified to treat the amount of surplus on purchase and sale of shares as business profit. The ld. D.R. submitted that the Hon'ble Apex Court in the case of G. Venkataswami Naidu & Co. -vs.- Commissioner of Income Tax [35 ITR 594] has laid down certain principles to ascertain as to whether the transaction is for the purpose of investment or is an adventure in the nature of trade. The ld. D.R. submitted that considering the period of holding of shares and the quantity of the scripts purchased and re-sold by the assessee establish that the transaction was in the nature of trade and not in the nature of investment. The ld. D.R. submitted that the Hon'ble Apex Court in the case of Anil Jain - vs.- Commissioner of Income Tax & Another [294 ITR 435] has held that it is a relevant factor for determining whether the transaction was one of business or an adventure in the nature of trade, is to whether the assessee had carried on similar transactions or not. The ld. D.R. submitted that in the back of mind of the assessee is to capitalize the fluctuation in the market and not the intention to hold the shares as an investment. The ld. D.R. submitted that the order of the A .O. be....
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....fore us, we observe that the assessee has purchased during the course of financial year relevant to the assessment year under consideration, the scripts of 22 companies. All the shares were purchased and also sold in the financial year relevant to the assessment year under consideration. On perusal of the table 2 at pages 4 to 6 of the assessment order, we observe that some of the scripts were retained by the assessee for a period of 1 to 10 days only. There were only a very few shares, the details of which are given by the AO in table 3 at page 7 of the assessment order that the shares were not sold during the year and the assessee received dividend therefrom. Therefore, we agree with the A.O. that the dividend earning was not the sold motive of the assessee but the motive was only to earn quick profit through trading of shares. The AO has also stated that the infrastructure employed is indicative of the fact that those shares were acquired by the assessee with a clear motive of earning quick profit. The assessee has not disputed the said observation of the AO before the ld. CIT(A) as well as before us. We are of the considered view that the dealing of the assessee in the shares ....
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....eration. Therefore he requested to upheld the orders of the ld. CIT(A). 7. After hearing the rival submissions and on careful perusal of materials available on record, it is observed that out of the total 162 lakhs of Short Term capital Gains an amount of 159 lakhs are relating to Jubilant Organosis Ltd. In this case the assesee is already having shares of 2045 as on 31.3.2004 in the investment portfolio and the AO has accepted the sale of the said shares as Short term capital gains in the assessment order whereas the subsequent shares purchased by the assessee obtained as bonus shares has been treated by the AO as business income without assigning the reasons. Therefore, in our considered opinion the AO is not justified to treat part of the transactions in respect of some of the shares of the same company as Short Term Capital Gain and the balance as business income without bringing any material to this effect. 7.1. It is further observed that in the case of NTPC and Western India Limited where the assessee is having a closing balance the same has been valued by the assessee at cost of showing the same under investment portfolio. Therefore AO is not justified to treat th....