2016 (3) TMI 865

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....ness or profession". 2. The assessee in the present case is an individual, who filed her return of income for the year under consideration on 19.07.2005 declaring total income of Rs. 12,79,200/-. In the said return, profit from the sale of shares amounting to Rs. 11,54,913/- was declared by the assessee as short-term capital gain liable to tax at a concessional rate of 10%. During the course of assessment proceedings, the relevant transactions giving rise to the said profit were examined by the Assessing Officer and on such examination, he found that a particular modus operandi was followed by the assessee, which resulted in unprecedented profit in the transactions of shares in connivance with some brokers. After discussing this modus oper....

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....dus operandi adopted by the assessee in respect of share transactions as explained by the Assessing Officer was only a supporting material. He, therefore, disregarded the same and focussed only on the core issue as to whether the income of the assessee from share transactions was chargeable to tax in her hands as business income or short-term capital gains. In this regard, he recorded his findings/ observations as under:- (i) There are no two views possible on the issue as sought to be contended on behalf of the assessee. (ii) By mere meeting of conditions in section 111(1)(a) and (b), the income does not become capital gains and the decision whether the income is capital gains or not is to be made independently. (iii)The relevant transa....

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....it was brought to tax by him in the hands of the assessee in the assessment and that too under the head "profits and gains of business or profession". The ld. CIT(Appeals), therefore, disregarded these findings recorded by the Assessing Officer and decided the issue as to whether the profit from share transactions chargeable to tax in the hands of the assessee as business income or short -term capital gains, which according to him, was the core issue involved in the case of the assessee. 6. It is by now well-settled that the issue as to whether the profit arising from share transactions is chargeable to tax as business income or capital gains depends on the intention of the assessee behind purchase of shares and such intention is to be gat....