TaxTMI 
TaxTMI 
TaxTMI 
2012 (10) TMI 1080
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.... of ₹ 9,22,09,885/- and purchases of ₹ 8,37,27,757/- and accordingly looking at such high volume of transactions upheld the order of A.O. 3. The CIT(A) erred in holding that the A.O. gave a finding that the transactions in shares are in the nature of adventure or trade ignoring the fact that the AO merely taxed the impugned income under the head business income. 4. The CIT(A) ought to have applied the judgement of the Special Bench ITAT, Mumbai in the case of M/s. Daga Capital Management (P) Ltd., Vs. ITO in relation to transaction in shares and accordingly, applied section 14A disallowing the expenditure towards exempted dividend income. 4. While disposing of this appeal, we are taking the brief facts in the case of Sanjay Ishwarlal Ranka as both Ld. A.R. & D.R. also agreed that the facts involved in both these appeals are similar. Similar grounds have been taken except change in the figures in ground no.2 in place of turnover of ₹ 9,22,09,885/- turnover of ₹ 2,32,61,213/- and in place of purchase of ₹ 8,37,27,757/- purchase of ₹ 2,21,98,527/- and in place of 351 number of scrips, 101 number of scrips has been taken. 5. The assessee sub....
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....basis of certain inherent characteristics. The scrips sold by the assessee during the year under consideration are from his investment portfolio and any gain arising on such sales has to be accepted as short term or long term capital gain depending on the period of holding as prescribed in the IT Act, 1961, and for all the transactions out of investment portfolio, appellant's claim of long term capital gain at ₹ 4,09,074/- and short term capital gain at ₹ 82,89,260/- is accepted." 9. The Ld. D.R. contended that it is apparent that the number of transactions involved in this case and the assessee has continuously purchased and sold the shares. It is not a case where he has entered into 2 or 3 transactions. Intention is a matter which is known to the assessee and the onus is on the assessee to prove that he has the intention for investment. Referring to the decision of the Mumbai High Court in the case of CIT Vs. Gopal Purohit 228 CTR 582, he pointed out that the appeal filed by the revenue against the order of the Tribunal in that case was dismissed not on merit but as High Court found that no substantial position of law is involved. 10. The Ld. A.R. before us contend....
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....the Nagpur bench was dismissed in the High Court vide order dated 28.10.2010 in ITA No.37/2009. It was again stressed that similar view has come before the Mumbai Bench in the following cases Nagindas P. Sheth (HUF) Vs. ACIT ITA No.961/Mum/2010 and ACIT Vs. Naishadh V. Vachharajani ITA 6429/Mum/2009. Thus, it was contended that the order of the CIT(A) be confirmed. Assessment Year Amount(Rs) 2005-06 35,54,752/- 2006-07 18,07,028/- 2007-08 66,52,110/- 12. We have carefully considered the rival submissions and, perused the material on record along with the order of the tax authorities below. We have also gone through the case law as has been cited before us. We find that in the case of CIT (Central), Calcutta vs Associated Industrial Development Company (P) Ltd. (82-ITR-586) , the Hon'ble Supreme Court has held as under: "Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and he should, in normal circumstances, be in a position to produce evidence from his records as to whether he has maintained any distinction between those shares which are hi....
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....ions and the period of the holding by the assessee. The period of the holding and number of transactions cannot be the only basis to determine whether the assessee has carried out the business in share transactions. It may be one of the relevant consideration but cannot be the main consideration for deciding whether the assessee is engaged in a business or not. We have to look into all the surrounding circumstances. This is a fact on record that the assessee in this case is engaged in the employment and has derived the salary income. Out of the surplus fund, he invested into the shares and the units and those shares and units has duly been shown by the assessee as investment in his balance sheet in the earlier year as well as during the year. In the earlier year also, the assessee derived the income on the sale of the shares, which has been returned by the assessee as capital gain and revenue has duly accepted the same. The assessee was not holding the shares or the units as a stock in trade. This fact is also not denied by the revenue. The period of holding itself has been treated by the legislature to be a relevant consideration for determining whether the capital gain derived is....