TaxTMI 
TaxTMI 
2012 (5) TMI 679
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd long term capital gains on profit arriving from purchase & sale of shares instead of business income treated by the A.O. without appreciating the fact that the assessee is dealing in large volume of shares, most of the shares are bought and sold within short period, while some are not sold due to market conditions and their holding with assessee remains beyond few days, it will not change the nature of the transactions and the assessee is very well engaged in the business of share trading, which denote that the motive of the assessee is to carry on business in shares to book profit rather than investment in shares". 2. During the assessment proceedings, AO found that the appellant had credited the following amounts in the capital acco....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the AO observed that for A.Y. 2004-2005, the appellant had treated the income received from trading as business income whereas for the subsequent assessment years i.e., A.Y. 2005-2006, 2006-2007 & 2007-2008 the appellant had classified his income/loss from share trading as short term capital gain and long term capital gain. The AO held that though the nature and type of expenses were same as those of A.Y. 2004-2005, the appellant debited all the expenses in the capital account for assessment years 2005-2006, 2006-2007 & 2007- 2008. The A.O. concluded that the expenses were debited to capital account with view to reduce tax. He further held that the appellant maintained an office cum residence in order to carry out the business of share tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....delivery based and non delivery based transactions and admitted income accordingly and except for A.Y. 2004- 2005, the appellant did not indulge in any non delivery based share transactions. As contended by the representative, even shares purchased as investment had to be sold within a short time depending on the market conditions. Thus, the sale of shares was only with a view to protect the amount invested by the appellant which would not convert the investment into stock-in-trade. The appellant transferred all the shares in his name before sale as evidenced by the demat account and paid STT at a high rate as applicable to the investor. It is found from the balance sheet filed that the appellant held shares as investment and after transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellant has to be accepted". 3. DR relied upon the order of the lower authorities. Authorised Representative (AR) submitted that in earlier year (2006-07) same issue was decided in favour of the appellant by 'C' Bench of the ITAT on 20-12-2010 (ITA/5238/Mum/2009). On page No.10 of the said order of the Tribunal, we find the following observations: "Thus, by analyzing the details of the transactions, we have no doubt that the intent of the assessee was not for earning profit by trading in shares but for earning the profit due to appreciation in the value of the shares and earning the dividend. The assessee has not booked any expenditure against the income shown as capital gain from the purchase and sale of the shares. All the exp....