TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 58
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....sment proceedings 2009-10 of Rs. 29,21,048/- as business income and not as short term capital gain. Looking to the facts and circumstances of the case the action of the Assessing Officer is unjustified and bad in law. 3. On the facts and circumstances of the case of ld CIT(A) has erred in holding the finding of Assessing Officer that the investment in equity shares of Rs. 12,20,000/- of 400000 nos. equity shares made in earlier year as business assets as against shown as investment assets. Looking to the facts and circumstances of the case the action of the Assessing Officer is unjustified and bad in law." 2. The assessee is having income from salary, house property, business, capital gains and other sources. Return for A.Y. 2009-10 was filed on 31/3/2010 declaring total income of Rs. 31,29,370/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that the assessee had shown short term capital gain of Rs. 29,21,048. The ld Assessing Officer gave reasonable opportunity of being heard on this issue. The assessee also replied vide letter dated 09/9/2011 alongwith list of short term and long term capital gain for th....
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....eet as investment by itself not a conclusive circumstance though it was relevant circumstances. He further relied on the following case laws:- (i) Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs CIT (SC) 227 ITR 172 (ii) Chowringhee sales Bureau P Ltd. 87 ITR 548 (SC) (iii) CIT Vs Provincial Farmers (P) Ltd. 35 ITR 223. The assessee's submission that delivery based transaction of shares should be treated as of nature of investment transaction and profit there from should be treated as short term capital gain or long term capital gain depending upon the period of holding as held by the courts, which was also not found convincing to the ld Assessing Officer by considering the Hon'ble Supreme Court decision in the case of G. Venkataswami naidu & Co Vs. CIT 35 ITR 594 wherein the Hon'ble Apex Court has laid down general principles for the purposes of share business. The Assessing Officer has to examine purchaser was a trader or purchase for commodity, quantity of purchase and repetition of the transaction. The ld Assessing Officer analysed the sale and purchase on which short term capital gain claimed by the assessee through a chart reproduced on page No. 8 and 9 of the asse....
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.... as stock in trade. It was also claimed that the assessee has taken delivery of such shares by making of full payment and by paying STT. The appellant also contended that the investment in shares was made by way of own savings and not from any borrowed money. It is also claimed that such shares were kept in D-mat account and also sold through D-mat account. It was further stated that some of the shares were kept even for more than Vi years. It is also claimed that intention of the appellant was always to treat such transaction as investment and not a stock in trade. In support of such submission the appellant has also placed reliance on various case laws. On the other hand the AO's case is that that the appellant is a salaried employee and the component of salary income vis a vis income from a capital gain indicated that the transactions in shares etc. were in the nature of business in as much as the income from salary is shown at Rs. 315400/- whereas the income from short term capital gain is shown at Rs. 2921048/-. The AO also noted that the particular treatment of books of accounts of certain transaction may not alter the real position of the transactions and that the entries of....
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....s always profit/loss conscious in respect of such shares and not dividend conscious. The appellant case is broadly covered under the guidelines and circumstances laid down by the CBDT vide instruction no. 1827 and 1857 dated 31.08.1989. Such guidelines were issued in consequence to decision of Hon'ble Supreme Court in the case of G. Venkataswami Naidu and Co. Vs. CIT, 35 ITR 594. The above facts will indicate that the real intention of the appellant was not to derive income by way of dividend but to earn profit at the earliest possible. It is also noted that in respect of shares of company namely M/s Confi Shares the assessee appear to have not derived any dividend. The facts and circumstance discussed above suggest that the assessee's activity in relation to share transactions and showing of short term capital gain was a clear cut business activity. Accordingly the AO has rightly taxed such amount business income. The ground of appeal is accordingly dismissed. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that whether an assessee is a trader in shares or is an investor primarily depends upon his intention. The intention is to be gathered by ....
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....lways be under the head 'capital gain', irrespective of the period of holding. The assessee is a salaried employee, has income from interest, EPF and dividend. He has drawn our attention on computation of income and argued that in A.Y. 2007-08 the dividend income was Rs. 21,451/- and in A.Y. 2008-09 Rs. 23,080/-. The dividend during the year is Rs. 1,03,675/-. The assessee is a regular investor and carried out the share transaction through share broker Mehta Equities Ltd. The assessee had used own fund not maintained any office, employed any staff or maintained any books of account. The value of the transaction in shares is also meagre when compared with the volume of transaction of a dealer in shares. All these facts indicate that the assessee is only an investor in shares and not a trader in shares. As per latest circular, if assessee treats to disclose the shares as stock in trade, then the income would be treated as business income.. Conversely, where shares are held as investment, the income would be capital gain. It is further clarified through circular that where listed shares are held more than 12 months and the assessee treated this transaction as investment and shown capi....