TaxTMI 
TaxTMI 
2016 (8) TMI 805
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....as "the CIT (A)"] dated 06-03-2014 for assessment year 2009-10. 2. The sole issue involved in both these appeals is as to whether the income earned by the assessee out of share transactions is to be treated as capital gains or business income. 3. The brief facts of the case are that the assessee HUF had shown short term capital gains to the tune of Rs. 1,82,10,741/- out of which net amount of Rs. 1,81,2009/- was offered for taxation. The AO noted that the assessee HUF had borrowed funds from its Karta and from a concern in which the Karta was a partner. The total borrowed funds received by the assessee during the year were Rs. 1.54 Crores and out of which a sum of Rs. 64.00 lacs was returned . The assessee had received dividend income....
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....and no interest was paid to the Karta in this respect. Only a small amount was borrowed from the firm in which the Karta was a partner upon which interest was paid but, the same was never claimed as expenditure. The learned CIT (A) also observed that the assessee had consistently been treated by the Revenue as an investor. The long term capital gains and short term capital gains offered by the assessee for earlier assessment years 2008-09 and 2009-10 were accepted as such by the Department. Even, the assessee had earned substantial long term capital gains of Rs. 22.00 lacs during the year which showed that the intention of the assessee was that of an investor. All the share transactions were on delivery basis and there was no speculative tr....
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....stor except in relation to the transactions in which there was churning of portfolios. On the other hand, the assessee has come in appeal agitating the action of the CIT(A) in holding that income from repetitive transactions of Rs. 10,17,065/- is taxable as business income of the assessee. 4. We have heard the rival submissions and have also gone through the records. The learned CIT (A) has categorically observed that the assessee in the past has consistently been treated as investor. The assessee during the year under consideration has earned Rs. 22.59 Crores and during the previous assessment year 2009-10, the assessee has shown short term capital loss of Rs. 2,18,87,930/- and long term capital loss of Rs. 4,01,474/- . Even, in the ear....
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....e learned CIT (A) has observed that there was churning in the portfolio in some transactions. He had called upon the assessee to explain the explanation given by the assessee was not found satisfactory. He, accordingly held that the transactions in which churning of the scrips within a span of less than a month was made, were to be held out of the business activity of the assessee. He therefore held that such income from repetitive transactions is to be treated as business income of the assessee. It has been held time and again by various Courts of Law that the assessee can hold both the portfolio i.e. that of the investor and that of the trader. Although, the assessee in this case had not kept separate accounts regarding its business ac....