TaxTMI 
TaxTMI 
2016 (8) TMI 1003
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.... for the assessment years 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97, done transactions in shares as a small investor. During that time, the assessee has earned profit by way of short term capital gains and long term capital gains. 3. Learned advocate Mr. Shah appearing for the appellant-assessee has taken us through the judgement of the Commissioner of Income-tax (Appeals) and contended that the Commissioner of Income-tax (Appeals) has discussed the issue in detail and in paragraph No. 9 of the judgement, he has observed as under: "On consideration of the full facts of the case, the impression that one gathers is that the appellant having substantial funds of about Rs. 57 lakh at her disposal, in the climate where investment in shares was considered as the most sound and rewarding investment, went in for purchase of large volumes of shares involving substantial funds. The fact that she purchased from open market, also she mostly went in for transfer of the shares in her name is an indicator that she had intention of making investments in shares. The mode of purchase adopted by the assessee is not that of a trader in as much as a trader would not undergo the cumbersome pr....
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....ore, directed to verify the requisite facts and recompute her income on the basis spelt out above." 4. The learned counsel for the appellant has further contended that the Tribunal while setting aside the judgement of the Commissioner of Income-tax (Appeals) has not properly considered the decision of this court relied on by the appellant in the case of Dy. C.I.T. v. Smt. Divyaben C. Shah delivered on 18.4.2001 in Tax Appeal No. 104 of 2001 with Tax Appeal No. 105 of 2001 which reads as under: "Admittedly as per return short term capital gain was Rs. 4,31,938/- and Rs. 5,73,738/- as against the long term capital gain at Rs. 7,84,422/- and Rs. 6,86,333/for Assessment Yerar 1993-94 and 1994-95 respectively, which is clear from the record. It is also clear that the shares were not shown as stock-in-trade and there was no finding recorded that there was any conversion. The Tribunal after considering various judgments as also keeping in mind the finding recorded by the Commissioner of Income Tax, Appeals, arrived at a conclusion. In para 25, the Tribunal has pointed out the test to be considered as laid down in case of P.M. Moahmmed Meers Khan vs. CIT [ 73 ITR 735] and in the case....
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....ration, no error and/or illegality has been committed by the CIT(A) as well as Income-tax Appellate Tribunal in deleting the additions made by the Assessing Officer and treating it as business income for the purpose of short term capital gain and long term capital gain.". 8. Reliance is placed on the decision of the Supreme Court in the case of Janki Ram Bahadur Ram v. Commissioner of Income-tax, Calcutta reported in (1965) 57 ITR 21 (SC) wherein it has been held by the Supreme Court as under: "Held, on the facts, that the purchase and sale of the property was not an adventure in the nature of trade within the meaning of section 2(4) and the profit realised therefrom was not taxable under section 10 of the Indian Income-tax Act, 1922. The facts that the appellant made a profitable bargain when it purchased the property and that it had a desire to sell the property if a favourable offer was forthcoming could not without other circumstances justify an inference that the appellant included by purchasing the property to start a venture in the nature of trade. It is for the revenue to establish that the profit earned in a transaction is within the taxing provision and is on tha....
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.... determination and has led to a lot of uncertainty and litigation in the past. 2. Over the years, the courts have laid down different parameters to distinguish the shares held as investments from the shares held as stock-in-trade. The Central Board of Direct Taxes (`CBDT') has also, through instruction No. 1827, dated August 31, 1989 and Circular No. 4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the tax payers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars, further instructs that the Assessing Officers in holdi....
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....rted in 82 ITR 586, Raja Bahadur Visheshwara Singh v. Commissioner of Income-tax reported in (1961) 41 ITR 685 and Commissioner of Incometax v. Sutlej Cotton Mills Supply Agency Ltd. reported in 100 ITR 706 and submitted that a single transaction or the manner in which the transaction is done is to be looked into and this is a pure question of law. Therefore, this court should not interfere with the order of the Tribunal. 11. We have heard learned advocate Mr. Shah for the appellant and learned counsel Mr. Patel for the respondent. Taking into consideration the question of law, we have considered that while the Assessing Officer has considered the income arisen to the assessee out of sale of shares as assessable under profit and gains of business or profession, however, in appeal, the Commissioner of Income-tax (Appeals), for the detailed reasons given in paragraph No. 9 as reproduced hereinabove, treated the income as short term capital gain/long term capital gain. Considering the decision of this court in the case of Smt. Divyaben C. Shah (supra) where this court has observed the test to be considered that "(i) The assessee have purchased almost all the scripts from primary ma....