TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 174
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....arising on sale of shares as business income as against short term capital gains declared by the assessee. 2] The learned CIT(A) erred in holding that the income arising on sale of shares was to be taxed as business income of the assessee on the following grounds - a. The assessee is engaged in the systematic and continuous activity of trading in shares with an intention to earn profits and hence, the said activity was in the nature of business activity. b. The magnitude and frequency of transactions in shares was quite substantial and therefore, the same had to be treated as business activity. c. The object of the assessee behind purchasing shares was not to earn dividend but to earn profits on sale of such shares. d. The assesse....
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....usiness income. 5] Without prejudice to the above grounds, if at all, the income arising on sale of shares is to be treated as business income of the assessee, then the shares held by the assessee as on 31.03.2007 may be valued at market value as against valued at cost by the assessee. 3. The issue arising in the present appeal is in respect of assessability of gain arising on sale of shares. The plea of assessee was that the same is to be assessed as 'Income from short term capital gains', whereas the Revenue authorities have taxed the same as 'Income from business' in the hands of assessee. 4. Briefly, in the facts of the case, the assessee for the year under consideration had filed the return of income declaring total income of Rs. ....
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....nder consideration had purchased total number of shares 84,151 against which the number of shares sold during the year were 62,190. The Assessing Officer has tabulated the details of transaction under para 4.8 at page 5 of the assessment order and since the assessee had sold 62,190 number of shares in just 21 days, the Assessing Officer observed that the frequency of transactions and the substantial nature established that it was engaged in business activity and hence, the income was assessed as 'Income from business'. 5. The CIT(A) upheld the order of Assessing Officer relying on several judicial decisions and because of frequency of shares. The contention of the assessee that some of shares were shown as investment in the preceding year,....
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....ACIT Vs. Blue Moon Securities Pvt. Ltd. in ITA No.1019/PN/2007, relating to assessment year 2004-05, order dated 23.07.2010. He further pointed out that earlier order of Tribunal in ACIT Vs. Blue Moon Securities Pvt. Ltd. (supra) was recalled and subsequently, the income was held to be income from short term capital gains and hence, the reliance by the CIT(A) on the said decision is misplaced. He stressed that where major shares sold by the assessee were shown as investment as on close of preceding year, then the gain arising on sale of said shares in current year would be taxable as income from capital gains and not as business income. In this regard, reliance was placed on the ratio laid down by Mumbai Bench of Tribunal in Janak S. Rangwa....
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....sale and purchase of shares and had though dealt in with less number of shares but the quantity, volume and periodicity of transaction was high and as per the Assessing Officer, it was organized business activity, hence, the gain arising therefrom is to be assessed as 'Income from business'. The assessee has placed on record the details of shares dealt in by her during the year, against which it had declared short term capital gains at page 13 of the Paper Book. Out of total gain of Rs. 29.76 lakhs, major gain on sale of shares is from shares of Cipla Ltd. The assessee had purchased 1000 shares on 09.06.2005 for Rs. 2,94,763/- which were sold on 04.04.2006 at Rs. 6,93,427/-, resulting in gain of Rs. 3,98,665/-. Further, the assessee purchas....
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....re to be assessed as 'Income from short term capital gains'. The case of Revenue on the other hand, was that because of repeated transactions in sale and purchase of shares, the assessee was engaged in systematic activity of purchase and sale of shares which was akin to carrying on of business and hence, gain had to be assessed as 'Income from business'. There is no merit in the said plea of Revenue keeping into consideration the totality of the facts and circumstances. 10. Where many of shares were invested into by the assessee in preceding year and the same were accepted as investment made by the assessee as on 31.03.2006, once the said investment is sold by the assessee, then the gain arising therefrom is to be assessed as 'Income from ....