2015 (10) TMI 2595

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....1.13 crores arising on sale of shares as business income of the assessee. 3. The assessee is engaged in the business of trading, import and export of chemicals and also earned indenting commission from foreign suppliers. The assessee also earned capital gains on purchase and sale of shares. In the return of income filed, the assessee declared STCG arising on sale of shares of Rs. 1.13 crores and Long Term Capital Gains (LTCG) arising on sale of shares of Rs. 1.70 Crores. Though the AO observed that the assessee is carrying on purchase and sale of shares as a trading activity, yet he accepted the Long term Capital Gain declared by the assessee. However, the AO took the view that the income from STCG is to be treated as income from busines....

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....d the shares as his investment in the immediately preceding year, i.e., on 31.3.2007 and the AO has also accepted the same. Hence the gains arising on sale of such shares should be assessed as capital gains only. 5. On the contrary, the Ld D.R submitted that the assessee has been purchasing and selling shares continuously and hence the volume and frequency of transactions were very high. He further submitted that the period of holding was as low as Zero days and the average period of holding was less than 16 days. The analysis of the transactions of the assessee shows that the assessee has sold 40% of the shares within 30 days of purchases. The Ld D.R further submitted that the activity of the assessee should be examined every year. He furt....

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....hen the profit shall be assessed as Capital gains. The intention of the assessee should be ascertained by his conduct and other criteria prescribed by the Courts and CBDT. 7. We notice from the Balance sheet filed by the assessee that he is possessing capital balance of Rs. 23.79 crores and his investment in shares and mutual funds stand at Rs. 13.65 crores. The balance sheet does not show any borrowings. We further notice that the assessee is running a proprietary concern in the name M/s Kantilal Sanghvi & Co and it had a turnover of Rs. 12.29 crores and also declared net profit of Rs. 1.83 crores. Hence, it is seen that the assessee is having other business activities also. During the year under consideration, the assessee has dealt in....