TaxTMI 
TaxTMI 
2017 (1) TMI 680
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....of profits and nature and frequency of transactions is nothing but trading in shares with an intention to earn quick profits out of trading activity and not to earn dividend out of investment in shares." Also it is raised that "the ld. CIT(A) has erred in not appreciating that the facts in the instant case is similar to the facts in the case of Jaysree Pradip Shah vs. ACIT (131 ITD 326) wherein it was held that high frequency of transaction of purchase and sale of shares shall be considered a business activity of the assessee if transactions are continuous, regular and systematic and use of borrowed funds for purchase of such shares with short period of holding." Further to it, it is stated that "the ld. CIT(A) failed to notice the fact tha....
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....es and purchased shares of Rs. 31.66 crores. The sales are 12.39 times the average stock of Rs. 2.63 crore. The AO also noted that the assessee is involved in intra-day transaction and future and option trading activity also. The purchases of shares is mostly out of borrowings from Nadi Finance and Investment Pvt. Ltd. personal loans from DBS Cholomangalam, Reliance, Barclays Bank, HSBC and ING Vasya Bank on which the assessee has paid interest to the tune of Rs. 21,34,607/-. The AO thus came to a finding the motive of the assessee was to trade and earn profit. The AO then brought to tax Rs. 58,24,428/- under the head income from business. 4. The ld. CIT(A) relied on the decision of the ITAT, Mumbai in the case of Koradia Construction Pvt.....
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....hat the investment in shares as on 31st March 2009 was Rs. 2,11,82,727/- and as on 31st March 2010 it was Rs. 3,14,60,011/-. He states that the short term gains on sale of shares of Rs. 88,41,354/- has been shown in the income and expenditure account of the assessee for the year ended 1st March 2010. Also it is stated that the short term capital gains on sale of shares of Rs. 31,41,209/- and long term capital gain on sale of shares of Rs. 3,70,475/- has been shown in the income and expenditure account of the assessee for the year under 31st March 2011 and the assessment has been made u/s 143(1) of the Act. Further it is stated that assessment u/s 143(3) has been made by the AO for the A.Y. 2012-13 and A.Y. 2013-14 without disturbing the cap....
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....appears to have weighed almost conclusively with the tax authorities in the first and second instance is the value and frequency of the transactions. As underlined by us, that factor alone cannot be conclusive and would have to be weighed along with the totality of facts. An important detail which cannot be overlooked by High Court is that in all past periods and even subsequent periods, similar income reported by the assessee was accepted by the Revenue as short term capital gain. In fact for A.Y. 2005-06, the scrutiny assessment under section 143 (3) accepted the sum of Rs. 1.02 crores as short term capital gain. In the circumstances, it was all the more necessary for the Revenue to point to some unique feature or distinctive material to ....
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....ars, therefore, the revenue is not permitted to take a contrary view in the present year and therefore, the profit/gain of the assessee is to be treated as business income. 7.4 In the case of Tarujyot Investment Ltd. (supra), the assessee was incorporated to carry on the business of an investment company and to invest in and acquire and hold shares, stocks, debentures, etc. The AO held that since the assessee had undertaken a large number of transactions, its activities were to be treated as in the nature of business instead of investment. This was confirmed by the ld. CIT(A) holding that the gains arising to the assessee on sale of shares were to be treated as business income. The Tribunal held that "the assessee paid securities transacti....