TaxTMI 
TaxTMI 
2017 (2) TMI 787
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.... the order of the AO treating the investment in shares as trading activity and taxing as short term capital gain of Rs. 21,10,696/- as business income. 3. Grounds of appeal no.2 and 3 are in support of ground no.1 of the appeal. 4. Brief facts of the case are that the assessee filed her return of income on 28.9.2008 declaring total income of Rs. 23,11,722/- which was processed under section 143(1) of the Income Tax Act, 1961. The case of the assessee was selected for scrutiny and the statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. The main sources of income of the assessee is business income, speculation income, capital gain and other sources. During the course of assessment proceedings, the....
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....of shares during the year which have been shown by the assessee as Capital Gains arising out of investment in the shares in question as an investor is to be assessed under the head "Income from Business" or whether the same is to be assessed under the head "Capital Gains" as disclosed by the assessee in his return of income. In the case of CIT Vs. H. Holck Larsen, 160 ITR 67(SC) been held that the question whether the transactions of sale and purchase of shares were trading transactions or whether they were in the nature of investment is a mixed question of law and facts. In the case of P .M.Mohd. Meerakhan 73 ITR 735 (SC), it has been held that the answer whether a transaction is adventure in the nature of trade or not must necessarily dep....
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....tive effect of all these criteria which would be important to decide whether the assessee was an investor or a trader. Keeping the above parameters in mind, it has to be decided whether the assessee can be treated as an investor or he is to be treated as a trader and whether the income in question is to be taxed under the head Capital Gains or under the head Income from Business & Profession, It is also pertinent to mention that the various Courts and Tribunals as well as the CBOT have laid down that an assessee can have two portfolios of shares one for trading and one for investment purposes. Therefore, the assessee can be both a-dealer in shares as well as an investor in shares at the same time. 2.7 Adverting to the facts of the ....
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....ssets in question which would decide the issue. It is the total impression of the parameters laid down which will have to be examined to find the answer. From the facts on record, it is apparent that the assessee has devoted substantial time to his activities relating to share dealings. 2.9 As regards the intention of the assessee, it has been held by various Hon'ble Courts that the intention of the assessee at the time of purchase of asset is the most important criteria to decide whether the same were purchases as trading assets or were bought as an investment. Only because the shares have been disclosed in the Balance Sheet as an investment would not determine or prove that the shares were purchased as a capital asset since i....
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.... viz. whether assessee's real intention is to invest or the intention was in the nature of trade." 2.10 An examination of the details of transaction filed by the assessee in respect of the shares on which he has claimed capital gains reveals that the overall impression that can be gathered is that the assessee has dealt with the shares as a trader and not as an investor. 2.11 From analysis of details of sales & purchase of shares, it is noticed that for share holding of less than 6 months profit is Rs. 21,10,695/- and between 6 months to 1 year profit is Rs. Nil. 2.12 The contention of the assessee that the shares were being reflected in the Balance Sheet as investments would not be determinative of the true n....
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....8 and Rs. 25 lakhs on 18.1.2008) were used to purchase the shares of Bharat Heavy Electricals 1000 shares, L&T 600 shares and Reliance communication 3600 shares, Reliance Energy ltd 1400 shares, Reliance Industries 900 shares through Prabhudas Lilladhar Pvt Ltd a broker for a total consideration of Rs. 99,90,396.53. These shares which were sold on 5.2.2008 for a total consideration of Rs. 1,19,11,896/- thereby making a profit of Rs. 19,21,500/- within a period of two days. According to the AR the sources of fund for purchase of these shares have out of mutual funds maturity of Sunlife Liquid Bonds which was invested by the assessee and this capital gain was earned within two days in the highly fluctuationing and volatile market. We find tha....