TaxTMI 
TaxTMI 
2017 (6) TMI 75
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.... of the Act upholding the profit on sale of shares of Rs. 1,08,53,182/- as business income from share trading instead of short term capital gain as made by the AO. 3. The facts of the case are that the assessee is an individual engaged in consultancy services. The return of income for the asst. year 2009-10 was filed on 30.9.2009 disclosing a total income of Rs. 1,13,85,760/-. The assessment u/s.143(3) of the Act was completed on 28.12.2011 accepting the return of income. Thereafter, proceedings u/s.263 of the Act was initiated by the CIT-X, Chennai. The CIT observed that in the assessment proceedings, the AO had failed to apply his mind into the nature of numerous share transactions undertaken by the assessee and by accepting the profit....
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....cator towards it being in the nature of the trade. So, in case, a taxpayer has engaged in transactions sporadically, the presumption of it being a capital asset is almost certain. The CIT(Appeals), further observed that in addition to the nature of business, volume of transaction and intention, the treatment of the shares in the books of account is also an important factor to be considered in order to arrive at a finding whether the profits are from business or chargeable under the head 'capital gains'. According to the CIT(Appeals), in the assessee's case, the transactions are numerous and frequent and a total over 2200 transactions during the years makes an average of over 42 transactions per week, and if it factor in 5 working days a wee....
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....also submitted that the contention of the AO is that there were more than 2200 shares which makes average over 42 transactions per week. According to the ld. AR, the AO has failed to appreciate that the assessee had purchased and sold only ten scripts out of more than 2559 scripts traded in BSE and 1277 companies at NSE for 2008-09 and around Rs. 11,00,074/- crores. Average daily turnover at BSE and that of Rs. 11,325 crores and NSE as per SEBI annual reports. It is submitted that the volume of transactions may be an important indicator of the intention of the assessee but certainly not the sole or determinative criterion. The ld. AR, relied on the decision of the Supreme Court in the case of Rameshwer Prasad Bangla (87 ITR 421) and contend....
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....9;the Act') No.1411/Mum./15 for A.Ys 2010-11 & 2011-12 dated 25/01/2017 6. On the other hand, the ld. DR relied on the orders of the lower authorities. 7. We have heard both the parties and perused the material on record. A careful analysis of the ledger account from the books of M/s.Shriram Insight Share Brokers Ltd., shows that the assessee is buying and selling shares in the same year very frequently. The assessee made total transactions of Rs. 89.83 crores involved in 2,200 number of transactions. Major portion of shares has been traded on a day to day basis of Rs. 42.83 crores and sale of Rs. 4.60 crores was carried out by the assessee during the year. Such correlation of buying and selling day after day can be seen from the ....
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.... motive must pervade the whole series of transactions effected by the person in the course of his activity. To infer from a course of transactions that is intended thereby to carry on business ordinarily the characteristics of volume, frequency and regularity indicating an intention to continue the activity of carrying on the transaction must exist. Looking into the volume, frequency, continuity and regularity of transactions of purchase and sale in shares by the assessee, it cannot be said that the assessee entered into this activity not with a profit motive. Therefore, only inference which can be drawn is that the income earned by the assessee out of sale and purchase of these shares was an income under the head 'Profits and gains of ....