TaxTMI 
TaxTMI 
2012 (10) TMI 1173
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....written submissions, which were extracted by the CIT(A) in his order at pages 7 to 10, which are reproduced below: " i) I am not a trader in shares. The investment in shares has been done with purely an intention of capital appreciation. Accordingly, the gain from shares has been reeinvested as I do not have any capital. ii) I am not registered with any recognized stock exchange nor do I possess the requisite knowledge to carry on business in shares. iii) The frequency of trading has been on the higher side compared to normal transactions on account of the volatility of the market. The fluctuations in the market were of such nature that it was not advisable to hold onto the shares during such period. iv) Foreign Institutional investors have invested in Indian stock markets in a big way. v) They are not treated as Traders and their income in spite of high frequency and volume of transactions is treated as Capital Gains. vi) Therefore, I submit that the gain from the sale of shares is Income from Capital Gains and not Business Income. vii) The intention was not to carry on trading of shares but only for the purpose of cap....
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.... 1 27,361 3 Tanla Solutions 262 3 70,48,210 353 4 Unitech 133 3 66,45,057 133 217 222 231 5 Hind Motors 116 3 (87,167) 130 6 Astro Micro (Bonus) 230 4 1,99,851 244 184 Excel Corp 127 4 (56,494) 8 ITD Cem 147 4 67,873 128 9 New STD Eng 180 4 38,939 10 Jain Irrigation Ltd. 153 5 69,585 11 ABG Heavy 245 5 25,874 246 12 Synergy Multy 184 5 47,342 188 188 13 W.S. Industries 217 5 7526 14 D.S. Kulkarni 129 5 85,971 15 UT Ltd. 124 6 (56,051) 16 ION Exchange 185 6 (23,003) 17 Fulf....
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....res did not constitute stock in trade. c) Investment was made for capital appreciation. d) Gains assessable as capital gains. 4 CIT Vs. Niraj Amidhar Surti 48 DTR Gu. 33 Assessee, CA, deriving income from his profession as well as from purchase and sale of shares. Intention of the assessee had always been that of making investment in shares and not dealing in shares hence profit was assessable as capital gains. xix) I am enclosing as an annexure to this submission a paper book which reflects the investment in shares and also the weekly prices of shares which were very volatile forcing me to sell my investments. xx) In lieu of the aforesaid submissions, it is my contention that the income disclosed is liable to be taxed under the head Capital Gains and not Income from Business/Profession." 5. After considering the submissions of the assessee, the CIT(A) analyzing the issue with various case laws, directed the AO to recalculate the profit from sale and purchase of shares as income from short term capital gains. 6. Aggrieved, the revenue is in appeal before us raising the following grounds of appeal: "1) The CIT(A) erred in ....
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....d asset or constitutes stock in trade of the assessee's business. Fixed asset is what the owner turns to profit keeping the asset in his own possession, stock in trade is what he makes profit of by parting with it and letting it change masters. If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital. If, on the other hand, it is made not for running the business of working it with a view to produce profits it is relatable to stock in trade. In determining the question whether after acquiring the shares, the assessee dealt with it as an investor or carried on business with it treating it as its stock-in trade or as a trading asset, what is relevant is that, if the case falls within the former category, receipts by way of sale of such shares will be capital receipts but if it falls within the latter the receipts will be trading receipts and profits therefrom business income. The intention with which such operation is carried on is relevant. If a owner of an investment realizes it and obtained a greater price for it than the price at which he originally acquired, if the en....
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....ons selecting the time of entry and exit in each scrip, called for regular direction and management which would indicate that it was in the nature of trade; (i) Repeated transactions, coupled with the subsequent conduct of the assessee to re-enter the same scrip or some other scrip, in order to take advantage of market fluctuations lent the flavour of trade to such transactions; (j) The assessees were purchasing and selling the same scrips repeatedly, and were switching from one scrip to another; (k) Mere classification of these share transactions as investment in the assessee's books of accounts was not conclusive; (l) The intention of the assessees at the time of purchase was only to sell the shares immediately after purchase; (m) Frequency of purchase and sale of shares showed that the assessee never intended to keep these shares as investment; and (o) It is only for the purpose of claming benefit of lower rate of tax, under Section 111A of the Act, that they had claimed certain shares to be investment, though these transactions were only in the nature of trade. 12. In the light of the above parameters and the decision of the....