TaxTMI 
TaxTMI 
2019 (1) TMI 649
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....ncome for AY 2012-13 on 31/12/2012 admitting income of Rs. 75,27,900/- which includes short term capital gains of Rs. 71,62,459/-. In the scrutiny assessment order dated 12/03/2015, the AO treated the income from purchase and sale of shares as income from business against treatment given by the assessee as short term capital gain by recording the following reasons: "(a) The volume of share trading was Rs. 13,23,00,977/- from which the assessee derived profit of Rs. 72,01,068/-. Therefore keeping in view the volume and frequency of share transactions, the income should be treated as Business income and not income from Capital Gains. (b) That the intention to resell the shares was there from the very beginning. The shares wh....
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....nt during the subsequent years", (h) Further the assessee is a employee of Inani Securities Ltd. This concern was dealing with share market activities. The assessee has done share trading through this concern only." 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and submitted as under: (a) that during the year there were purchase and sale only in 11 scrips, out of 11,4 were allotted in IPO. (b) All the purchases were through recognized stock broker or in the IPO market. (c) The intention was to invest for substantial period and to earn dividend. However, sometimes sales were made if the price of stocks moved up. (d) In all the cases, delivery of shares were....
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....s fairly settled principle that, taxability of a particular item depends on provisions of law and not the accounting treatment given by assessee. Therefore all the first 5 grounds are treated as dismissed." 5. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds: "1. The CIT (A) erred in facts and law while passing assessment order. 2. The CIT (A) erred in treating the profit arrived from purchase and sale of shares of Rs. 71,62,459/- as business income and speculative income which was to be assessed as short term capital gain. 3. The CIT (A) erred in not considering the CBDT Circular No.6/2016 dated 29.02.2016 relating to the issue of taxability of surplus on sale....
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.... the observation that the assessee has dealt in the share market regularly and the volume of transaction denotes that the assessee is in the business of share trading. Further, he observed that majority of the profits earned are through buying and selling of shares which taken place within a period of 10 days and 100% share transactions were completed within one month. In our considered view, the intention to hold the investment for long period or transfer within that period to earn additional profit is depending upon the action of the assessee but cannot be demonstrated. This is the one issue always lead to litigation. For this purpose and to reduce the litigation, the CBDT has issued a circular No. 06/2016. In the similar facts, the coord....
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....d August 31, 1989 and Circular No. 4 of 2007 dated June 15, 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and....
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....ble such as bogus claims of long term capital/short term capital loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with the sole object of reducing the litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities." In view of the circular, we have clearly noticed that the issue raised in this appeal stands fully covered by the Circular issued by the CBDT. Since the assessee has treated the securities as investment and not as stock in trade in all the years, therefore, in v....