TaxTMI 
TaxTMI 
2019 (9) TMI 660
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....involved in these appeals, they are heard together and being disposed together, for convenience sake. 2. Shri Amit Jain, the assessee, an individual, is proprietor of M/s. Amit S Fragrances, which is manufacturing and trading in fragrance supari, trades in textile handloom goods. Apart from receiving salary, the assessee admitted income from letting out of property, business (intraday) trading in shares, commission and interest income. During the assessment years 2014-15 & 2015-16, the assessee admitted short term capital gain and short term capital loss from sale of listed shares and also admitted short term capital gain from sale of shares u/s. 111A of the Income Tax Act, 1961 (in short 'the Act'). While making the assessments for AYs ....
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....h without prejudice to the other or others. 2. The order of the Commissioner of Income Tax (Appeals) is biased, arbitrary, and contrary to law, considering the facts and circumstances of the case. 3. The Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the business of Appellant was manufacturing and trading in fragrance supari and also trades in textile handloom goods and the Appellant had invested its surplus capital fund in the shares as an investment and not as a business activity. 4. The Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant had been showing the investments in shares as 'Investments' in its books of account and not as 'Stock-intrade'. ....
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.... 4. Classification by AO Business income Business income Capital gains Business income Exempt income AY 2015-16 S.No. Particulars Intraday Trading Short Term Long term Business Exempt income 1. Turnover 13,16,24,156.00 8,01,24,374.29 23,20,998.00 1,28,12,448.00 2. Profit 6,35,444.00 48,61,982.00 1,22,146.31 4,23,853.27 2,58,795.00 3. Classification by Assessee Business income Capital gains Capital gains Business income Exempt income 4. Classification by AO Business income Business income Capital gains Business income Exempt income Relying on the decision of the Hon'ble High Co....
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....nd found that since the assessee has been regularly dealing in purchase of sale of shares, the period of holding is very short and in some cases involved in speculative trade, the assessee earned only a meager amount of dividend and therefore, the ld. CIT(A) held that the income arising from sale of shares is assessable as business income only. However, he has also directed the AO to value the inventory of earning stock and closing stock and also isolate the transactions having the nature of speculative business and treat it separately. The ld. D R submitted that the decision of ld. CIT(A) is in accordance with criteria laid down by the Hon'ble High Court of Delhi , which was relied on by the ld AR, supra, and hence pleaded that the assesse....
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....ure of the activity is that of trading in shares and not an investment in shares, therefore he held that the income arising from sale of shares, claimed by the assessee under the head capital gains, is assessable as business income and assessed accordingly. Now, in this regard, reliance is also placed on the decision of Hon'ble Delhi High Court in the case of Om Prakash Arora (supra), the relevant portion of which is extracted as under: "7. The factors which Courts and Tribunals have to take into consideration whilst deciding whether income gained during a particular period is business income through purchase and sale of shares or other tradable capital assets, or capital gains on account of sale of such assets, has been spelt out ....
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....nother related factor is the duration for which the shares are held. (4)Was the purchase and sale made for realizing profit, or for retention and appreciation in its value. The former indicates the purchases being part of trade; and the latter is indicative of the purchases being an investment. Furthermore, it would be relevant to ask whether the intention behind the purchase was to enjoy dividend, or merely to earn profit on sale of shares. Importantly, a commercial motive is an essential ingredient of trade in this context. (5) Whether the items in question were valued at cost. If so, it would indicate that they were investments. Where they were valued at cost or market value or net realizable value, whichever is less, i....