TaxTMI 
TaxTMI 
2019 (12) TMI 760
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....tal gains of Rs. 48,75,642/- as income from business and assessed to tax @ 30% instead of 10% as claimed by the assessee. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) partly allowed the appeal of the assessee. 4. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: "1. That the order of the Commissioner of Income Tax (Appeals). VI, Hyderabad, in confirming the assessment order passed by the Asst. Commissioner of Income Tax, Circle10(1), Hyderabad, for the assessment year 2008-09 under the Income Tax Act, 1961, is contrary to law, against the weight ~f evidence and probabilities of the case. 2. That the return of income filed for the assessment year 2008-09 by the petitioner on 09.09.2008. The said return of income was processed under Section 143(1) of the I.T. Act, 1961. Subsequently the said return of income was selected ~or scrutiny as per the CASS guidelines contained in the action plan for the financial year 2008-09. It is respectfully submitted that the scrutiny guidelines contained in the action plan cannot go beyond the scrutiny guidelines. Hence the basis of scrutiny ....
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....not related to particular issue and, therefore, the AO has power to adjudicate all the issues and pass order u/s 143(3) of the Act. 9. After hearing both the parties, we find that as per the record, the assessee's case was selected for scrutiny under CASS and not for any specific purpose. The AO has power under jurisdiction to scrutinize the entire of the assessee and, therefore, this ground of the assessee is dismissed. 10. Ground No. 3 is similar to ground No. 1, therefore, this ground is dismissed as it has already been adjudicated. 11. As regards ground No. 4, the AO observed that during the year the assessee has shown short term capital gain of Rs. 48,75,642/- on profit on shares. On verification of the share transactions done by the assessee, the AO noticed that the assessee has made frequent sale and purchases of shares in high volumes through brokers pool account. During the course of assessment proceedings, the AO asked to submit the relevant details and on examination of the same, the AO noticed that the assessee is purchasing and selling the shares on regular basis. The AO observed that in most of the cases, though the mode of trade was delivery trading, the per....
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....uch sales. There is no indication of earning of dividend by the assessee from such investments. It is also a fact that the investments are made for a limited period of few days and for purpose of earning profit on sale of shares. The facts of the case indicate clearly that the appellant was purchasing and selling shares with the intention of deriving profits but not the dividend and there is no indication of making the investments for a long period, with the frequency of buying and selling of shares remained very high and period of holding is very short, resulting in high volumes of transactions and the same indicate the intention of the appellant that the investments were made for deriving the profit in trading of the shares. Further, the appellant did not contest the details of purchases and sale of shares as enumerated in assessment order which has indicated the frequency of transactions. Further, the submissions of the appellant wherein it was clearly indicated that he did not hold the shares for longer period for fear of losses on account of fluctuations in the market, also indicate the real intention of the assessee in this regard. 9.5 In light of the above facts of ....
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....ransactions were only in the nature of trade." 9.6 Hlon'ble ITAT dealt upon the issue of sale of shares with high frequency and high volumes with low period of holding and further opined that there was intention of the assessee to earn the profit than to derive dividend. The decision of Hon'ble !TAT in the case referred above (supra) runs as under, where the facts of the case are similar to the facts of the case under reference. "Considering in the light of the parameters laid down by the jurisdictional High Court in case of PVS Raju (supra), it is seen that as per the assessee's own admission, during the year he has dealt with 95 number of scrips of different companies. The Assessing Officer in the assessment order has mentioned specific instances where the assessee has sold shares either on the same day or within a very short period of 7 to 15 days. It is also a fact on record that the volume of turnover was because of the frequency and regularity of transactions and not due to huge investment. Even the CIT(A) in para 8.4 of his order has accepted the fact that there were not only numerous transactions but volume of transactions were also more. The C....
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....ept the ratio laid down in those decision. However, as already observed by us hereinbefore the ratio laid down in a particular decision is in the context of the facts involved in that case. Therefore, it cannot apply uniformly unless the facts are akin and identical in nature. We do not agree with the contention of the learned AR that the decision of jurisdictional High Court in case of PVS Rahu (supra) does not lay down any ratio of binding nature. On the contrary, the tests/guidelines laid down by the jurisdictional High Court in that case fully applies to the facts of the present case. Considered in the light of the aforesaid decision of the jurisdictional High Court, we are of the view that the income derived by the assessee from sale of shares has to be treated as profit from business. " 9.7 Thus, based on the facts of the case which are similar to the facts of the case of the decision of the Hon'ble !TAT, Hyderabad and also respectfully following the ratio of the decision of Jurisdictional High Court (supra), I am of the considered opinion that in the instant case, shares were purchased and sold at high frequency resulting in higher volumes and by holding them fo....
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....5/07/2007 11,53,416 25/07/2007 13,04,260 1,50,843 ACC Ltd. 26/07/2007 11,60,951 26/07/2007 12,50,337 89,386 From the above table, it is clear that the assessee is buying shares and selling the same within 2 days for profit. All the shares in the above table except one scrip pertaining to EASUN Reyrol, which is purchased on 25/07/2007 and sold on the same day, the assessee purchased on 24/07/2007 and sold on 206/07/2007 i.e. within two days. Therefore, it is very much evident that the intention of the assessee is only to make the profit by buying and selling the shares in a systematic manner. The assessee did not hold any shares for a longer period that means, the assessee's intention is not at all earn dividend income, but, only he wanted to make profit. In the written submissions, the ld. counsel for the assessee relied on various case law as well as CBDT Circular No. 6 of 2016, dated 29/02/2016. In our view, the same are not relevant to the facts of the case of the assessee. Therefore, the revenue authorities treated the assessee as a trader and not an investor is proper and accordingly, we uphold the order of the CIT(A) and dismiss the ground rai....
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....;ble ITAT, Hyderabad in the case of Sri Kavuri Prasad in ITA No. 1176/Hyd/2011, is relevant in this context, wherein the Hon'ble Tribunal was referring to the decision of Coordinate Bench, which was consistently disallowing the 15% of the expenditure claimed by the assessees on similar circumstances and was in turn based on the ratio of the decision of Hon'ble A.P.High Court in the case of CIT Vs. Transport Corporation of India (256 ITR 701). Hence, by considering the facts of the case as well as the ratio of the judicial decision In this regard, on* the subject matter, the A.O is directed to restrict the disallowances of expenses under the heads of 'conveyance & travelling' and vehicle maintenance' to 15% of the total expenses under respective heads, as against 30% adopted in the assessment order. The appellant gets part relief in this regard, against the disallowances under both the heads of expenses. Accordingly, these grounds of appeal are treated as partly allowed." 18. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The AO made the disallowances @ 30% of the expenditu....