TaxTMI 
TaxTMI 
2022 (3) TMI 1193
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....essee is an individual who is mainly engaged in the business of manufacturing of tin containers of various sizes in the name and style of proprietary concern M/s. Times Tin Containers. The return of income for the year under consideration was filed by him on 14.10.2010 declaring total income at Rs. 16,44,980/-. During the year under consideration, the assessee had undertaken activities in the shares and derivatives trading in individual capacity and the income from the said activities was declared as under:- i) Profit on sale of shares held as investment = Rs. 24,74,201/- (Short Term Capital Gains) ii) Profit on sale of shares held as investment = Rs. 13,47,806/- (Long Term Capital Gains) iii) Profit from trading in shares = Rs. 98,590/- (Speculation activity) iv) Loss on trading in derivatives =(-) Rs. 8,62,256/- 4. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to furnish the relevant details in respect of all the share transactions. Although the assessee furnished the said details in piecemeal manner at different stages, ....
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....strictly apply to the Income-tax proceedings. * The assessee vide its own submission has contradicted his own disclosure by submitting that he held the share only as investment. As the assessee himself has disclosed the share trading activity j derivatives trading as its business activity for which separate account are maintained and the separate finals accounts are prepared and audited. * Just by classifying any holding of shares as 'Investment' does not partake characteristics of the investment as the same can also be classified as trading stock which is also a sort of Investment of the assessee and is thus classified in the Balance Sheet on the 'ASSET' side. This implies that every closing stock held is off course an 'Investment' but all investment does not necessarily includes the closing stock. As such, mere wrong classification made by the assessee does not change the characteristics of the transactions. It gains importance that during the assessment proceedings, disclosure by the assessee were often changed every now and then. * The term "Business" as defined by Sec. 2(13) of the Act is clearly applicable in the instant case....
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....tire profit arising to the assessee from the transactions in shares claimed as Short Term Capital Gains, Long Term Capital Gains and Speculation Profit as the business income of the assessee. He also treated the dividend income of Rs. 2,63,040/- received by the assessee during the year under consideration as the business income of the assessee and brought to tax the total amount of Rs. 41,83,637/- in the hands of the assessee under the head "profits and gains of business or profession" in the assessment completed under Section 143(3) of the Act vide order dated 28.03.2013. 6. Against the order passed by the Assessing Officer under Section 143(3) of the Act, an appeal was preferred by the assessee before the learned CIT(A) challenging the action of the Assessing Officer in treating the profits arising from the share transactions claimed as Long Term Capital Gain, Short Term Capital Gain, Speculation Profit and Dividend Income as business income; and, after considering the submissions made by the assessee as well as the material available on record, the learned CIT(A) decided this issue vide paragraph No.5.1 of his impugned under as under:- 5.1 Ground No. 1 to 4 are inter....
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....scussed or dealt with this issue. Details furnished with copies of these asstt. order in the form of statement of total income reflect that for the previous year relevant to AN. 08-09 appellant reflected short term capital gain of Rs. 1,63,823/- but there is no details about on which share or shares which were purchased on 02/04/07 and sold on 25/03/08 these gains were reflected. Further appellant reflected Rs. 17325/- as long term capital gain for sale of Prism Cement. No details about shareholding as investment were filed. The appellant also reflected speculation income of Rs. 13156 from share but no details were filed. In reference to previous year relevant to A.Y. 09-10, appellant reflected shod term capital loss of Rs. 2,13,428/- in reference to 99 transactions. These transactions are repetitive in respect of following share (on sample / illustration basis) (1) Elecon Engg. Name of Share No. of Shares Date of purchase No. of shares Dt. of sale (i) Elecon Engg. 100 22.09.08 100 07.10.08 100 06.10.08 100 07.10.08 100 06.10.08 100 06.11.08 400 03.11.08 40 06.11.08 100 03.11.08 100 06.11.08 4....
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....wo demat account does not reflect many of the transaction shown by appellant for short terms capital gain. Similarly the transaction reflected in these demat account are not reflected in the table for working out short term capital gain. It is therefore, appellant's claim that delivery of shares are taken, investment of shares are supported by holding period and its treatment in books of account as investment cannot be accepted being not duly supported by evidences. Some of the example (on illustrative basis) reflect as follows: (a) The table reflecting short term capital gain reflect gain in reference to 'WOCKHARDT' in which 12908 shares were purchased on 22/04/09 and sold on 25/11109 but this transaction is not recorded in any of these demat account. On the other hand in the Demat a/c with Action financial services (India) Ltd. there are transfer in and out entries of this scripts with demat a/c with Shah Investor home Ltd. In Shah Investor's home Ltd. demat a/c out of 2000 shares on 23/04/09, 500 share on 05/05/09 purchased, 1000 shares on 23/05/09 and 700 shares on 25/05/09 were sold through C M Oswal shares and securities ltd. as Rolling Market lot. Again ....
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....no supporting evidences for delivery of shares, time & energy devoted to this activities etc. clearly reflect that appellant carried out share transaction in the nature of adventure in the nature of business & trade. I am also inclined with A.O. that circular no. 4/2007 dt. 15/03/07 and Instruction No. 1827 dt. 31/08/89 are applicable to the facts of appellant to a large extent. The ratio of Hon'ble Supreme Court in the case of G. Venkata Swami naidu & co. (supra) as elaborated by A.O. emphasizing repetitive transaction is applicable in the facts of appellant's case. I am also inclined with A.O. that appellant's claim of LTCG cannot be allowed on certain scrip as the same were claimed to be off market transaction without evidences of payment of security transaction Tax (STT). I am inclined with contention of appellant that as per circulars & instructions of board and ratio of various case laws, an assessee is permitted to maintain two portfolio, one for business and other for investment. But, appellant failed to demonstrate that it maintained such two different & distinct portfolio. As discussed above, the Demat account reflect different picture than transactio....
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....o dividend of Rs. 263040/- and credit to be given for security transaction tax paid." 7. The learned CIT(A) thus deleted the addition of Rs. 2,63,040/- made by the Assessing Officer by treating the dividend income as business income but upheld the action of the Assessing Officer in treating the profit arising to the assessee from share transactions claimed as Long Term Capital Gain, Short Term Capital Gain and Speculation Profit as business income of the assessee subject to the credit on account of Security Transaction Tax paid. Still aggrieved by the order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal. 8. We have heard the arguments of both the sides and also perused the relevant material available on record. The learned Counsel for the assessee has mainly relied on Circular No.6/2016 dated 29.02.2016 issued by the CBDT in which the guidelines have been provided for dealing with the issue as to whether the profit arising from the transactions in shares is to be assessed as business income or capital gain. He has contended that the Hon'ble Gujarat High Court in the case of PCIT vs. Ramniwas Ramjivan Kasat, [2019] 410 ITR 540 (Guj.) as well ....