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Issues Involved:
1. Classification of income from share transactions as "Short Term Capital Gain and Long Term Capital Gain" vs. "Business or Profession". 2. Consideration of Circular No. 4 of 2007. 3. Volume of transactions and its impact on classification. 4. Treatment of shares as stock in trade vs. investment. 5. Use of own funds for share purchase. 6. Intention/motive behind share transactions. 7. Rule of consistency in tax treatment. Summary: Issue 1: Classification of Income from Share Transactions The revenue challenged the CIT (A)'s direction to tax income from share transactions as "Short Term Capital Gain and Long Term Capital Gain" instead of "Business or Profession". The CIT (A) held that the transactions should be treated as capital gains, not business income, despite the AO's assessment based on the high volume of transactions. Issue 2: Consideration of Circular No. 4 of 2007 The AO argued that Circular No. 4 of 2007 should be considered to determine if the gains are business income. However, the CIT (A) did not find this argument sufficient to reclassify the gains. Issue 3: Volume of Transactions The AO noted the assessee's involvement in 5500 transactions of purchase and sale of shares, suggesting a business activity. The CIT (A) disagreed, stating that volume alone does not determine the nature of income. Issue 4: Treatment of Shares as Stock in Trade vs. Investment The AO treated shares as stock in trade, while the CIT (A) considered them as investments, noting the assessee's use of own funds and the nature of transactions. Issue 5: Use of Own Funds The AO argued that the use of own funds for purchasing shares does not imply investment, especially for a high net worth individual. The CIT (A) found this argument unconvincing. Issue 6: Intention/Motive Behind Share Transactions The AO believed the assessee's intention was to maximize profit, indicating a business motive. The CIT (A) held that the intention to invest for capital appreciation was evident. Issue 7: Rule of Consistency The CIT (A) and Tribunal emphasized the rule of consistency, citing previous years where similar transactions were treated as capital gains. The Tribunal referenced the case of the assessee's husband, where similar facts led to the classification of income as capital gains. Conclusion: The Tribunal upheld the CIT (A)'s decision, confirming that the income from share transactions should be treated as "Short Term Capital Gain and Long Term Capital Gain" and not as "Business or Profession". The appeal by the revenue was dismissed, reinforcing the principle of consistency in tax treatment.
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