2012 (11) TMI 1161 - AT - Income Tax

Summary

Issues involved: Determination of nature of income from sale and purchase of shares - Whether income should be treated as short term capital gain or business income.

Assessment Proceedings:
- Assessing Officer noticed STCG claim of Rs. 2,78,77,456 under section 111A.
- Assessee asked to furnish details of STCG.
- Assessing Officer considered frequency of share payments and short holding period.
- Assessee asked to justify why STCG should not be considered as business income.
- Assessing Officer concluded transactions were in the nature of trade.
- CIT(A) found assessee engaged in share transactions for only 69 days in a year.
- CIT(A) held assessee as investor, not trader, directing STCG assessment.

Arguments:
- Revenue supported Assessing Officer's view based on ITAT Jaipur Bench decision.
- Counsel for assessee cited jurisdictional High Court decision distinguishing investment and business transactions.

Judgment:
- Tribunal considered factual situation of majority shares held for long resulting in STCG.
- CIT(A) correctly noted limited share transactions by assessee.
- Tribunal agreed with CIT(A) that assessee is investor, not trader.
- CIT(A)'s direction to assess income as STCG upheld, appeal by Revenue dismissed.

Conclusion: The Tribunal upheld the CIT(A)'s decision to treat the income from sale and purchase of shares as short term capital gains, dismissing the appeal filed by the Revenue.