9911796707
TMI Blog2011 (8) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... for a period less than one year, the same would be indicative of a business transaction is not correct - Having considered the manner in which the assessee has transacted in shares and having invested only the surplus funds in the transaction of shares, the same has been rightly declared by the assessee as falling under the head as 'Capital gain' and not as 'Business income' - Therefore reverse the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to treat the impugned income from sale of shares as assessable under the head 'Capital gains' and not as 'Business income'. - 1172 (PUNE) OF 2009 - - - Dated:- 24-8-2011 - SHAILENDRA KUMAR YADAV, G.S. PANNU, JJ. For the Appellant: S.A. Gundecha For the Respondent: S.C. Shivagunde ORDER G.S. Pannu, Accountant Member. This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-I, Pune dated 8-7-2009 which, in turn, has arisen from an order dated 11-11-2008 passed by the Assessing Officer under section 143(3) of the Income-tax Act, 1961 (in short the Act ), pertaining to the assessment year 2006-07. 2. In this appeal, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer came to the following conclusions: (i) The regularity, frequency, volume and continuity is very high; (ii) The assessee purchased shares and its dominant intention was to earn profit within minimum time; (iii) The intention of holding the shares for longer period to earn dividend is missing unless the assessee had taken recourse to the benefit of section 94(7) of the Act; (iv) Whether two separate accounts and the entries are made in the books of account, it was found that no separate accounts distinguishing the investment and stock were maintained; (v) The assessee was riding very high in the book period and wanted to make quick bucks. On the basis of the above conclusions, the Assessing Officer held that the transactions in shares whether short-term or long-term were held to have been made with an intention to earn profit. Accordingly, the long-term capital gain shown of ₹ 2,62,300 and short-term capital gain shown at ₹ 24,01,082 were taxed as income from business. The assessee took up the dispute in appeal before the first appellate authority. 4. Before the Commissioner of Income-tax (Appeals), it was submitted on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s activity of dealing in shares/mutual fund units is business activity being systematic and conducted with a profit motive, was justified on facts and in law and accordingly, affirmed the action of the Assessing Officer in taxing the profit derived from such activity under the head 'Income from business'. Against this order of the first appellate authority, the assessee is in appeal before us. 7. Before us, the learned Counsel for the assessee vehemently submitted that the lower authorities have erred in treating the income from the sale of shares as business income as against income from capital gain declared by the assessee. It has been pointed out that the assessee is an individual, who has invested his surplus funds towards shares and the same has not been carried out as a business activity. It has been pointed out that considering the background, and the fact that the assessee does not have any office establishment or a license or the required permission to carry on business as a dealer in shares/securities, the said activity has to be looked upon as an investment per se. It was also pointed out that the lower authorities have only looked at few of the factors to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue's stand. He summed up by submitting that the Commissioner of Income-tax (Appeals) was justified in concluding that the transactions carried on by the assessee in acquisition and sale of shares/securities constituted a business. He accordingly defended the orders of the lower authorities. 9. We have carefully considered the rival submissions. The dispute in the present appeal arises from the treatment accorded to the gain earned by the assessee on sale of shares. The assessee had shown long-term capital gain of ₹ 1,25,336 after claiming exemption under section 10(38) of the Act and short-term capital gain at ₹ 24,00,367 on account of sale of share/securities. The Assessing Officer has treated such gain as assessable under the head 'Income from business' and not as 'Capital gains'. The Commissioner of Income-tax (Appeals) has concurred with the stand of the Assessing Officer and for that reason the assessee is in further appeal before us. Undoubtedly, the question as to whether a particular transaction is in the nature of investment or an adventure in the nature of trade is a mixed question of law and fact. It is also a well-settled principle t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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