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TMI Blog2011 (5) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... foreseen and contemplated when the investment was made and the possibility of enhanced value motivated the investment. Assessee has not carried out trading in the shares continuously and systematically. She has not conducted a number of transactions. She made investment in one shares and that was sold after two and half months. She has not borrowed the capital for this purpose. She did not take special advise or employed staff and paid salary to carry out this activity - Had there was no STT payment and the rate of tax was 30 per cent then probably Assessing Officer would not disturb the declaration made by the assessee - Decided in favour of the assessee and treated as capital gain. X X X X Extracts X X X X X X X X Extracts X X X X ..... . He directed the assessee to explain as to why share transaction undertaken by her should not be considered as adventure in the nature in trade within the meaning of section 2(13) of the Act. The assessee has submitted following reply in response to the queries of the Assessing Officer: "1. The assessee had made the purchases with the motive of investments and paid the full amount of purchases consideration. The capital market is uncertain and the assessee was getting very good return on such investment and therefore it was sold during the year. 2. That the assessee made the investments in her personal name in individual capacity and not any trade name as she is not engaged in any business or adventure in the nature of grade, had she b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estments or stock in trade and her such decision is clearly conveyed by classifying the same as investments in the financial statements". 3. Assessing Officer did not accept the contentions of the assessee. He made a reference to para No. 9 of the Board's Circular bearing No. 4/2007 which according to him, the CBDT has appraised the Assessing Officer, as to how a share transaction has to be appreciated. Assessing Officer made a reference to the decision rendered in the case of CIT v. Associated Industrial Development Co. (P.) Ltd. [1971] 82 ITR 586 (SC) as well as decision of Hon'ble Madras High Court in the case of CIT v. N.S.S. Investments (P.) Ltd. [2005] 277 ITR 149/[2007] 158 Taxman 13. He also made a reference to the decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lted to the assessee in trading of the shares that is why Assessing Officer has accepted the short-term capital gain and did not disturb this transaction. Though Learned CIT(Appeals) has changed the character and treated this gain also arisen out of trading activity. He reiterated his contentions as were raised before the Assessing Officer. He relied upon the decision of ITAT, Ahmedabad in the case of Sarnath Infrastructure (P.) Ltd. v. Asstt. CIT [2010] 124 ITD 71 (Luck.). He pointed out that in this decision, the ITAT has considered almost all the major decisions of the Hon'ble Supreme Court as well as of Hon'ble High Courts. The ITAT has also considered in detail the Circular of the Board which has been relied upon by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of any article or of any capital investment, for instance, shares, is made without the intention to resell at a profit, a resale under changed circumstance would only be realization of capital and would not stamp the transaction with business character. Hon'ble Court has also observed that where purchase is made with the intention of resale, it depends upon the conduct of the assessee and the circumstance of the case whether the venture is on the capital account or in the nature of trade. A transaction is not necessarily in the nature of trade, because the purchase made with the intention of resale. According to the decision, an investment and resale do not lose their capital nature merely because the resale was foreseen and contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, commerce or manufacturer. Various authoritative pronouncements, Hon'ble Supreme Court and Hon'ble High Courts had explained the meaning and scope of expression "business". It is not necessary to recite and recapitulate of those decisions, on the strength of them, it would be suffice to say word "business" has a wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill with a view to earn income. Let us examine the facts of the assessee's case in the light of the number of decisions propounded by the Hon'ble Court as well as within the meaning of expression provided in section 2(13) of the Act. It emerges out that assessee has not carried out trading in the share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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