9911796707
TMI Blog2011 (5) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. 2. The brief facts of the case are that the assessee is an individual. She has filed her return of income on 4-10-2007 declaring total income at Rs. 79,65,790. A notice under section 143(2) of the Act was served upon the assessee on 26-9-2008. In response to the notice, Shri OP Karnani, CA (Authorized Representative) of the assessee appeared on behalf of the assessee and submitted requisite details. On scrutiny of the accounts, it revealed to the Assessing Officer that assessee had declared short-term capital gain under section 111A (ST paid) at Rs. 57,54,446. She paid a tax @ 10 per cent as per the provisions of section 111A of the Act. She has also declared short term capital gain (STT unpaid) at Rs. 2,48,975. The income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness or trade activity as far as investment in shares for short term capital gain is concerned. 4. That the assessee had not engaged in purchase or sale of shares on regular basis and therefore she had not made any trading on a regular basis so as to treat her transaction on account of investment as business or trade. 5. That the assessee as already stated above had very few transactions. 6. That the assessee had not borrowed funds from a bank or a commercial lender for buying shares which is normally done when one is engaged in business of trade. The assessee certainly not engaged in business or trade. 7. That the assessee has not undertaken several types of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel for the assessee while impugning the orders of the Revenue Authorities Below submitted that in the past assessee has only made a marginal investment in the shares. This aspect has never been disputed by the Assessing Officer. She has no income from trading activity in shares. He drew our attentions towards the computation of income as well as copies of the return for assessment years 2005-06 and 2006-07 etc. The learned counsel for the assessee pointed out that the basic reason for branding the investment activity in the shares carried out by the assessee as adventure in trade is the difference of tax rate. Assessee had paid STT, therefore, short-term capital gain tax is to be levied at 10 per cent. Had the assessee not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was to sell the shares as early as possible. Learned First Appellate Authority has considered this aspect elaborately in the order. According to the Learned CIT(Appeals), the assessee has not merely realized the fruits of investment rather she has carried out an activity in the trading of shares. 7. We have duly considered the rival contentions and gone through the record carefully. In our opinion, it is always difficult to draw a line, whether an assessee made investment in shares or he ventured in the business. Difficulty arises because to arrive at proper conclusion, one has to evaluate the evidence and gathered the intention of an assessee. Intension as described by the Webster's Comprehensive Dictionary, is settled direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be looked into by the adjudicating authority for deciding any dealing in shares, whether investment or trading. The following factors are important factors which can help the adjudicating authority to apply on the facts of a given case for deciding the nature of the activity: (i) Whether the purchase is made solely with the intention of resale at a profit i.e. intention to earn profit or for long term appreciation and/or for earning dividends and interest? (ii) Whether transactions are entered into continuously and regularly? (iii) Whether purchases are made out of own funds or borrowings? (iv) What is the typical holding period for securities bought and sold? (v) What is the rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d salary to carry out this activity. We have considered the explanation of the assessee extracted supra. On an analysis of all these factors within the light of discussions made by the learned revenue authorities, we are of the view that Assessing Officer has approached this controversy with this angle only because rate of tax applicable on the capital gain arisen to the assessee after payment of STT is 10 per cent. 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. Learned CIT(Appeals) has rectified this anomaly and contradictory stand of the Assessing Officer but that would not obliterate to exhibit the approach of the authority. It is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
