9911796707
TMI Blog2012 (5) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... /- from purchase and sale of shares. It was also noted by him that the assessee had also indulged in speculation of shares, and in respect of shares in which delivery had been taken, he had shown income as short term capital gain. The AO also noted that in almost all cases shares had been sold within short time mostly during 3 months and in some case within a few days. He was purchasing and selling shares on day to day basis and on several occasions he had transacted in more than 3 scrips on the same day. He, therefore did not accept the explanation of the assessee that shares had been purchased for making investment only on the ground that these were declared as investment in the books of account. The intention of the assessee was to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was Rs.51,84,746/-. CIT(A) further noted that the assessee was not having any office/administrative set up for doing share business and shares had been purchased out of own funds. He, therefore held that income from sale of shares held for less than 30 days will be treated as business income and that for shares more than 30 days will be treated as short term capital gain. Aggrieved by said decision the assessee is in appeal before the Tribunal. 4. Before us, the ld. AR for the assessee reiterated the submissions made before lower authorities that the assessee was an investor in shares. It was pointed out that the assessee started making investments in shares from assessment year 2004-05 with short term capital gain of Rs. 8,897/- and lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gularly purchasing and selling shares in more than 50 scrips and most of the shares had been sold within three months and in many cases within a month and in some cases within a few days. The assessee had also used borrowed funds though it may not have been interest bearing. Total purchases were Rs. 2.67 crores, total sale of Rs. 3.30 crores and dividend income received was only Rs. 65,675/-. It was also pointed out that in earlier years and subsequent years, assessment were covered under summary scheme and, therefore, AO had no power to examine the nature of transaction. Further, in assessment years 2004-05 and 2005-06, the transactions were small in number and, therefore, based on these transactions no conclusion could be drawn about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the judgment of the Hon'ble Supreme Court in the case of CIT v. Madangopal Radheylal [1969] 73 ITR 652. The actual conduct has to be evaluated by analyzing of the holding period etc. An investor makes purchases with long term goal of earning income from the investment and he is not tempted to sell the shares on every rise and fall in the market which are the attributes of a trader. Since income from investment in shares which is in the form of dividend is received annually, normally an investor is expected to hold the shares for more than a year. However there may be situations when the investor may also sell the shares after short holding in order to reshuffle portfolio when prices are falling or to encash investment in case of excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and in the subsequent years the share transactions have been accepted as investment. However, we note that in the earlier two years as well as in the subsequent years income tax returns were covered under summary scheme and AO was not empowered to make any examination of nature of transaction. It can not, therefore, be said that in the earlier and subsequent years the department had accepted the transaction as investment. Moreover in the earlier years, the transactions were small in number and based on these transactions, it could not be decided that the assessee was a trader or investor. Each year is independent and nature of transaction has to be decided on the basis of facts prevailing in that year. 5.3 The ld. AR for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in case of Gopal Purohit (supra), cannot be considered as a precedent for the proposition that all delivery based shares have to be treated as investment activity. The assessee can also be a trader in case of delivery based purchases and sales, which is a normal feature of any trading activity. Therefore, in our view reliance placed by the ld. AR on the decision in the case of Gopal Purohit is misplaced. 5.4 The assessee has also relied on some Tribunal decisions which are also distinguishable on facts such as in case of Hitesh Satishchandra Doshi (supra), and in case of Sugamchand C. Shah (supra). In both these cases, assessee had sold shares in many cases after holding for more than one year, whereas in the present case shares have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
