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TMI Blog2012 (9) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A)-I, Pune relating to Assessment Years 2006- 07 and 2007-08 respectively. Since identical grounds have been taken by the assessee in both these appeals, therefore, these were heard together and are being disposed of by this common order. ITA No. 16/PN/2011 (2006-07) : 2. The only effective ground raised by the assessee reads as under : On facts and circumstances prevailing in the case and as per the provisions of the Act it be held that, the amount of Rs. 9,82,738/- considered by the Assessing Officer as assessable under the head income from business is contrary to the provisions of law and facts prevailing in the case. The income of Rs. 9,82,738/- should have been assessed under the head capital gain as is claimed declared by the appellant. Just and proper relief be granted to the appellant in this respect. 3. Facts of the case, in brief, are that the assessee is a member of Sukhwani Group wherein a search u/s.132 of the I.T. Act was conducted on 14-06-2006. In response to the notice issued u/s.153A the assessee filed the return of income wherein profit on sale of shares amounting to Rs. 9,82,738/- was declared under the head Short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther noted that the assessee has obtained borrowed interest free funds from the associate concerns for earning profit by dealing in shares. Based on these observations the AO came to the conclusion that the transaction in shares were carried out by the assessee as a trader. However, the gain has been shown as Short term capital gains with sole view of having the minimum tax liability. The AO accordingly treated the amount of Rs. 9,82,738/- as Business income as against Short term capital gain treated by the assessee. 5. Before the CIT(A) it was submitted that the assessee is having her own capital to the extent of Rs. 22,70 lakhs as on 31-03-2006 which is in nature of surplus funds and a part of which has been invested in equity shares of various companies. The total investment as on 31-03-2006 in shares was at Rs. 29,38,169/-. It was submitted that no borrowed funds were utilised for making such investments and the observation of the AO that interest free funds were availed from the sister concerns for making the investments in shares is not correct. It was pointed out that the unsecured loans appearing in balance sheet is interest free advance from her father. It was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of such analysis are as under : Asst. Year No. of sale transactions during the year as per list appended to the order Purchase value (including shares purchased during the year but not sold) (Rs.) Sale Consideration (Rs.) Profit claimed as short term capital gains (Rs.) Profit claimed as long term capital gains (Rs.) 2006-07 60 57,64,206 65,20,931 9,82,738 3,33,004 2007-08 21 30,50,222 24,47,764 3,43,081 4,18,174 8. The Ld. CIT(A) observed from the above that the magnitude and frequency of the transactions in shares of various companies in the above two years were quite substantial. According to him the sale and purchase of shares of such magnitude regularly indicates a systematic activity by the assessee with a motive and intention to make profits from dealing with shares and securities. The assessee is not a mere investor in shares of few companies and the assessee has dealt in shares of several companies and there was a systematic organised activity every year with the said parties or contract in the matter of acquiring, holding and selling of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejoinder submitted that the decision relied on by the learned D.R. is not applicable to the facts of the present case in as much as in the case relied on by the learned D.R. the assessee was a corporate assessee and a member of the BSE and NSE and the volume, frequency and magnitude of the transactions are far more than that of the assessee. 10. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. The question regarding taxability of profit on sale of shares as capital gain or business income is a mixed question of law and facts. Each case depends on its own set of facts. In the instant case we find the assessee had shown the shares as investment in the balance sheet. Profit on sale of shares declared as income from capital gain was accepted by the AO in the past, a fact brought on record by the AO himself in the assessment year. From the details of share transaction for the year 2005-06 furnished by the assessee at Paper Book Page Nos. 5 to 8 we find in some cases the shares have been held fairly for a longer period. For example 2000 shares of Advani Hotel purchased on 17-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case and the profit on sale of shares in our opinion should be treated as Short term capital gain . In this view of the matter, we are of the considered opinion that the Short term capital gain declared by the assessee should be accepted. We accordingly set-aside the order of the order of the CIT(A) and direct the AO to treat the profit on sale of shares as Short term capital gain as against business income treated by him. The ground raised by the assessee is accordingly allowed. ITA No. 17/PN/2011 (Assessment Year 2007-08 ) : 12. The only effective ground raised by the assessee reads as under : On facts and circumstances prevailing in the case and as per the provisions of the Act it be held that, the amount of Rs. 3,40,970/- considered by the Assessing Officer as assessable under the head income from business is contrary to the provisions of law and facts prevailing in the case. The income of Rs. 3,40,970/- should have been assessed under the head capital gain as is claimed declared by the appellant. Just and proper relief be granted to the appellant in this respect. 13. After hearing both the sides, we find the above ground by the assessee is identica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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