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TMI Blog2013 (5) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... re than 30 days as income from capital gains. From the records it is noticed that so far as shares shown in LTCG are concerned, the average period of holding is around 549 days and number of transactions are also less, therefore, income from sale of such shares has rightly been held to be taxable as LTCG. Whether the amount of Rs. 1,24,38,554/- representing profit on sale of shares transactions is taxable STCG, within the meaning of Section 2(13) of the I.T. Act, 1961? – Held that:- it is seen that purchase of shares has been shown as investment in the books of account and the same has been accepted such in the past. All the transactions are delivery based transactions and the assessee has not undertaken any derivative or speculative tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng term capital gain and is consequently exempt u/s 10(38) of the I.T. Act, 1961 overlooking the finding of the Assessing Officer that this amount represents profits and gains from trading in shares and is consequently taxable as income under the head profit gains of business. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that an amount of Rs. 1,24,38,554/- representing profit on sale of shares and held by the Assessing Officer to be taxable as income from business is partly taxable under the head short term capital gain and that only the gain resulting from sale of shares held for less than a month is taxable as income from business, disregarding the finding of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od would not be that much. (c) Dividend received The assessee has received dividend on shares invested. The assessee has invested the money to earn the dividend where the objects of the investments in shares of a company is to derive income by way of dividend then the profit accruing by change in such investments (by sales of shares) will yield capital gains and not revenue receipts. (as per the Authority for Advance Ruling AAR (288 ITR 641). The assessee has received dividend on almost all investments. (d) No. of scripts The assessee has invested only in 26 shares during the year booked gains only in 16 scripts during the year. The assessee number of transaction is very few in the whole year. There are around 6000 shares listed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in the transactions. The appellant purchased and sold 1,45,280 shares which resulted in STCG and also sold 52,076 shares resulting in LTCG. The STCG was derived from 70 transactions for which assessee sold shares to the tune of Rs. 3,47,09,972/- and cost of purchase was Rs. 2,46,39,739/-. d. That the appellant company was purchasing shares in huge amount, not to hold them as investment, but to sell them at a later date. Out of total net gain of Rs. 1,41,43,438/- an amount of Rs. 1,24,38,554/- pertains to STCG. f. That appellant company sold off as soon as the price of shares had risen above its purchase value and got good profit margin. Similarly, it sold off the same when the price declined and hence, the period of holding was l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 5. The learned CIT(A) duly appreciated the assessee's contentions and after recording the detail findings, allowed the assessee's appeal, inter alia holding that income from sales of shares has to be taxed under the head of STCG and LTCG and not business income. The sum and substance of his conclusions are that the number of scripts purchased was 22, while the number of scripts sold was only 16. Further in case of LTCG the holding period was very high and in case of STCG the period of holding ranged from 1 to 324 days. He, however, gave a ride that the shares which were held for less than a month, the gains from such shares should be treated as profits from business and rest of the profit will be brought to tax as STCG. 6. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head of 'investments' and income from similar transactions have been held to be 'capital gain' in the earlier years and all the transactions were delivery based transactions. The SLP, against said High Court, has also been dismissed by the Hon'ble Supreme Court vide order dated 15.11.2010 in SLP (Civil) No. 32891 of 2010. 8. We have heard the rival contention, perused the findings of the Assessing Officer as well as the CIT(A) and the relevant material referred to before us. In this case, the assessee had shown STCG at Rs. 1,24,38,554/- on sale of shares of twelve scripts even though number of transactions undertaken were huge and in case of LTCG shown at Rs. 17,04,884/- was on account of sale of shares of four scripts. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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