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TMI Blog2013 (6) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... asically the spine of the submissions of the assessee, before the revenue authorities. Hence the facts gets squarely covered by the decision of Gopal Purohit (supra). Thus Respectfully following the decisions above no reason to disturb the order of the CIT(A)stating that profit arising on sale of such shares cannot be assessed under the head business and the claim of the assessee that it is assessable under the head long term capital gains has to be accepted. Against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gain under the head business on the following grounds: Mere entries in the books of account showing shares as "Investment" is not determinative factor to decide the real nature of transaction. For this proposition the AO relied on various judgments including the decisions of the Supreme Court, a) Tuticorin Alkali Chemicals case 227 ITR 172 b) Chowringhee Sales Bureau's case 87 ITR 584 c) Punjab Distilling Industries Ltd's case 35 ITR 523 d) G. Venkataswami Naidu & Co's case 35 ITR 594 e) Bazapur Sugar Factor's case 172 ITR 330 (i) Assessee is undoubtedly dealing in large number of shares is the sole business of the assessee. Most of the shares are bought and sold within short period. While some are not sold due to market conditions and their holding with the assessee remains beyond few days, it will not change the nature of transactions. The assessee is very well engaged in the business of share trading and runs a full fledged office for this purpose. (ii) The AO relied on the Circular No. 4/2007 dated 15.06.2007 issued by the Central Board of Direct Taxes (iii) For treating the profit on sale of investment in shares as business income, the AO relied upon fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iends and relatives, on which, no interest was paid. It was submitted that the assessee did some speculative transactions in shares, which were very nominal, but that by itself, would not debar the assessee from claiming the profit on sale of shares under the head capital gains. He admitted that the assessee showed speculative profit of Rs. 37,331/- in the preceding year, i.e. assessment year 2006-07 whereas for the current year, there was a speculation loss, which was claimed at Rs. 35,660/-. He further contended that the AO was wrong to hold that the assessee held most of the shares only for very few days. On the other hand, the assessee earned major portion of short term capital gain (Rs. 16,95,025 out of Rs. 20,40,025/-) from the shares held for fairly long period as shown below:- Purchases Sales Security Name Date Qty Amt. Date Qty Amt. *Holding Period Gain Loss GTC Industries Ltd. 9.12.05 10561 1178072 10.5.06 5000 1499211 152 -- 19.10.06 4000 802811 314 -- 01.11.06 1561 310775 327 -- 10561 1178072 10561 2612797 1434725 Mysore Cements Ltd. 8.3.06 25000 917980 12.7.06 25000 1173328 126 255348 Bartronics India Ltd. 16.1.06 2121 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very has been taken or given and securities transaction tax has been paid is liable to accepted. Accordingly, we reverse the orders of Revenue Authorities". 6. Further the representative relied on the decision of Hon'ble Tribunal in the case of Janak S. Rangwalla vs ACIT (11 SOT 627) wherein it is held that the frequency and magnitude of transaction cannot be the criteria for determining the head of income. He further submitted that recently the Hon'ble Mumbai High Court has confirmed the decision of the Hon'ble ITAT in the case of Shri Gopal Purohit". 7. The CIT(A), taking into consideration the submissions, held, "I have considered the submissions of the representative and the stand taken by the AO. Admittedly, the assessee disclosed the shares as investment in the balance sheet for AY 2006-07 and 2007-08. It is seen from the balance sheet that the investment in shares as on 31.3.2006 was Rs. 88,28,688/- whereas the investment in shares as on 31.3.2007 was Rs. 71,59,978/-. The total sale value of shares on which short term capital gain was admitted by the assessee during this year is Rs. 1,18,54,891/- and when same is compared to the investment in shares as on 31.3.2006 and 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (29 SOT 117) held as under: "When we compare the facts of the case with that case, we find that the facts of both are almost identical. In the present case, the assessee is also maintaining separate records for both types of transactions Further, in the present case, it is important to notice that the assessee has entered into two different types of transactions, where both activities are entirely different in nature i.e. one activity is of investment in nature on the basis of delivery and second activity is purely of jobbing (without delivery) which puts assessee's case on a more strong footing. Hence, in our view, the ratio of this decision is squarely applies to the facts of the present case. Accordingly, we hold that the delivery based transaction should be treated as of the nature of investment transactions and profit therefrom should be treated as short term capital gain or long term capital gain depending upon the period of holding. To conclude, we hold that, in the facts and circumstances of the present case, the assessee's claim of short term capital gain and long term capital on share transactions where the delivery has been taken or given and securities transaction tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, whereas the AR defended the case of the CIT(A), besides referring to the detailed charts showing the volume of business and frequency of transactions and holding period of shares held for period less than one year. 10. We have heard the arguments of both the sides and have also perused the material placed on record and case laws cited before us. From the detail as produced at APB 14, we find that 73.75% of investments transacted were held for more than 6 months, despite the fact that numbers of transactions were 61 in 46 scrips, which resulted in only 13.95% shares held as investments. Based on these facts, when we apply the decisions of Gopal Purohit, which now has found approval even by the Hon'ble Supreme Court, the Hon'ble Bombay High Court had insisted upon intention at the time of purchase and consistency in the nature of holdings. On both these grounds, the issue is squarely covered by the decision. Coming to the charts, as reproduced here above and the details in the Balance Sheet, with regard to the holding pattern of shares, held under investments and trading, it is evidently clear that the assessee was maintaining separate distinct portfolios. This fact, not havin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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