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TMI Blog2013 (7) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... y based transaction or future & options transaction. Thus CIT(A) that the assessee was actively involved mostly in intra-day speculative transaction and future options, appears not to be correct. Assessee has not borrowed any funds for making the investment in shares and separate portfolio has been maintained for the purpose of investment. Also in the earlier years similar nature of transaction and income from sale of shares was shown under the head short term capital gains and long term capital gains and the same has not been disturbed, though return of income has been accepted u/s 143(1). From these facts, it can definitely be gathered that the intention of the assessee in undertaking purchase and sale of shares were not for the purpose of trading but as an investor to get gain from the escalation of the share prices. Thus as per the material on record, it cannot be held that the assessee was doing trading in shares but has had held the shares for the purpose of investment - income earned from sale and purchase of shares in the case of the assessee can very well be held as income from short term capital gains - appeal of the assessee is allowed. - ITA No. 7711/M/2011 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Gopal Purohit in ITA No.4854/M/2008, besides various other cases. The assessee's detail explanation in response to the show cause notice has also been incorporated by the Assessing Officer from pages 5 to 9 of the assessment order. The Assessing Officer however, rejected the assessee's entire contention and after detail analysis on the various decisions came to the conclusion that assessee is actually conducting the business of purchase of sale and shares only for profit. The relevant observation of the A.O are reproduced here under for the sake of ready reference:- Apart from the above, the careful analysis of assessee's approach to the securities market betrays her intention for profit making rather than await appreciation of the value of security for larger gains on long term basis. If it were the intention of assessee to approach the stock market as investor, regardless of the manner by which she has kept her books of accounts for recording these transactions, it would have been held on long term basis for enabling its appreciation and or for earning a regular stream of income by way of dividends. In assessee's case, this situation does not prevail, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring had submitted that in the second column of the table where it has been mentioned as number of days during the year, it should be treated as number of times because it has been wrongly printed by CIT(A) as days instead of times). iii) The period of holding in most of the scrip was fairly long as most of the gain has been earned from the scrip which were held for longer durations. The said details were as under. Period Gain Up To 30 days 72,965 31-60 days 139,009 61-90 days 123,613 91-180 days 231,320 181-365 days 558, 953 Total 1,125,860 iv) In the investment port folio opening balance of investment as on 31.3.2006 was ₹ 30,07,784 whereas, as on 31.3.2007 it was at ₹ 62,79,441, which clearly indicates that there was increase in the holding of investment for the purpose of earning dividend and capital appreciation. v) The assessee has not borrowed any funds for the purpose of making inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the assessee though, has conducted trading in futures and options and non-delivery based transaction, however, the same pertain to very few scrips. For example in futures and options the assessee has only taken a transaction of only one scrip of Allahabad Bank on 31st October 2005. Except for this, in no other scrips the assessee has carried out any futures and options trading. Just by trading in one scrip in F O, the assessee cannot be held to be trader in shares. Even the loss in speculative transactions, the number of scrips are only three, hence speculative transactions was not a regular feature. Otherwise the assessee has maintained a seperate portfolio of investment so far as purchase of shares are concerned, which goes to show that the assessee has been purchasing only for the purpose of earning gains and not for the trading purpose. He reiterated the submissions made before the CIT(A) and submitted that, if the over all gain from the sale of shares has to be seen, then out of gain of ₹ 11,25,860 shown under the head short term capital gain, there is gain of ₹ 8,00000 on the shares which were held for a period of more than 3 months that is from 91 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six months to one year, the other scrips have been held for the period ranging mostly between 2 to 6 months. There are only few scrips which has been held up to the period of 30 days on which short term capital gain ₹ 72,965 has been shown. The portfolio of the shares shows that the same have been held under the head 'investment' in the balance sheet. In case of speculative transactions the assessee has dealt only in three scrips which has resulted into loss of ₹ 4039 and in case of futures options, the assessee has dealt only with one scrip of Allahabad Bank of 1500 shares on 31st October 2005, which was sold on 15th May 2006. Except for the transaction of these few scrips, the assessee has not carried out any non-delivery based transaction or future options transaction. On these facts, the findings of the CIT(A) that the assessee was actively involved mostly in intra-day speculative transaction and future options, appears not to be correct. The percentage of gain derived from various shares held for different period were as under:- Period Gain % Up to 30 days 729 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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