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TMI Blog2013 (9) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the assessee is to be gathered by taking complete fact and circumstances into consideration. There may be several factors like the manner of presentation of the same in the books of account, volume of transactions, period of holding, frequency of transactions, employment of borrowed funds for acquiring shares, nature of shares acquired etc. which taken together show the intention of the assessee for acquiring the shares. It is also an established position that the presence or absence of a single factor is not conclusive to determine the actual nature of the acquisition and a proper evaluation of all the factors taken together only show the actual intention of the assessee - assessee could not acquire sufficient number of shares and therefore the assessee sold the shares in question. However, no material was produced before us or before any lower authorities to support the above contention - CIT(A) has also brought no material on record to show what was the actual intention of the assessee in acquiring the shares in question whether the same was acquired as stock in trade or the same was acquired as capital asset to enjoy the fruits of the same - it shall be fair and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are trading. According to the AO this purchase and sale of shares of other companies is speculation business according to Explanation to Sec.73 of the I.T. Act and therefore the loss of Rs.33,10,000/- would be speculation loss. On a show-cause notice from the AO to the assessee he explained that the shares on which the loss was incurred was part of investment made by it and not part of trading activity and therefore the loss of Rs.33,10,000/- on the share transaction should be treated as short term capital loss and not speculation loss u/s 73 of the IT Act. The AO did not accept the explanation of the assessee. The AO held that in the profit and loss account the assessee had shown purchase and sale of shares as business transaction. Further in the return of income and computation of income also this transaction was shown as business loss. These facts showed that the assessee indulged in these transactions as business transactions. Therefore as per Explanation to section 73 of the Act this loss was to be treated as speculation loss. Accordingly he treated the loss of Rs.33,10,000/-as speculation loss and did not allow it to be set off against other income. 3.2 The assessee filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has not don any trading business on shares. The opening stock and the closing stock of the shares also remained the same. In the absence of any transaction of shares on trading account, it would be incorrect to infer that the assessee was doing business in shares. There was no other purchase or sale of shares during the year to suggest that the assessee was a trader in shares during the year. Neither was the activity of purchase and sale of shares carried out on a regular and organized manner nor was there any such action to even remotely suggest that the assessee intended to act as a trader in shares. Further, the Tribunal in case of Atlas and Union Jute Press Co.Ltd. v Commissioner of Income-tax has pointed out that when the intention of the assessee was an important aspect to be considered the manner in which the assessee had described the transaction is a relevant and important factor. In this particular case the assessee company had not shown the shares in question in the investment in Schedule-C of the Balance sheet, since they were purchased and sold in the same financial year and hence were not held by the Company on the Balance Sheet date. However, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling shares of M/s. Neeraj Estates (P.) Ltd. which were clearly reflected as investment in the accounts at the beginning of the p.yr. under consideration. Thus it can be said that there was a mistake in the return in correctly representing the income of the assessee under the correct head of income as per the I.T. Act and this mistake should not be made the basis for deciding the nature of the transactions done. As regards the second argument of the AO about the sale and purchase of these shares being shown separately in the P L a/c it should be noted that these shares were purchased and sold during the previous year itself. Therefore there was no occasion for the assessee to show them in the income side and purchase is shown separately in the expenditure side it cannot be said that these are business/trading transactions. It can be seen that during the year the assessee purchased and sold only these shares on which it incurred the above loss of Rs.33,10,000/-. The assessee did not do any other share transactions except sale of last year's investments which resulted in profit of Rs.32,65,980/-. Actually the inventory of shares amounting to Rs.4,00,000/- has remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm capital loss and therefore the ld. CIT(A) has rightly allowed its setting off against the long term capital gain by the assessee and sold the shares held as investment. 6. We have heard the rival submissions and perused the orders of the authorities below and materials available on record. In the instant case, the assessee claimed set off of loss of Rs. 33,10,000/- arising out of sale of shares of Emkey Commercial Company Ltd. and Apeksha Steels Pvt. Ltd. which were purchased during the year from Long Term Capital Gain of Rs. 32,65,980/-. The AO treated the loss of Rs. 33,10,000/- as speculation business loss by invoking the provisions of section 73 of the IT Act and therefore did not allow the set off as claimed by the assessee. On appeal the ld. CIT(A) accepted the claim of the assessee that loss of Rs. 33,10,000/-was short term capital loss and consequently allowed the set off of the same against the long term capital gain. 6.1 Before us, the ld DR supported the order of the AO and pointed out that the loss in question was shown by the assessee itself as business loss in the return of income and the purchase and sale of the related shares were shown as purchase and sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutes capital asset in the hands of the assessee giving rise to capital gain or capital loss. The real intention of the assessee is to be gathered by taking complete fact and circumstances into consideration. There may be several factors like the manner of presentation of the same in the books of account, volume of transactions, period of holding, frequency of transactions, employment of borrowed funds for acquiring shares, nature of shares acquired etc. which taken together show the intention of the assessee for acquiring the shares. It is also an established position that the presence or absence of a single factor is not conclusive to determine the actual nature of the acquisition and a proper evaluation of all the factors taken together only show the actual intention of the assessee. In the instant case the ld. AR of the assessee submitted before us that as the assessee could not acquire sufficient number of shares and therefore the assessee sold the shares in question. However, no material was produced before us or before any lower authorities to support the above contention. We observe that the lower authorities have also not properly verified the entire facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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