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TMI Blog2013 (9) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... delineate the facts and circumstances of the case as well as the respective cases of both the parties. The assessee-individual disclosed the following activities for the year, along with the operating results: Nature of share trading activities claimed Income/profit earned No. of shares traded Futures and Options trading (21510059) 36269502 Short-term profit on sale of shares 60128293 2145551 Speculation profit (9343) 3644 Long-term capital gain on sale of share 35659784 272551 Total Shares Traded 38691248 The net profit from the Future & Options (F&O) activities, as well as the profit on sale of shares (i.e., sold within a year of their purchase), thus, at Rs. 373.36 lakhs, stood returned as business income and set off against the brought forward business loss, so that the final income offered under this head was at Nil. The assessee was, therefore, considered by the Assessing Officer (A.O.) as being clearly engaged in all types of share transactions, and on a systematic basis, and which in fact was for the past several years. The assessee, in fact, maintained separate books of accounts for this business, which stood duly audited, bearing all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he apex court, also quoting there-from, viz.: 1) Tuticorin Alkali Chemicals and Fertilizers Ltd. vs. CIT [1997] 227 ITR 172 (SC); 2) Chowringhee Sales Bureau P. Ltd. [1973] 87 ITR 542 (SC); 3) CIT vs. H. Holck Larsen [1986] 160 ITR 67 (SC) and; 4) Rajputana Vishveshwara Singh (Agencies) Ltd. vs. CIT [1961] 41 ITR 685 (SC) 3.2 In appeal, the matter was again examined at length by the ld. CIT(A). The assessee had engaged in all forms of shares trading, returning income as under: i. Business income Rs.3,73,36,316.00 ii. Short Term Capital Gains Rs.Nil iii. Income from other sources (*) Rs.22,969.00 iv. LTCG Rs.3,56,59,784.00 (*) wrongly stated as '27969' in the impugned order (pg. 6) The transactions are being carried out through the same bank account, using the common funds, through the same D-Mat account and using the same infrastructure and, in fact, through the same broker. There is no classification or categorization of the shares as to being either a part of the trading stock or as capital assets. The claim of the shares sold after one year of their purchase as being capital assets is, therefore, untenable, and prompted merely to take benefit of the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing also actively engaged in share trading business. Further, the assessee had admittedly declared the income from the shares sold within a period of a year of their acquisition as business income. Our first observation in the matter is that the primary facts are not in dispute, and both the assessing as well as the first appellate authority have arrived at their conclusions on the same set of basic facts, i.e., with regard to the various parameters in relation to the share transactions entered into during the year, viz. the number of scrips held, purchased and sold during the year. The question as to whether the assessee's share transactions are in 'capital assets', though of long term tenor, or of trading stock, is essentially one of fact, requiring an analysis of the relevant data, as well as the surrounding facts and circumstances of the case. Proceedings with our examination of the objections, we firstly observe that trading in the shares, whether in the speculative or non speculative mode, is the assessee's principal occupation, perhaps the only occupation; the assessee's only other income being by way of dividend apart from negligible income from other sources. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower than that warranted by its fair value, going by its performance, or by the price behavior reflected in the past. As soon as, therefore, there is a correction in price, or any improvement in the market sentiment, the scrip is sold. On the other hand, an adverse price movement would suggest of a wrong decision, warranting its liquidation. Thus, while the former is a capital asset, the decision qua holding of which is ordinarily not affected by the price movement or the price obtaining for the time being, the other is a trading stock, which needs to be rotated. The other factor would be the price differential realized on sale. While an investor would normally look for higher gains, a trader would be satisfied with small gains inasmuch as he wishes to square his position and move on to the next earning opportunity. This, however, is only an indicator and, as afore-stated, the decision in the matter requires a consideration and holistic view taking all the factors into account. In the instant case, all the shares have been bought by the assessee in the regular course of his business, employing common funds, depositing them in the same D-Mat account, and even through the same bro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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