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TMI Blog2013 (10) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... bracing formula or guideline to these kinds of transactions. In the instant case, assessee is mainly engaged in the business of partnership firm wherein, he is a whole time partner. For the purchase of shares, he has not borrowed any funds and has used his own fund from which is evident from the capital account. Further, right from the earlier years, he has shown these shares as investment in the balance sheet which have been accepted by the Department also. The gain from such investments has also been assessed as capital gain, even though such assessments have been completed under section 143(1) but the same have not been disturbed. From these facts, it can be gathered that the assessee's intention in the purchase of shares was mostly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains earned by the assessee amounting to Rs. 6,02,458 was treated as share trading income and accordingly assessed under the head 'Income from business or profession'. 2. The appellant prays that the treatment of the short term capital gains of Rs. 6,02,458 as business income be deleted and the Assessing Officer (Assistant Commissioner of Income Tax 19(1), Mumbai be directed to treat the same as short term capital gains and accordingly assess it under the head 'CAPITAL GAINS" 2. Facts in brief:- The assessee is an individual and is deriving income mainly by way of salary and remuneration from partnership firms Brilliant International and Brilliant Industries. These firms are in the business of manufacture and export of electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a period of one month and the remaining within four months and, therefore, the motive of the assessee was to earn quick profit. He also analysed the frequency of sale of shares and found that there were repetitive transactions in the name of scrips like UCO Bank, Allahabad Bank, Union Bank, Syndicate Bank, UTI Bank, etc. Thus, he concluded that the assessee's entire motive was earning of profit and, hence, instead of short term capital gain it should be treated under the head "Business Income". Against the said remand report, the assessee also filed rejoinder submissions. However, the learned Commissioner (Appeals) rejected the assessee's contention and relied upon the decision of the Tribunal, Mumbai Bench, in Sadhana Nabera v/s ACIT, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in all the years, the assessee has shown the purchase of shares as investment in his books of account and in the balance sheet filed along with the return of income from time to time. In the earlier years, such income from sale of shares has been assessed as capital gain, though these assessments have been finalized under section 143(1). Regarding observations of the learned Commissioner (Appeals) about various transactions, he submitted that some of the transactions were in mutual funds and 55 transactions out of 92 transactions, the shares were held for more then three months and out of these transactions, 96% of the capital gain have arisen to the assessee. In the whole year, the assessee has carried out only 92 transactions which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant findings of the Assessing Officer and the learned Commissioner (Appeals) as well as the material available on record. The issue of assessability of income in the transactions of sale and purchase of shares, whether to be assessed under the head "capital gain" or under the head "business income" has been subject matter of consideration before various Courts. There is thin line demarcation between the activities of such kind which can be considered purely for investment purpose or for trading purpose. The guiding parameters like volume and frequency of transactions, holding period of shares, intention of the assessee, treatment given in the books of account and host of other factors that are very relevant for such transactions whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is seen that the maximum gain has been on those shares, which have been held for period of 91 to 180 days and 181 to 365 days, which is evident from the chart reproduced herein above. If all these factors are considered in totality, it cannot be held that the assessee was engaged in organized and systematic activity of trading of shares. It has also been submitted before us that in case of long term capital gain transactions of the shares have been accepted by the Assessing Officer. Thus, under the facts and circumstances of the case, we hold that the learned Commissioner (Appeals) was not correct in holding that the assessee was carrying out the business of purchase and sale of shares for the motive of business profit. Even in case of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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