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TMI Blog2013 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant factors which shows that assessee has been engaged in business/vocation and not as an ‘investor’, so far the assessment year in question is concerned. Not only a large number of transactions have been made directly through the ICICI Online, but the assessee has also made voluminous transactions through PMS - These transactions of purchase and sale have been made continuously and regularly throughout the year without any interval, showing that assessee was keeping a constant vigil on the ups and downs of the market, and purchasing and/or selling the shares accordingly - This type of conduct, it may be appreciated, cannot be said to be that of an investor; rather, has the characteristics of a business - The word “business” is a word of large and indefinite import - it is something which occupies the attention and labour of a person for the purpose of profit - it is an activity carried on continuously in an organized manner with a set purpose and with a view to earn profit - these attributes were present in the instant case. M.M. Nissim & Co. Versus Assistant Commissioner of Income-tax 11(3) [2007 (9) TMI 437 - ITAT MUMBAI] - The entirety of the transactions and the ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, agreed with the submissions of the Authorized Representative (AR), the counsel for the assessee, to the effect that assessee had been consistently investing in shares, bonds, mutual funds, etc., and has earned Long Term Capital Gains (LTCG) on sale thereof during the financial years relevant to the assessment years 2005-06 and 2006-07, which have been accepted by AO. The AO had also accepted the STCG earned by assessee on account of PMS transactions. It was further observed by the ld. CIT(A) that there are only 78 scrips held through ICICI Online, out of which in 70 scrips there was only a single transaction during the year and, thus, there is no churning of or voluminous business, as observed by the AO. Even out of the capital gains earned through ICICI Online, an amount of Rs.20,17,007/- had been earned on shares held for more than 200 days. The ld. CIT(A) was further impressed by the fact that the assessee had been consistently declaring the amount of investment in shares in her balance-sheet for all the assessment years as an investment. There was no utilization of borrowed funds for the purpose of investment in shares. The assessee had also earned dividend of Rs.3,19,163/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te before us relates to the transactions made by assessee directly through the ICICI Online, we observe that not only a large number of transactions have been made directly through the ICICI Online, but the assessee has also made voluminous transactions through PMS. These transactions of purchase and sale have been made continuously and regularly throughout the year without any interval, showing that assessee was keeping a constant vigil on the ups and downs of the market, and purchasing and/or selling the shares accordingly. This type of conduct, it may be appreciated, cannot be said to be that of an investor; rather, has the characteristics of a business. The word business is a word of large and indefinite import; it is something which occupies the attention and labour of a person for the purpose of profit; it is an activity carried on continuously in an organized manner with a set purpose and with a view to earn profit. We find these attributes to be present in the instant case. 4.2 The argument of the AR that the number of transactions per scrip is very less, though on face appears to have some force, however, fails when we go through the record of the transactions. It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is only indicative and not a fixed criterion. It is the assessment, on an overall appreciation of facts, that is material, so that no single criteria can be followed in this respect. 4.4 The next submission of the ld. AR is to the effect that almost 70% of the income has been earned by selling shares with a holding period of more than 200 days. We observe that it is not a criterion as to what income has been earned from the shares with holding period of 200 days or more, or having holding period of less than 30 days or even lesser, which all depends on the assessment of the anticipated price movement in the individual scrip vis-a-vis the actual movement therein as well in the market. We observe that a number of purchase and sale transactions with a holding period of less than 200 days, or even less than 30 days, were made by assessee during the relevant year. It is immaterial as to what income has been earned by assessee and from what transactions. The material fact is that assessee has made so many transactions out of which certain transactions ended in more than 200 days and certain transactions ended in a very short period. The number of transactions; the whole time engageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions. 4.6 The argument of the learned AR that the frequency of the transactions of investments in shares of different companies cannot be a criterion to understand the nature of the transactions is also not tenable. The ld. AR has given an example that a person may invest his money in fixed deposits of various Banks, so that he does not loose his capital in case of insolvency of any particular bank and, similarly, when an investor invests in various different companies, he does not become a trader nor it is the frequency of the transactions but the transactions per scrip that is to be seen. The said submission is of no moment in the facts of the case. In case of investment in fixed deposits, the money is invested for a fixed period. The investor is not concerned with the ups and downs in the market; there is no constant engagement; rather, no engagement at all, and the investor is entitled to a fixed rate of interest over the term of the investment. On the other hand, in case of investment in shares of different companies, the investor keeps a constant vigil on the market so as to earn maximum profit by making sales and purchase as per the trend of the market as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r buy, hold or sell a scrip by keeping a constant vigil on the market as also the developments in the economy as well as in relation to the shares held or to be held. The law laid down by the hon'ble apex court in G. Venkataswami Naidu s (supra) case relied upon by assessee goes against assessee rather than help her. The Hon'ble Supreme Court in the said authority in clear words has held that in each case it is the total effect of all the relevant factors and circumstances that determine the characteristics of the transactions. No single or direct rule can be mechanically applied; rather, it is the facts and circumstances of each case which determine the character of the transaction. As observed by the apex court, for an investment in a purchase, the element of pride of possession comes into picture. In the case in hand, no such element is involved. 4.8 The ld. AR has further relied on an authority styled CIT v. Associated Industrial Development Co. (P.) Ltd., 82 ITR 586 (SC) to stress the point that, as held therein, whether a particular holding is by way of investment or as stock-in-trade is a matter which is within the knowledge of assessee who holds the shares. In normal circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be regarded as a dealer because the shares did not form its stock-in-trade. It was observed that upto a certain point of time the assessee had been assessed as an investor but the multiplicity of the transactions crossed successively over the years showed that assessee had ceased to be an investor and had become a dealer. The assessee should have contended that even on the assumption that it became a dealer and was no longer an investor in shares, the particular holding, on sales of which profit in question had arisen, had always been treated by it as an investment. The hon'ble apex court observed that though initially the onus is on the Revenue to prove that a particular item of receipt is taxable, but the onus shifts to the assessee as it in normal circumstances should be in a position to produce evidence from its record as to whether it has maintained any distinction between the shares which are its stock-in-trade and those which are held by way of investment. The hon'ble court observed that assessee in that case made no attempt to make out a case that the shares which had been sold were a part of its capital investment, and that those shares had been treated in its books any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 117 (Mum), to stress the point that delivery based transactions should be treated as in the nature of investment transactions, and not as income from business or profession. As the hon'ble apex court has observed in the above mentioned authority/s that there cannot be a fixed criteria or rule to judge that the income earned can be characterized as capital gain or business income, but the overall facts and circumstances of the case; the number of transactions; the conduct and intention of assessee, etc., are the relevant considerations. Hence the authority of the Mumbai Bench of the tribunal, and also another styled as Saranath Infrastructure P. Ltd. Vs. Asstt. CIT, 120 TTJ 216 (Luck.), with due respect, are good as per the facts and circumstances of those cases, but due to the peculiar facts of this case, cannot be applied in this case. 5. In view of the above observations, the appeal of the Department is hereby allowed, and the AO is directed to treat the impugned income in question as earned through transactions made directly through ICICI Online as business income and assess the assessee accordingly. 6. In the result, the appeal by the Revenue is allowed. Order pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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