9911796707
TMI Blog2013 (12) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... Briefly the facts are the assessee is an individual. For the assessment year under dispute, the assessee filed his return of income on 30-9-2008 declaring a total income of Rs.13,62,10,060/- comprising of remuneration received from Zustek Systems Pvt. Limited ,capital gains and income from other sources. The assessee also declared loss under the head 'business' of an amount of 1,99,41,168/-. In course of scrutiny assessment proceedings, the Assessing Officer asked the assessee to show cause as to why the transactions in shares should not be treated as investment activity of the assessee due to the following reasons:- i) The assessee invested his own funds out of his capital gains in the shares. ii) Borrowed money was not utilised for inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the assessee made investments in shares from his own funds and not out of borrowals. It was further submitted by the learned Departmental Representative that the assessee has claimed share transaction as a trading activity only for the purpose of reducing his tax liability. 4. The learned AR in his written submissions filed before us submitted that the assessee has purchased and sold stocks and shares of several companies on a substantial scale. The total shares purchased during the year amounted to Rs.11.30 crores and total sales of shares during the year amounted to Rs.5.2 crores. The learned AR submitted that if the activity of the assessee in share transaction is tested with the parameters laid down by the jurisdictional hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head "business" or an investment income derived from which has to be assessed as capital gain. While it is the contention of the assessee that he has held the shares as stock in trade for trading purpose and has never the intention of holding it as investment for earning dividend, it is the case of the department that the assessee was holding the shares as investment only. As per the principles of law laid down, the character of a transaction carried on by the assessee whether constitutes a business activity or is in the nature of investment only cannot be determined solely on the application of any abstracts rule,. Principle or test but, would depend upon all the facts and circumstances involved in the case. No single criterion is decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction and management which would indicate that it was in the nature of trade; (i) Repeated transactions, coupled with the subsequent conduct of the assessee to re-enter the same scrip or some other scrip, in order to take advantage of market fluctuations lent the flavour of trade to such transactions; (j) The assessees were purchasing and selling the same scrips repeatedly, and were switching from one scrip to another; (k) Mere classification of these share transactions as investment in the assessee's books of accounts was not conclusive. (l) The intention of the assessees at the time of purchase was only to sell the shares immediately after purchases; (m) Frequency of purchase and sale of shares showed that the assessee never inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantities. The CIT(A) has also mentioned specific instances where purchases of shares of a particular company was intervened by sales of those shares. The period of holding of shares was also very short. For which reason the assessee could only earn dividend of Rs.64,867/-only though the volume of transaction was very high. It is also a fact to reckon with that in subsequent assessment years i.e. in 2009-10 and 2010-11 also the assessee has treated the transaction in shares as business. In fact for the assessment year 2010-11 the assessee has disclosed a profit of Rs.2,14,80,187/-as profit from sale of shares and has paid tax of Rs.66.40 lakhs. From the frequency and regularity of buying and selling of shares, it is obvious that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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