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TMI Blog2014 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain of Rs. 97,26,090/-. The AO asked the assessee to explain as to why the short term capital gain on sale of shares should not be treated as profit from trading in shares. In reply the assessee explained and submitted that the said income was short term capital gain and not trading profit. The AO did not accept the explanation of he assessee and treated the entire short term capital gain on sale of shares as profit from trading in shares. 3. On appeal, CIT(A) held that the gain arising out of purchase and sale of shares with holding period of less than 10 days has to be considered as business income and rest of the gain has to be treated as short term capital gain. Thus both assessee and revenue have challenged he impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the detailed arguments given by the assessing officer which clearly establish the motive of the assessee to indulge in trading activity. 02. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer by treating income of Rs. 1,09,952/- arising out of share dealing in HDFC mutual funds as business profit instead of short term capital gain". 4. Before us, the Ld. AR for the assessee submitted that the assessee is a partner in the partnership firm and, therefore, the main activity of the assessee is devoting time to the partnership firm and no dealing in shares. The Ld. AR has further contended that the assessee is a qualified Engineer and mainly invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days would not change the character of capital asset into trading asset. The Ld. AR has further submitted that the claim of the assess of short term capital gain has been accepted by the AO in the earlier assessment years 2006-07 2007-08 and there is no change in the facts and circumstances in the year under consideration. The AO cannot take the different stand when the claim of the assessee was accepted in the earlier years. Even in the subsequent year, claim of the assessee has been accepted by the AO. Thus the department has accepted the claim in the earlier years as well as in the subsequent year and only for the year under consideration the claim of the assessee has been denied. He has relied upon the decision of Hon'ble Jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain and not from other activities that too has been earned from the purchase and sale of shares up to the 50 days. He has referred the assessment order and submitted that the assessee has utilized borrowed capital though no interest was paid. Further the assessee has not utilized his own funds, therefore, the intention of the assessee in purchasing the shares is not a long term investment but with the motive to earn profit at the shortest period and to return/refund the borrowed funds. He has further submitted that the assessee is a regular subscriber of the IPO's of the company for allocation of shares which have been invariably sold with in 10 days accept for very few shares which have been retained up to 30 days or part of them up to 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the assessee has carried out only 59 transactions of purchase and sale in 29 scrips out of which the capital gain earned by the assessee on sale of 27 scrips. The details of share and holding period are reproduced by CIT(A) at page 4 of the impugned order as under:- IMG 7. It is clear from the details given above that out of the total 27 scrips from which short term capital gain earned by the assesseee 11 scrips were held for a short period of 6 to 9 days and remaining scrips were held by the assessee for an average period of 90.44 days ranging from 1 month to 8 months. There are various factors which has to be taken into consideration for determining the nature of transaction of purchase and sale of shares. These factors includes, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and has not claimed the benefit of STT paid on the purchase and sale of shares of the transactions. Under the provision of the Act the short term capital asset and long term capital asset is defined in case of shares and securities on the basis of holding period on one year. In other words if the holding period is more than 1 year then the asset in the nature of share and securities would be long term capital asset otherwise it will be short term capital asset. The gain from sale of capital asset would be treated depending upon the holding period less than 1 year or more than 1 year. Thus if the assessee has treated the transactions as investment then the entire transactions having holding period less than 1 year would be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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