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TMI Blog2014 (6) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... the other depends on the question whether the excess is an enhancement of the value by realizing the security or a gain in an operation of profit making. The assessee might have invested capital in shares with an intention to resale these if in future their sale brings in a higher price - Such an investment though motivated by a possibility of enhancement value, did not necessarily render the investment a transaction in the nature of trade – there was no reason as to why the profit should not be taxed under the head Short term capital gain as returned by the assessee – thus, the order of the CIT(A) is set aside and the AO is directed to tax the profit arising from the sale of shares under the head ‘Short term capital gain’ as shown by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. 2. On the facts and circumstances of Appellant s case and in law, the CIT(A) erred in holding that the Appellant is a trader in share and not investor . 3. On the facts and circumstances of Appellant s case and in law, the CIT(A) erred in holding that expenses of Rs. 7,45,426/- are disallowable u/s. 14A r.w. Rule 8D. 3. The assessee is an individual deriving profit from share of profit and interest on capital from firms wherein assessee is one of the partners. The assessee is also deriving salary income and has also shown Short term capital gains Long term capital gains and income from other sources. 4. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It was further explained that the assessee has not borrowed money to make investment in shares. The assessee has also earned Long term capital gain of Rs. 10.36 lakhs which has been accepted as such by the AO. Most of the shares sold during the year were brought forward from the earlier year and therefore the AO has grossly erred in treating the assessee as a trader. 5.1. After considering the facts and the submissions made by the assessee, the Ld. CIT(A) at para 2.3 on page-12 of his order held as under: I have considered the submissions of the Ld. Counsel and this case it is seen that the appellant has consistently, systematically and methodically entered into the series of transactions so designed to book a profit and earn a qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a partner in M/s. Kamdar Co., M/s. Mahek Investments, K. Amishkumar Co., and M/s. Hamsa Trading Co., from where he is deriving share of profit and interest on capital. The assessee is also deriving remuneration from K. Amishkumar Trading Pvt. Ltd. In addition to this, the assessee is also deriving rental income from M/s. Frankfinn Institute of Airhostess and K. Amishkumar Trading Pvt. Ltd. The allegation of the Revenue authorities that the assessee has indulged in repeated transaction of the same scrip is not supported by the facts on record as can be seen from the chart which is exhibited at page-2 3 of the assessment order. 8.1. The assessee has purchased shares of Reliance Communication on 12.1.2006 and 27/28.3.2006. The shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer and was no longer an investor in shares the particular holdings which had been cleared and the sales of which had resulted in the profit in question had always been treated by it as an investment. It can hardly be disputed that there was no bar to a dealer investing in shares. But then the matter does not rest purely on the technical question of onus which undoubtedly is initially on the revenue to prove that a particular item of receipt is taxable. Whether a particular holding of shares is by way of investment or forms part of the stock-in trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as accepted that the assessee is an investor in so far as the Long term capital gain is concerned. 8.4. Considering the volume and frequency of transactions and also the past assessment history of the assessee, we do not find any reason as to why the profit should not be taxed under the head Short term capital gain as returned by the assessee. We, therefore, set aside the findings of the Ld. CIT(A) and direct the AO to tax the profit arising from the sale of shares under the head Short term capital gain as shown by the assessee. Ground No. 1 2 are accordingly allowed. 9. Ground No. 3 relates to the disallowance u/s. 14A r.w. Rule 8D. 10. The Ld. CIT(A) has considered this grievance at para-3 on page- 13 of his order. 11. Bef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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