9911796707
TMI Blog2014 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... vide assessment order dated 31.12.2010 passed under section 143(3) read with section 263 of the Income Tax Act, 1961, held that income arising from sale of shares is business income and not long term/short term capital gains. Similarly, for the assessment year 2008-09, the assessee filed its return of income on 28.07.2008 declaring total income of Rs. 58,50,180/-. For this assessment year as well the assessee claimed profit arising on sale of shares as long term/short term capital gain. However, the Assessing Officer vide order dated 31.12.2010 passed under section 143(3) of the Act, discarded the plea of the assessee and held income arising out of sale of shares as business income. Aggrieved against the respective assessment orders, the assessee preferred appeals before the CIT(A). The CIT(A) vide order dated 9.7.2012 partly allowed the appeals of the assessee for statistical purposes, wherein the CIT(A) following the order of the Jaipur Bench of the Tribunal in the case of ACIT vs. Kavita Devi Agarwal (decided on 23.9.2011) has held as under:- "12. Therefore considering the facts of the appellant's case wherein the appellant has returned profit on purchase and sale of shares as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to treat the gain arising out of sale of shares as capital gain. In order to support his contentions, the DR relied on the order of the Hyderabad Bench of the Tribunal in ITA No.748/Hyd/2011 in the case of M/s. Spectra Shares & Scripts Pvt. Ltd., Vs. DCIT decided on 5.8.2011. The DR has also relied on the judgement of the Hon'ble Andhra Pradesh High Court in the case of P.V.S. Raju Vs. ACIT reported as 340 ITR 75 and the judgement of the Hon'ble jurisdictional High Court in the case of Matheson Bosanquet Enterprises Ltd. Vs. DCIT., reported as 316 ITR 375(Mad) . The D.R. contended that the Hon'ble Supreme Court of India in the case of Raja Bahadur Visheshwara Singh Vs. CIT 41 ITR 685 (SC) has held that magnitude, frequency and ratio of sales to purchase shows the true nature of activity of the assessee. 5. The DR further contended that although the assessee has shown the holding of shares as investment in its books of accounts but mere book entries do not determine the nature of investment. The entries in the balance sheet does not absolve the assessee from the liability. 6. On the other hand, Shri K.Balasubramanian appearing on behalf of the assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trader in shares is a question of fact to be decided on the facts and circumstances of each case. 8. The learned AR has referred to page 4 to 8 of the paper book which contain income tax return for the assessment year 2005-06 and the computation of total income along with balance sheet for the financial year ending 31.3.2005. A perusal of the computation of income shows that apart from income from capital gain from sale of shares other components are income from salary, income from house property and income from other sources which include dividend income. In the said balance sheet, the assessee has shown investment in shares to the tune of 2.99 crores. At page 9 the assessee has given summary of short term capital gains arising from trading in shares for the assessment year 2005-06 which comes to Rs. 11,13,351.92. At page 10 to 12, the assessee has given list of shares which were held for more than 30 days but less than one year. At page 13 to 16, the assessee has given list of shares held for less than 30 days and at page 17 to 19, the assessee has given list of shares which were held for zero days i.e. shares were purchased and sold on the same day. Similar details have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble High Court. 11. The Hon'ble Supreme Court of India in the case of Raja Bahadur Visheshwara Singh (supra), has laid down the law to determine the nature of investment in shares. The Hon'ble Apex Court held as under:- "...... The question referred was whether there was material for the assessment of that amount as income arising from an adventure in the nature of trade. The High Court held that that was the nature of the transaction. On appeal this Court held that before the Tribunal could come to the conclusion that it was an adventure in the 'nature of trade, it had to take into consideration the legal requirements associated with the concept of the trade or business and that such a question was a mixed question of law and fact. It was also held that where a person invests money in land intending to hold it and then sells it at a profit it is a case of capital accretion and not profit derived from an adventure in the nature of trade but if a purchase is made solely and exclusively with the intention to resell it at profit and the purchaser never had any intention to hold the property for himself there would be a strong presumption that the transaction is in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yderabad Bench of the Tribunal in the case of Spectra Shares & Scripts P.Ltd., (supra), has held as under:- "50. Looking into the volume, frequency, continuity and regulatory of the transactions of purchase and sales in shares, it can be inferred that these transactions must have been entered into by the assessee with a profit motive. The assessee might have intention thereby to carry on business. It cannot be said that these transactions were entered into only for the purpose of investment and there was no motive of the assessee to earn profit. Though the word 'business' has not been defined in the taxing statute at it postulates the existence of certain elements in the activity of an assessee which would invest it with the character of business. According to well established interpretation of word 'business' as found in taxing statutes it is the sense of an occupation or profession which occupies the time, attention and labour of a person normally with the object of making profit. To record an activity as business there must be of course of dealing either actually continued or contemplated to be continued with a profit motive and not for support or plier. 51. In our opinion, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old by him as investments and those held as stock-in-trade. [CIT vs. Associated Industrial Development Co. Ltd. 1972 CTR (SC) 239: (1971) 82 ITR 586(SC)]. (c) Treatment in the books by an assessee will not be conclusive. If the volume, frequency and regularity with which transactions are carried out indicate systematic and organized activity with profit motive, then it would be a case of business profits and not capital gain, [CIT vs. Motilal Hirabhai Spg. & Wvg. Co. Ltd. 1977 CTR (Guj) 674: (1978) 113 ITR 173(Guj), Raja Bahadur Visheshwara Singh (Decd) & Ors. vs. CIT (1961) 41 ITR 685(SC)]. (d) Purchase without an intention to resell where they are sold under changed circumstances would be capital gains. CIT vs. P.K.N. Co. Ltd. (1966) 60 ITR 65(SC). Purchase with an intention to resell would render the gain profit on sale business profit depending on the circumstances of the case like nature and quantity of article purchased, nature of the operation involved. [Saroj Kumar Mazumdar vs. CIT (1959) 37 ITR 242(SC)]. (e) No single fact has any decisive significance and the question must depend upon the collective effect of all the relevant materials brought on record. [Janki Ram Bah ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
