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TMI Blog2015 (4) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... suggest that somehow the facts were different, or conduct of the assessee was so different, to hold differently. We find ourselves gainfully supported by the decision of Special Bench of the ITAT at Mumbai in the case of Gopal Purohit [2009 (2) TMI 233 - ITAT BOMBAY-G] , which has since been approved by the Hon’ble Bombay High Court, dismissing the appeal filed by the department u/s 260A, reported in [2010 (1) TMI 7 - BOMBAY HIGH COURT], wherein the basic ratio as laid down was in the case of consistent approach to be adopted in case of separate portfolios maintained by the assessee. In such a circumstance, it would be erroneous to sustain the orders of the revenue authorities. In the course of proceedings before us, the AR had pointed out that the assessee had neither taken any loans nor it had any employees nor it conducted its activities in an organized and in any continuity. Besides this one of the most important factors is the intention the assessee. The intention has to be seen at the time of acquisition of shares, i.e. whether to hold or dispose off. This has to be gathered from the actual conduct of the assessee while dealing with the shares, We are supported by the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has paid service tax, transaction charges and turnover tax and D-mat charges on these transactions. The AO held that the assessee was trading in shares. According to the AO, i) The sole intention was to book profit, ii) Trading in regular intervals and payment of professional charges, iii) Ratio of sales and purchases i.e. one to one sales and purchases, iv) Devotion of time and money in the activity as a means of livelihood of assessee, etc. 4. The AO further held that the assessee carried out the transactions only to avoid payment of taxes and to reduce the tax burden. The AO held that the assessee had shown these transaction of purchase and sale of shares when Security transaction act was introduced. This clearly means that the intention of the assessee was to earn profits from trading activity. The AO therefore, negated the claim of the assessee of claiming the STCG and treated the profit of the assessee from the purchase and sale of shares as business income to be taxed under the head profit and gains of business and profession. 5. The AO, therefore held that the gains on sale of shares is business income and cannot be characterized as capital gains. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onorable Supreme Court observed that 'the presence of all these factors may help the court to draw an (inference that a transaction is in the nature of trade, but it is not a matter of merely counting the numbers of facts and circumstances pro and cons, what is important is to consider their distinctive character.' CBDT bas also issued clarified this issue from time to time. First clarification was in the form of instruction 1827, dated August 31, 1989 and second clarification was by circular no 4.12.2007. In the circular certain legal principles were brought to the knowledge of the AO and it was emphasized that ultimately it the AO who has to decide the issue by taking into consideration all facts of each case. 3.1 Legal principles, which may guide the AO to decide the issue in a particular case, may be summarized as under (i) Intention of the assessee at the time of purchase of assets. If intention is to purchase and hold the assets, it should normally be treated as capital transaction. If purchases are made with a view to resell it may be treated as trade transactions. (ii) Whether the assessee is a trader in commodity and the transaction of purchase and sale of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has frequently and continuously indulged in purchase and sale of shares. Even the turnover of the assessee is many times more than the average fund employed by the Assessee for investment. The assessee has indulged in purchase and sale of shares of 48 companies. The turnover of the assessee of those shares, profit from which was shown by the assessee under the head Short term Capital Gain is ₹ 2,43,32,164/-; whereas the average investment of the assessee in shares is only ₹ 98.77 lacs. Thus the turnover of the Assessee is nearly three times of average fund used for investment. It is further seen that the assessee company has only two shareholders. These two persons are also the directors of the Assessee company. These persons are Mr. S.P. Tulsian and his wife Tulsian. Shri S. P. Tulsian is a member of National Stock Exchange and this main income is earned from brokerage He earned brokerage of ₹ 31,09,770/- From shares. He is also a well-known TV personality appearing on CNBC television channel and expresses his view on trends in stock market. He is also controlling all activities of the Assessee company. Naturally when decision of purchase and sale of shares ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot interpret the same judiciously, as per the apparent facts of the case. Since the number of transactions were 48 in the entire year, this according to the CIT(A) was high in the case of the investor. This view by the CIT(A) baldly sustaining the observation of the AO. When we look into the facts, we find that the assessee is neither holding any SIT portfolio, nor was he indulging into sale and purchase on a regular interval basis. We also find that the department has accepted the status of the assessee as that of an investor in the preceding years as well as in the subsequent years. 14. This shows the consistency of the approach by the assessee as well as by the department. However, in the instant years, the revenue authorities did not specify anything to suggest that somehow the facts were different, or conduct of the assessee was so different, to hold differently. We find ourselves gainfully supported by the decision of Special Bench of the ITAT at Mumbai in the case of Gopal Purohit vs JCIT, reported in 122 TTJ 87 (Mum-SB), which has since been approved by the Hon ble Bombay High Court, dismissing the appeal filed by the department u/s 260A, reported in 336 ITR 287, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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