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TMI Blog2015 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has given a finding of fact that the underlying shares have been acquired by Assessee’s own funds and no borrowed funds have been used, the Assessee had treated the shares as “Investments” and not as “stock in trade” and the motive of trading in those shares have not been established by the A.O and merely by referring to the volume and number of transactions does not establish the motive of Assessee to be a trader of shares. These finding of fact of ld. CIT(A) has not been controverted by Revenue. In the present case, we find that ld. CIT(A) has given a clearly finding about the acquisition of shares in IPOs were with the help of part finance taken from ILFS & J.M. Financial Services and the activity of Assessee was systematic activity so as to treat it in the nature of business - ITA Nos: 171 & 212/AHD/2011 & ITA Nos: 847 & 1361/AHD/2010 - - - Dated:- 4-12-2015 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER SHRI S.S. GODARA, JUDICIAL MEMBER For the Petitioner : Shri Dinesh Singh, Sr. D.R. For the Respondent : Shri S.N. Soparkar, A.R. ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. These 4 appeals of which 2 are filed by the Assessee and 2 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g them could be termed as Business or adventure in the nature of trade. The entire finding and observation are incorrect on the facts and circumstances of the case. In view of this the treatment of ₹ 28,52,583/- as business income is incorrect on the facts and on law and the same be deleted and the income be taxed as Short Term Capital Gain as treated and offered by the assessee. 3. The order passed by the learned C.I.T. (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 5. On the other hand the grounds raised by the Revenue in ITA No. 1361/Ahd/2010 reads as under:- 1. The ld. CIT(A) has erred in law and on facts in directing the A.O. to tax surplus of ₹ 1,29,68,597/- arising from sale of shares and securities as short term capital gains as per the provisions of Section 111A and not as business income. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 6. Since the grounds raised by Assessee and Revenue in their respective appeals are interconnected, both the appeals are considered together. 7. During the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant, in the previous year under consideration, has got surplus of ₹ 1,58,21,180/- in the share transactions. In the return, the aforesaid surplus amount has been offered to tax as STCG, which is taxed @ 10%. The appellant has not directly advanced any funds to Rupal Panchal and others, who are involved in the IPO Scam. This has been categorically stated by the appellant vide submissions made on 10.02.2010. The same has been reproduced at para 7 of the instant appellate order. Out of total surplus amount of ₹ 1,58,21,180/-, the surplus amount of ₹ 28,52,583/- has been generated in the sale / purchase of shares of IDFC Ltd. and Yes Bank Ltd. These shares were acquired by making application in the IPOs of these companies through IL FS and J.M. Financial Services Pvt Ltd. The IL FS and M/s. J.M. Financial Services Pvt. Ltd. had also partly financed such activity. The appellant has provided part finance to M/s. IL FS and M/s. J.M. Financial Services Pvt. Ltd. for making application in the IPOs of IDFC Ltd. and Yes Bank Ltd. After acquisition of these shares, these shares have been sold as per the details mentioned by the Assessing Officer at page 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the adventure in the nature of trade and same has to be taxed as business income. The Assessing Officer is directed to tax ₹ 28,52,583/- at the rates applicable in the case of business and profession. 8.5 As regards to balance surplus amount of ₹ 1,29,68,597/-, this surplus has arisen as the appellant had mainly invested in shares it's own funds. It is also noticed that investment in shares is shown by the appellant in the account under the head Investment and not stock in trade. Thus, the appellant's intention of making investment was clear. The appellant has not incurred any substantial interest on borrowings for such investment. There is no motive of trading in shares established by the Assessing Officer except referring to the volume and number of transactions. I also appreciate the arguments that the Assessing Officer's contention about period of holding are not correct particularly in view of the fact that definition of short term capital asset in respect of shares and securities itself specifically provides that the period of holding would be less than one year. This itself suggest that the short period of holding is not the criteria to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that on identical facts, in the case of Smt. Smruti Shah, who is sister in law of assessee, the tribunal by its decision dated 26.6.2015 in ITA nos. 3214/A/2009 others, had decided the issue in her favour and against the Revenue. He also placed on record the copy of the aforesaid decision and submitted that since the facts of the case are similar to that of Smruti Shah (supra) following the decision of the Coordinate Bench in the case of Smt. Smruti Shah (supra) the matter be decided in favour of the assessee. 10. The Ld DR on the other hand supported the order of AO and further submitted that in the present case, of the total profits which have been claimed by the Assessee as STGG, Assessee has earned ₹ 71.80 lacs from the sale of shares where the holding period of shares ranged between 0 to 33 days, that the Assessee has also indulged in speculation of shares as is evident from the computation of income and that the facts in the present case are similar to that of Manoj Samderia reported in (2012) 27 taxmann.com 102 (Del) and other decisions. He thus supported the order of A.O 11. We have heard the rival submissions and perused the material on record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts are identical. We do not agree with the submission of ld. A.R. of the facts of the present case being similar to that of Smt. Smruti Shah more so in view of the fact that in the present case, we find that ld. CIT(A) has given a clearly finding about the acquisition of shares in IPOs were with the help of part finance taken from ILFS J.M. Financial Services and the activity of Assessee was systematic activity so as to treat it in the nature of business whereas in the case of Smt. Smruti Shah (supra) we do not find any such finding of fact. Apart from the aforesaid, we also find that the case laws relied upon by Revenue and Assessee are distinguishable on facts and are therefore not applicable to the facts of present case. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the appeal Assessee and Revenue are dismissed. 12. As far as appeals of Assessee and Revenue for A.Y. 07-08 are considered, since both the parties before us have had submitted that the facts of the case are identical to that of A.Y. 06-07, we therefore for the reasons given hereinabove, while deciding the appeals for A.Y. 06-07 and for ..... 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