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TMI Blog2016 (1) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... considering only two factors. We have seen that even the two factors that were considered by the assessing officer works out in favour of the assessee only. Hence, in our view, the decision taken by the assessing officer in AY 2006-07 is not correct in the facts and circumstances of the case and hence the assessment orders passed in other years by following the decision rendered in AY 2006-07 would consequently rendered incorrect. Under these set of facts, we are of the view that there is merit in the contentions of Ld A.R that the assessing officer was not justified in assessing the gains arising on sale of shares as business income of the assessee. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res as Business income of the assessee. 3. In the quantum appeals filed by the revenue, the common issue urged is against the decision of Ld CIT(A) in holding that the gain arising on sale of shares held for more than 12 months is assessable as Long term capital gain instead of Business income. 4. In the appeal filed by the revenue in respect of penalty proceedings, the revenue is aggrieved by the decision of Ld CIT(A) in cancelling the penalty levied for AY 2007-08. 5. The facts relating to the case are stated in brief. The assessee is an individual and she filed her return of income for AY 2006-07 declaring Short term capital gain of ₹ 177.59 lakhs and long term capital gain of ₹ 14.23 lakhs, both arising on purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order of AY 2006-07 had been disposed of by Ld CIT(A) by confirming the assessment of Short term capital gain as Business income. However, the Ld CIT(A) had directed the AO to assess the Long term capital gain as Capital gains only. However, the assessing officer chose to assess both Short term capital gain and Long term capital gains as business income of the assessee in assessment year 2007-08. 8. In the year relevant to the assessment year 2008-09, the assessee declared professional income of ₹ 2,07,230/-, short term capital gain of ₹ 275.00 lakhs. Following the assessment order passed for AY 2007-08, the assessing officer assessed the Short term capital gains as business income of the assessee. 9. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew scrips and since the assessee had purchased shares in high quantity, the volume appeared to be high. 12. He further submitted that the assessing officer has chosen to assess the gains arising on sale of shares as business income only by considering the gains declared by the assessee without making a proper case to support his view. He submitted that the assessing officer, after holding the activity as business activity, did not prepare any profit and loss account, did not value the stock. He further submitted that the Ld CIT(A) was fair enough to hold that the long term capital gains is assessable under the head Capital gains only. However, the Ld CIT(A) was also persuaded by the view taken by the assessing officer in respect of Short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter. Considering the various factors, we shall examine the facts prevailing in the instant case. 15. We have earlier noticed that the assessee is a medical doctor by profession specializing in dermatology. Hence it cannot be considered that her main activity is dealing in shares. Next we have examined the Balance Sheet of the assessee for all the years under consideration. We notice that the assessee has used her capital and also interest free funds obtained from her father for purchasing the shares, i.e., the assessee has not borrowed interest bearing funds for purchasing shares. We further notice that the shares have been shown as investments in the Balance Sheet. The fall, if any, in the value of shares has not been recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out the activity of purchase and sale of shares. 18. We have earlier noticed that the decision taken by the assessing office in AY 2006-07 was followed in other years. In assessment year, the assessing officer has considered following points to hold that the assessee has dealt in the shares as a trader:- (a) The holding period in majority of shares was less than a month. (b) Volume of transactions is high. However a critical analysis of the transactions of the assessee would show that the assessee has dealt with 24 scrips, 27 scrips, 26 scrips and 17 scrips respectively in the years relevant to the assessment years 2005-06, 2006-07, 2008-09 and 2009-10. We have earlier noticed that the assessee has purchased each shares in h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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