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TMI Blog2016 (7) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... shares as business income in respect of those shares, which were held by the assessee for period less than one month. . Since both the issues are inter-connected with each other, therefore, we take them together. 4. The brief facts of the case are that the assessee has filed his return of income electronically on 1.11.2007 declaring total income at Rs. 63,08,282/-. The case was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has shown short term capital gain for sale of shares at Rs. 36,89,026/- and long term capital gain of Rs. 29,39,046/-. The ld.AO after elaborate discussion in the assessment order treated the assessee as trader in the shares. He assessed income of the assessee from sale of shares as business income. 5. On appeal, the ld.CIT(A)has held the assessee as investor, but directed the AO to treat the gain on transfer of shares which was held by the assessee for less than one month as business income by observing as under: "4.1 The main issue in the first ground of appeal is as to whether profit declared under long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order. The operative part of the order being, as under:- "Considering the totality and peculiarity of the facts of this case, we find that assessee is neither fully acting as a trader nor as fully investor. Demarcation is quite hazy; though in the books he is showing all the purchases as investment but frequency of transaction in several cases is so large and holding period in many cases Is so small - from 0 to a week or so that assessee is de facto selling and purchasing shares as trader. He is also holding shares for long period -indicating that they are held as investment. Therefore, a criteria has to be fixed for determining as to when he is acting as trader and when as investor. Accordingly, we decide following criteria to hold when gains are to be taxed as profit to be earned under the business or to be taxed as short term capital gain, we hold that if shares are not held even say for a month, then the intention is clearly to reap profit by acting as a trader and he did not intend to hold them in investment port-folio. We believe that if, a person' intends to hold his purchases of shares as investment, he would watch the fluctuation of rates in the market for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head 'short term capital gain' as 'income from business activities' and dismissed the appeal of the appellant. The Hon'ble members while deciding the appeal of the appellant had examined the purchases and sales of scrips traded by the appellant, income from which had been declared under the head 'short term capital gain' and after considering the same, observed that the appellant purchased the shares with an intention to make profit in the share market. In the said decision, the Hon'ble Bench also differentiated the facts of the case before them with the facts in the case of Gopal Purohit decided by the ITAT, Mumbai Bench reported in 122 TTJ 97 and another decision of ITAT, Mumbai in the case of Janak Rangwala Vs ACIT, 11 SOT 627(Mum) and held that the facts involved in the above two cases were not applicable to the facts of the case of Smt Sadhna Nabera. I have alluded to the above decisions to highlight the fact that in so far as the taxability of the shares traded from which capital gain income has been shown is concerned, there cannot be a universal formula. However, this issue has to be decided on the basis of some guidelines/ principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Asstt.Year 2005-06, the AO has been treating the assessee as trader in the shares, but his conclusion did not meet approval of the higher appellate authority. This issue has been decided in favour of the assessee by the order of the ITAT passed in ITA No.127/Ahd/2009 and 2076/Ahd/2009 of the Asstt.Years 2005-06 and 2006-07. Similarly, the appeal of the Revenue bearing ITA No.2226/Ahd/2011 has also been dismissed by the Tribunal in the Asstt.Year 2008-09. He placed on record copies of the Tribunal's orders. The discussion made by the Tribunal in the Asstt.Year 2008-09 reads as under: "6. With the assistance of ld. representatives, we have gone through the record carefully. We find that in this assessment year, Assessing Officer has not independently discussed the facts and circumstances exhibiting the number of transactions of purchase and sales of shares of the assessee. He simply relied upon the observations of the Assessing Officer in Assessment Year 2007-08. We find that in assessment year 2005-06 under similar circumstances an addition of Rs. 68,87,173/- was made by the Assessing Officer. The assessee in that year also claimed investment in shares and disclosed income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the frequency of the transactions was also more infrequent and spaced out. Accordingly, the Id. ClT(A) while observing that the said shares which are held for investment purposes for long term, would not require Infrastructure for transacting in shares, concluded that the LTCG claimed by the assessee could not in any way be treated as income from business. The Id. DR appearing before us did not controvert these findings of the Id. CIT(A). In these circumstances, especially when the Revenue have not brought to our notice any material or contrary decision in order to enable us to take a different view in the matter, we are not inclined to interfere with the findings of the Id. CIT(A). Therefore, ground no.1 in the appeal of the Revenue is dismissed." 8. Though the assessment order is based upon the observation of the Assessing Officer recorded in Assessment Year 2007-08 but it is demonstrated that the stand of the revenue is identical starting from Assessment Year 2005-06 to this assessment year. Therefore, following the order of the ITAT in Assessment Year 2005-06 and 2006-07, we are of the view that ld. first appellate authority has rightly appreciated the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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