9911796707
TMI Blog2016 (8) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-III, Pune dated 31-08-2011 for the assessment year 2006-07. 2. The brief facts of the case as emanating from records are: The assessee is engaged in the business of share trading. The assessee filed his return of income for the assessment year under appeal on 31-10-2006 declaring total income of ₹ 4,54,81,780/-. Thereafter, the assessee filed revised return of income on 28-03-2008 declaring total income of ₹ 4,55,35,290/-. The case of the assessee was selected for scrutiny and accordingly notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was issue to the assessee on 26-06-2007. In the return of income, the assessee had shown business income from trading of shares ₹ 2,94,00,958/-, profit from speculation in shares and commodity ₹ 24,69,343/- and Short Term Capital Gain arising out of purchase and sale of shares ₹ 1,37,45,845/-. Apart from the above, the assessee had declared income from remuneration ₹ 79,923/- and income from house property ₹ 50,804/-. During the course of scrutiny assessment proceedings, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AR further placed reliance on the CBDT Circular No. 6/2016 dated 29-02-2016. The ld. AR contended that in order to mitigate the difficulties of the assessees the CBDT has issued above circular. The CBDT has clearly stated that in respect of shares and securities, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. The ld. AR further in support of his submissions placed reliance on the decision of Coordinate Bench of the Tribunal in the case of Jawaharlal P. Mehta Vs. DCIT in ITA No. 1463/PN/2008 for the assessment year 2005-06 decided on 29-11-2013. The ld. AR further pointed that the Commissioner of Income Tax (Appeals) while deciding this issue has placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of Asstt. Commissioner of Income Tax Vs. Blue Moon Securities Pvt. Ltd. in ITA No. 1019/PN/2007 decided on 23-07-2010. The Tribunal has recalled the aforesaid order and had decided the appeal afresh in favour of the assessee vide subsequent order dated 23- 08-2011. The ld. AR placed on record a copy of the order of Tribunal in the case of Asstt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, the assessee is engaged in trading of shares and has claimed to have held shares and securities for trading purpose, as well as investment. However, the assessee has failed to substantiate from records the existence of two separate portfolio for shares held as investment and stock in trade. The assessee has not maintained separate bank accounts for transacting the shares held as investment. The assessee has further not maintained separate demat account for the shares held as investment. The assessee has admitted the fact that the assessee is transacting shares held as investments as well as stock in trade through single demat account and all the transactions are done through single bank account. 9. A perusal of the impugned order shows that the assessee has made huge borrowings for purchase of shares. The assessee has admitted the fact that part of borrowings were utilized for purchase of shares allegedly held as investment. However, no precise distinction has been made by the assessee to show the borrowings utilized for purchasing the shares held as investment. The ld. AR pointed that in the Balance Sheet, the assessee has separately shown investment in share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese principles to the facts of an individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. Whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following- a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-intrade, the income arising from transfer of such shares/securities would be treated as its business income, b) In respect of listed shares and securities held for a period of more than 12 months immediately pr ..... 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