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TMI Blog2016 (8) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee was not for making investment but rather making quick profit, which is nothing but indulging in business. There is no doubt that all the transactions are conducted with the profit intention only. But, the intention to invest for holding as investment will qualify for deduction u/s 111A whereas the intention is to make quick profit, will definitely gives the impression that it was carried on as short term business to make quick money. As held in the case of CIT Vs. Rewa Shankar A. Kothari [2006 (1) TMI 80 - GUJARAT High Court] where on finding that there was a long gap between date of acquisition of shares and their sales, also shares having been shown as investments in Wealth Tax returns right from its purchase, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO noticed that the assessee is purchasing and selling the shares on regular basis. In few cases there were cases wherein the shares were purchased and sold on the same day. In few cases the shares were held for even one day. The details of such shares were as under: S.No. Name of the Scrip Date of purchase Date of Sale Capital gain (Rs.) 1 Aptech Training Ltd. 11/07/2007 11/07/2007 4,287 2 Gei. Hamon India Ltd. 27/07/2007 27/07/2007 343 3 Hindustan Oil Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. 2.4 AO after considering the submissions of the assessee and referring to the provisions of section 111A as well as Board s Circular No. 4/2007, dated 15/06/2007, held that the intention of the assessee is to make profit by sale of shares and he had no intention to hold the shares for a long period to earn dividends. He, therefore, treated the claim of short term capital gains of ₹ 32,72,432/- u/s 111A was rejected and the same was treated as business income of assessee. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 4. Before the CIT(A), the assessee submitted as under: a) That the appellant is a salaried employee, the shares were purchased for the purpose of investment for ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2007 0 - 5.1 The CIT(A) analysed the transactions of assessee as under: The quantum of purchases were ₹ 3,76,49,515/- The quantum of sales were ₹ 2,46,29,142/- The shortest period of holding shares - 1 day The longest period of holding shares 77 days (Hyderabad Industries purchased on 09/04/07 and sold on 11/07/07) The appellant also traded in futures options. Most of the shares were purchased and sold within a week. 5.2 In view of the above observations, the CIT(A) held that the number of shares, frequency of transactions, volume of business clearly indicate that the assessee carried on trading activity. He, therefore, confirming the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certainly not a criteria. He submitted that the assessee was in full time employment of a company and was not having time to carry on business of purchase and sale of shares. He submitted that without bringing on record contrary material, the A.O., and the commissioner of appeals cannot change the intention and manner of investment made by the appellant. 7.2 Ld. AR submitted that the intention of the assessee, a salaried person at the time of purchase of shares is clear that it was for purpose of investment and not for trading in shares. For the preceding asst years viz: 2006-07 and 2007-08 and for the subsequent years 2009-10 and 2010-11 the returns of income showing the profit as income from 'short term capital gains' from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as investment will qualify for deduction u/s 111A whereas the intention is to make quick profit, will definitely gives the impression that it was carried on as short term business to make quick money. As held in the case of CIT Vs. Rewa Shankar A. Kothari [2006] 155 Taxmann 214 (Guj.), where on finding that there was a long gap between date of acquisition of shares and their sales, also shares having been shown as investments in Wealth Tax returns right from its purchase, it was held that profits from sale of shares were required to be taxed under capital gains and not as business income. In the present case, it is quite opposite to the above discussion. Hence, we are inclined to conclude that the transactions are in the nature of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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