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TMI Blog2013 (6) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the same as speculation loss and not allowed to be set off against other income and the Ld. CIT(A)-30 has erred in confirming the same. 3) The Ld. A.O. has erred in making the ad-hoc addition of ₹ 1,50,000/- alleging low house-hold withdrawals and the Ld. CIT(A)-30 has erred in confirming the same. 4. At the time of hearing the Ld. AR of the assessee stated that the assessee does not press ground No. 2 3 and the same may be dismissed as not pressed. The Ld. DR has no objection if ground No.2 3 are dismissed as not pressed. Accordingly the Ground No.2 3 are dismissed being not pressed. 5. Ground No.1 regarding assessment of the income arising from the sale and purchase of share as business income instead of capital gain. The Assessee has declared income from short term capital gain on sale of share of ₹ 28,77,661/- and long term capital gain on sale of share of ₹ 1,88,815/-. While completing the assessment, the Assessing Officer treated both short term capital gain and long term capital gain on sale of shares as business income and taxed accordingly. On Appeal the CIT(A) has confirmed the action of the Assessing Officer on the ground that for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect was only ₹ 37,538/-, therefore the assessee did not preferred further appeal due to the small amount of tax involved in the said year. The Ld. AR of the Assessee has further pointed out that from 1st. April.2004 the assessee decided to carry on business on trading in shares and securities. However the assessee had not converted his investment in the shares into stock in trade and therefore the investment in share remained as investment as it was treated accordingly by valuing them at cost. During the year under consideration the Assessee has earned business income from the share trading of ₹ 2,61,70,171/- which was offered as business income in the return of income. Apart from business income the Assessee ahs also sold some of the shares which were acquired by the Assessee prior to 31st March.2004 and the said shares were held less than twelve months. Therefore the profit arising from sale of those shares at ₹ 27,77,661/- was offered as Short Term capital gain. Apart from this the Assessee has also sold the shares which were held for more than 12 months and the profit arising there from of ₹ 1,89,698/- was declared as long term capital gain. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and valued the same as on 31st March at cost. From the assessment year 2005-06 onwards the Assessee has stop purchasing the shares for investment and therefore the frequency of purchase is very less and the shares already held by the assessee as investment were sold during the year. Thus the motive of the purchase and sale of the shares is Clear from the holding period of the shares which is ranging from 45 days to 357 days as far as the short term capital gain is concerned, whereas the long term capital gain arises from the shares which were held by the assessee ranging from one year to more than six years. The Ld. AR of the Assessee has submitted that the assessee started trading in share but had strictly kept under separate portfolios one for investment and another for trading. The shares which were acquired in the earlier years as investment were remained in the investment portfolio. Therefore there was no profit motive as far as the shares held by the Assessee as investment. In support of his contention he has relied upon the decision of the Tribunal in the case of Hitesh Satish Chandra Doshi Vs. JCIT reported in 46 SOT 336, Mumbai. The Ld. AR has also relied upon the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x effect for the assessment year 2004-05 was only ₹ 37,538/- which was because the entire short term capital gain was taxable at the rate of 30% and only the long term capital gain was subjected to tax at the rate of 10%,. Therefore, not preferring the appeal against the order of the CIT(A) for the assessment year 2004-05 does not operate as estoppel because in the matter of taxation the rule of estoppel and resjudicata are not applicable. Further we find from the undisputed fact that the assessee has not converted the shares shown as investment as on 31st March.2004 in to stock in trade and the treatment of the shares continued as investment and valued at cost. We find that there is a consistent treatment by the assessee of the shares which were purchased as investment. The holding period for long term capital gain is ranging from 1 year to 6 years which itself shows the intention of the assessee that the shares were acquired by the assessee as investment and retain the same for enhancement of the value of the asset and not for earning the profit at the earliest possible occasion by taking the advantage of volatile condition of market. When the Assessee has retain the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss. There is no repetitive transaction and the shares acquired for investment has been consistently shown as investment, therefore in view of the fact and circumstances of the case we are of the considered opinion that the assessee has been holding those shares as investment and not stock in trade and therefore the profit arising out of the sale of the shares would be capital gain and not business income. Accordingly we set-aside the orders of the Authorities below and allow the claim of the Assessee. For the Assessment Year 2006-07 10. The assessee has raised the following grounds:- 1 The Ld. A.O. has wrongly invoked the provisions of section 14A and made the addition of ₹ 3,90,295/- of the Income Tax Act, 1961 and the Ld. CIT(A)-30 has erred in confirming the same. 2 The Ld. A.O. has in disallowing the interest expenditure of ₹ 51,320/- and the Ld. CIT(A)-30 has erred in confirming the same. 3 The Ld. A.O. has also erred in treating the short term capital gain of ₹ 17,383/- and long term capital gain of ₹ 15,55,397/- in sale of shares as Business income and the Ld. CIT(A)-30 has erred in confirming the same. 11. At the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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