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TMI Blog2015 (5) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... requency of the transactions cannot be the sole factor in holding the assessee as a trader. Even there is no minimum holding period of shares is prescribed under the statute for treatment of the same as short term capital gain. Thus in our view, the assessee has to be treated as an investor and the income earned from purchase and sale of shares is to be treated as short term capital gain. - Decided in favour of the assessee. Dividend stripping - Held that:- The Assessing Officer noted that the assessee had purchased and sold shares of three companies within the time prohibited under section 94(7) of the Act which had resulted in loss. The Assessing Officer, therefore, reduced the loss suffered by the assessee to the extent of dividend ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by the assessee. 2. The learned CIT(A) has grossly erred in treating the loss suffered by assessee on account of purchase and sale of shares as dividend stripping activity u/s 94(7) and thereby enhanced the business income to the extent of ₹ 2,983. 3. The learned CIT(A) has grossly erred in restricting the claim of the preliminary expenses to ₹ 500 only as against ₹ 3,204 debited to Profit Loss account by the assessee and subsequently claimed as a deduction under section 35D of the Act. 4. The learned CIT(A) erred in confirming penalty u/s 271(1)(c) of the Act. 5. The learned CIT(A) also erred in confirming the interest u/s 234B and 234C of the Act. 2. Ground no.1 is relating to the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, from the year 2004- 05, the charging rate for short term capital gains have been decreased giving benefit to the investors in share and securities. The assessee company, during the year, has also earned long term capital gains some of which have been in relation to shares which were acquired from the year 1999 onwards. The assessee has never been treated as trader in earlier assessment years. No borrowed funds have been used for the purchase and sale of shares as the assessee used to invest its surplus profits only in the purchase of shares and securities. The assessee, during the year, has declared long term capital gain of ₹ 3,54,470, which has been accepted by the lower authorities. He has further submitted that considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gain and as a trader in respect of short term capital gain. If such yardstick is allowed to be adopted, then the provisions of short term capital gain will become redundant. When the assessee has been consistently been treated and accepted as investor since so many years and there is not much change in the investing pattern or in the facts and circumstances of the case, then applying the rule of consistency, the assessee is to be treated as investor only. Moreover, as explained by the learned A.R., the Memorandum and Articles of Association of the assessee company does not allow it to trade in shares and it has been consistently investing its money as an investor in shares. No borrowed funds have been used for making the share t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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