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TMI Blog2016 (5) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... late Authority, the A.O accepted the investment in shares. The revenue cannot blow hot and cold in the same breath since in the scrutiny reassessment the purchases have been accepted. We do not find any reason/logic in not accepting the subsequent sales of the shares and since the credit in the books pertained to the sale consideration received, in our considered opinion, the same cannot be treated as unexplained cash credit. Therefore, we do not find any merit in the impugned additions made u/s. 68 by treating the sale proceeds as unexplained cash credit. The additions on this account are directed to be deleted. - Decided in favour of assessee Sale proceeds from sale of shares - Treatment of short term capital gain OR business income - Held that:- A prudent investor always keep a watch on the volatility of the market and makes sound investment decision in accordance with such market fluctuation and has the liberty to liquidate its investments in shares as and when necessary. The law itself has recognized this fact by treating the same as short term capital gains for shares held less than 12 months and long term capital gains where the shares are held for more than 12 months. Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom other sources as unexplained cash credit u/s. 68 of the Act for which the assessees are in appeal. (ii) Treatment of short term capital gain as business income for which the assessees are in appeal. (iii) Treatment of long term capital gain as business income, wherever the ld. CIT(A) has decided against the revenue, the revenue is in appeal and wherever the ld. CIT(A) has decided against the assessee, the assessee is in appeal. 4. On such statements/acceptance by the rival parties, we proceed to decide these appeals by considering the facts given in the case of Ramnivas Kasat in ITA No. 2190/Ahd/2010 for A.Y. 2006-07. It would be pertinent to mention here that although the issues are identical, the quantum may differ. 5. Facts of the case in ITA No. 1707/Ahd2010 are that. During the course of the scrutiny assessment proceedings, the assessee was asked to furnish copies of the contract notes of purchase and sale, account of scrip-wise transactions entered into with respect to short term capital gain and long term capital gain. 6. Assessee furnished the requisite details. On perusing the details, the A.O found that the purchases have been made in the month of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O has rightly treated the purchases as not genuine and since the purchases were not genuine the sale consideration remains unexplained. 12. We have heard the rival contentions and have carefully perused the orders of the authorities below and with the assistance of the ld. counsel we have gone through the related documentary evidences placed on record in the form of paper book. The undisputed fact which emanates from the assessment order is that the purchases were made in the month of April, 2004 i.e. financial year 2004-05 relevant to assessment year 2005-06. 13. A perusal of the record shows that assessment of A.Y. 2005-06 was made u/s. 143(3) r.w.s. 147 of the Act vide order dated 08.10.2012 and the reasons for the reopening of the assessment shows that the assessment was reopened to verify the deposits made in the bank account which were used for the investment in shares. After thorough scrutiny the investment in shares was accepted. 14. It is pertinent to note that the impugned order of the First Appellate Authority is dated 25.03.2010 and the reassessment order is dated 08.10.2012 which means that when the officer made the reassessment order, the order of the Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares in a particular case should be treated as capital gain or as business income has been a debatable issue and there are conflicting decisions of the Tribunal on this issue. Each case is, therefore, to be based on its own factual situation. A perusal of the profit and loss account of the assessee show that the assessee has separately shown Derivative profit, long term capital gains/short term capital gains on shares. In the balance sheet, the assessee has shown shares under the head 'investment'. These investment shares have been valued at cost. The Hon'ble Supreme Court in the case of CIT Associated Industrial Development Co Pvt. Ltd. 82 ITR 586, which decision has also been considered by the CBDT in its Circular No. 4/2007 dt. 15.6.2007, has observed that: Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares as and when necessary. The law itself has recognized this fact by treating the same as short term capital gains for shares held less than 12 months and long term capital gains where the shares are held for more than 12 months. Had this been not the case, all the gains on shares would have been considered as business income only. The fact that the law recognizes such volatility and has specifically provided a separate holding period in respect of such shares makes it very clear those gains on such shares having a holding period of less than 12 months and held as investment would be considered as short terms capital gains only. Thus the assessee s claim cannot be negated on the basis of frequency of transaction. 22. Considering the entire facts in totality, we find that the assessee has shown shares as investment right from the year of purchase and that was shown as such in the balance sheet of the assessee which was filed before the A.O. 23. In our humble opinion, the shares have to be treated as investments and, therefore any profit earned on the sale thereof is to be treated as capital gains. 24. In so far as the findings of the ld. CIT(A) confirming STCG as busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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