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TMI Blog2017 (2) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent by : Shri Suman Kumar ORDER Per Rajesh Kumar, A. M. This appeal by assessee is arising out of the order of ld.CIT(A) in appeal No.CIT(A)-23/DCIT-12(3)/IT-232/2010-11 dated 3.12.2012 passed in the assessment framed by the AO u/s 143(3) of the Income Tax Act (hereinafter called as the Act) vide order dated 10.12.2010. 2. The issue raised by the assessee in ground no.1 is against the order of the ld.CIT(A) upholding the order of the AO treating the investment in shares as trading activity and taxing as short term capital gain of ₹ 21,10,696/- as business income. 3. Grounds of appeal no.2 and 3 are in support of ground no.1 of the appeal. 4. Brief facts of the case are that the assessee filed her return of income on 28.9.2008 declaring total income of ₹ 23,11,722/- which was processed under section 143(1) of the Income Tax Act, 1961. The case of the assessee was selected for scrutiny and the statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. The main sources of income of the assessee is business income, speculation income, capital gain and other sources. During the course of assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on at the time of purchases is the most important factor to decide whether the purchases were made as a trader or whether the same were made as an investor. This intention can be gathered from subsequent conduct of the assessee in dealing with these shares. An investor purchases a share with a view to earning income in the form of dividend and for appreciation in value over a long period of time and is not motivated to sell shares on each and every rise in the value of shares which are, in fact the attributes of a trader. For deciding the question whether the profit from sale of share is capital gain or business income, no single thumb rule can be applied as held by the different Hon'ble Courts as well as by the CBDT in Circular No. 412007. Various Hon'ble Courts and Benches of the Hon'ble Tribunal and CBDT have laid down parameters/criteria for judging whether the activity of the assessee was in the nature of an investment activity or a trading activity. These parameters include intention of the appellant at the time of purchase of shares, frequency of transaction, continuity, volume, holding period, treatment in the books of account, use of borrowed/own funds and devo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets in question which would decide the issue. It is the total impression of the parameters laid down which will have to be examined to find the answer. From the facts on record, it is apparent that the assessee has devoted substantial time to his activities relating to share dealings. 2.9 As regards the intention of the assessee, it has been held by various Hon'ble Courts that the intention of the assessee at the time of purchase of asset is the most important criteria to decide whether the same were purchases as trading assets or were bought as an investment. Only because the shares have been disclosed in the Balance Sheet as an investment would not determine or prove that the shares were purchased as a capital asset since it is well settled law that entries in the books of accounts are not determinative of the true nature of the transactions. Further, assessee's contention that he has taken delivery of shares and, hence, the profits should be assessed as capital gains cannot be accepted since this cannot be and is not the criteria for determining the nature of income. To determine the nature of the transactions or whether the assessee has acted as a trader or invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 21,10,696/- as business income is upheld. This ground of appeal filed by the assessee is dismissed. 5. We have carefully considered the rival submissions and perused the material placed before us including the orders of the authorities below. The assessee has maintained two portfolio one is for investment and other for trading and the incomes accruing from both the portfolios were treated accordingly as capital gain and business income respectively. The ld. AR during the course of hearing a specific query was put to him qua sources of funds used for the investment of shares which yielded STCG which was replied by him by referring to the ledger account of HDFC account no.04142 in the books of the assessee pointing out that the maturity proceeds of units of Birla Sunlife liquid Plus Funds amounting to ₹ 1.00 crore (Rs.25 lakhs on 14.1.2008, ₹ 50 lakhs on 16.1.2008 and ₹ 25 lakhs on 18.1.2008) were used to purchase the shares of Bharat Heavy Electricals 1000 shares, L T 600 shares and Reliance communication 3600 shares, Reliance Energy ltd 1400 shares, Reliance Industries 900 shares through Prabhudas Lilladhar Pvt Ltd a broker for a total consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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