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TMI Blog2013 (3) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the Act ) for Assessment Years 2007-08 and 2008-09 vide his separate orders dated 17.12.2009 and 06.12.2010 respectively. 2. The only common issue in both the appeals of revenue is against the order of CIT(A) directing the AO to treat the profit from share transaction as capital gain instead of business income. For this, revenue has raised following ground in AY 2008-09: 1. That the Ld. CIT(A) erred in directing the A.O. to treat the profit from share transactions as Capital Gain instead of Business income by failing to take cognizance of the magnitude frequency of transactions, purchase to sale ratio, multiplicity of transactions in particular scrips and negligible dividend income compared to the money invested. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that the assessee has entered into transactions in scrips of 60 companies having about 260 trade transactions and the period of holding of scrips ranges from 1 day to 315 days. According to AO, the opening stock of shares stood as 111838 shares, purchases made during the year stood at 898860 shares and sales during the year was of 915698 shares. According to AO, the assessee has invested borrowed funds to the extent of ₹ 6,74,195/- for buying and selling of shares on which short term capital gain was declared. According to AO, in view of the above activities, the assessee is engaged in the business activity of share trading and has not made any investment for the purpose of capital appreciation or for earning of dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 20 days - 13 d. 21 to 30 days - 15 e. 31 to 60 days - 22 f. 61 to 90 days - 18 g. 91 to 120 days - 05 h. 121 to 150 days - 07 i. 151 to 180 days - 05 j. 181 to 210 days - 03 k. 211 to 240 days - 02 l. 241 to 27 days - 03 m. 271 to 300 days - 01 n. 301 to 315 days - 02 v. Opening stock of shares stood at 111,838 shares; purchases made during the year stood at 898,860 shares; sales during the year 915,698 shares; closing stock at the end of the year stood at 95,000 shares. vi. If portion of stock sold is eliminated from the total sales the ratio between purchase and sales during the year stands at 1.12:1. In view of the above, the AO after discussing at length treated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is observed that there were only 10 instances where shares were purchased and held within 1 to 3 days. In these 10 transactions, the appellant has incurred net loss of ₹ 58,014/- as against the overall profit of ₹ 40.22 lakhs disclosed under the head short-term capital gain. If the holding period is considered from 1 to 10 days, total transactions were 26 and for the period 1 to 20 days, the transactions were 40 in which the profit of ₹ 5,80,952/- and ₹ 1,65,883/- was earned respectively. Thus, in the transactions of period of holding 1 to 20 days the net income of the appellant was ₹ 1,65,883/- as against the total short-term capital gain of ₹ 40,22,546/-. It means that more than 95% of the profit by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 was completed u/s. 143(3) of the Act on 31.12.2009 by the Addl. CIT, Range-31, Kol. and the capital gain declared by the assessee was accepted u/s. 143(3) of the Act. However, this contention of the appellant was not accepted by the A.O. for the reason that the facts in the case of appellant s father were different than the facts in the case of the appellant. However, on perusal of notice issued u/s. 263 and order passed by the Hon ble CIT, Kol-XI, Kol., it is observed that the observations of the A.O. is not correct, because the facts in the case of appellant s father for A.Y. 2006-07 are exactly similar to the facts in the case of the appellant during the year under consideration as well as in earlier years. 6. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in shares was assessed under the head capital gains either as short term or long term depending upon the period of holding. The assessee before us filed complete details of assessments and accounts i.e. copies of assessment orders for AY 2004-05 to 2006-07 in its paper book which clearly reveals that the variation in investment is accepted by the revenue as income from capital gains. Once this is an established position, that assessee maintained the distinction in books of account between its investments and stock in trade and also maintained distinction of short term investment as well as long term investment and such investments were accepted by revenue in earlier years all along, now they cannot take u-turn and change the head of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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