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TMI Blog2017 (6) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ics of volume, frequency and regularity indicating an intention to continue the activity of carrying on the transaction must exist. Looking into the volume, frequency, continuity and regularity of transactions of purchase and sale in shares by the assessee, it cannot be said that the assessee entered into this activity not with a profit motive. Therefore, only inference which can be drawn is that the income earned by the assessee out of sale and purchase of these shares was an income under the head 'Profits and gains of business or profession'. No justification in lengthy argument of the assessee's counsel that the profit arising to assessee on sale of shares acquired by it was assessable as income from 'capital gain'. CIT(A) is justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Act was initiated by the CIT-X, Chennai. The CIT observed that in the assessment proceedings, the AO had failed to apply his mind into the nature of numerous share transactions undertaken by the assessee and by accepting the profit on share transaction as short-term capital gains. Accordingly, the ld. CIT directed the AO to treat the above income as business income from share transactions instead of short-term capital gain. The assessment order u/s.143(3) r.w.sec.263 of the Act was completed on 02.03.2015 holding that the profit on share transactions undertaken by the assessee is to be assessed as business income. Aggrieved by this order, the assessee went in appeal before the CIT(Appeals). 4. The CIT(Appeals) observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the CIT(Appeals), in the assessee s case, the transactions are numerous and frequent and a total over 2200 transactions during the years makes an average of over 42 transactions per week, and if it factor in 5 working days a week, when the stock markets function, an average of 8-10 transactions every working day. The period of holding of shares is very short and most of the shares purchased / sold are squared off either during the same day or immediately thereafter, which gives the strong indication of the intention of the assessee that the transactions are neither for the purposes of earning dividend income, nor for the purposes of capital appreciation. Further, the CIT(Appeals) observed that the assessee need not be a broker o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions may be an important indicator of the intention of the assessee but certainly not the sole or determinative criterion. The ld. AR, relied on the decision of the Supreme Court in the case of Rameshwer Prasad Bangla (87 ITR 421) and contended that the volume of the shares purchased and sold cannot be the reason for treating the transaction as adventure in trade. 5.1 The ld. AR further submitted that the contention of the AO is that the shares were classified as stock-in-trade in the balance sheet. The submitted that the shares in question were never treated by the assessee as stock-in-trade and they were held for earning dividend income only. The audited balance sheet as on 31.3.2009 shows it as investment in shares and the Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares has been traded on a day to day basis of ₹ 42.83 crores and sale of ₹ 4.60 crores was carried out by the assessee during the year. Such correlation of buying and selling day after day can be seen from the above ledger account. The income from consultancy was ₹ 8.82 crores as against profit of ₹ 1,08,53,182/- from share trading. 8. Looking into the volume, frequency, continuity and regularity of the transactions of purchase and sales in shares, it can be inferred that these transactions must have been entered into by the assessee with a profit motive. The assessee might have intention thereby to carry on business. It cannot be said that these transactions were entered into only for the purpose of investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into this activity not with a profit motive. Therefore, only inference which can be drawn is that the income earned by the assessee out of sale and purchase of these shares was an income under the head 'Profits and gains of business or profession'. We see no justification in lengthy argument of the assessee's counsel that the profit arising to assessee on sale of shares acquired by it was assessable as income from 'capital gain'. In our considered opinion, after considering the cumulative effect of the facts and circumstances of the case, the CIT(A) is justified in treating the profit arising out of sale of shares acquired by the assessee as income from business. Further, the AO passed order in consequent of order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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