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TMI Blog2012 (10) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... order at pages 7 to 10, which are reproduced below: i) I am not a trader in shares. The investment in shares has been done with purely an intention of capital appreciation. Accordingly, the gain from shares has been reeinvested as I do not have any capital. ii) I am not registered with any recognized stock exchange nor do I possess the requisite knowledge to carry on business in shares. iii) The frequency of trading has been on the higher side compared to normal transactions on account of the volatility of the market. The fluctuations in the market were of such nature that it was not advisable to hold onto the shares during such period. iv) Foreign Institutional investors have invested in Indian stock markets in a big way. v) They are not treated as Traders and their income in spite of high frequency and volume of transactions is treated as Capital Gains. vi) Therefore, I submit that the gain from the sale of shares is Income from Capital Gains and not Business Income. vii) The intention was not to carry on trading of shares but only for the purpose of capital appreciation. Therefore the purchase of shares was made with this intention. However, when there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 104 1 27,361 3 Tanla Solutions 262 3 70,48,210 353 4 Unitech 133 3 66,45,057 133 217 222 231 5 Hind Motors 116 3 (87,167) 130 6 Astro Micro (Bonus) 230 4 1,99,851 244 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed is ₹ 1,91,97,162 from the sale of all the shares. In respect of shares where the period of holding is more than 100 days as shown above the total gain is ₹ 1 ,57,17,730 which constitutes about 82% of the gain. Therefore it is my submission that the income disclosed under the head capital gains at ₹ 1 ,92,04,038 is to be assessed as short term capital gains. xvi) Your kind attention is invited to pages 7-74 of Paper book wherein the volatile fluctuations in the share market are reflected. The drastic fall in prices compelled me to sell some of the shares within a short period. xvii)The shares constituting 82% of the total gain as stated above have been held for atleast 100 days. Moreover, there was no repetition in the transactions of purchase and sale of shares. xviii) Merely because the shares had been purchased from interest free borrowed funds would not change the nature of the transaction from investment to in the nature of an adventure in the nature of trade. The intention was always to treat is as investment and not dealing in shares which is apparent from the fact that the shares had not been treated as stock in trade. Precedents - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. 3) The CIT(A) ought to have appreciated that the fact that AO has correctly treated the income as business income as the intention of the assessee was clear from her transactions that her investment in shares is not for holding the shares for a long time to earn dividends but her investment in shares is to trade in shares and earn profits in short time. The volume, the frequency and the amount of transactions clearly shows the intention of the assessee. 4) The CIT(A) erred in directing the AO to treat the gains as capital gains as the assessment was completed keeping in view the Board Circular No. 4/2007 dated 15/06/2007 wherein the parameters laid down to determine whether the shares were held as stock-in-trade or investment. 7. None appeared on behalf of the respondent-assessee at the time of hearing before us. However, we proceed to decide the appeal after hearing the learned DR and on merits. 8. Before us, the learned DR relied on the decision of the ITAT, Hyderabad in the case of CIT Vs. P.V.S.Raju Anr. V/s. Addl. Commissioner of Income-tax (340 ITR 75)-AP. 8. We have heard the learned DR and perused the record as well as gone through the orders of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or an act done for making profit depends on the question whether excess was an enhancement of the value for realising the shares by a gain in an operation of making profit. If the transaction is in the ordinarily lien of the assessee s business, there would hardly be any difficulty in concluding it to be a trading transaction, but where it is not, the fact must be properly assessed to determine whether it is in the nature of trade. The surplus realized on the sale of share would be capital, if the assessee an ordinary investor realising his holding, but it would be revenue if he deals with them as a trader. if the assessee is an ordinary investor, the income arising out of sale of shares is capital gain. On the other hand, if he trades in shares in regular manner, it is income from business. If an individual invests in shares for the purposes of earning dividend, he is not carrying on a business. If the assessee is holding shares as investment and sold it due to change of circumstances and earns profits, that profit is nothing but capital gain. Whether a purchase is made with an intention of resale and gain to earn profit, such income has to be treated as income from business. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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