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TMI Blog2019 (7) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... of his business: in each case the question is one of intention to be gathered from the evidence of conduct and dealings by the acquirer with the commodity. On perusal of CBDT Circular No.6/2016 shows that even Board recognised the fact that where the assessee itself, irrespective of the period of holding the registered shares, treated them stock in trade the income arising from transfer of such shares would be treated as business income which means that where the assessee hold the shares as investment, the income arising therefrom is nothing but capital gains. There is no quarrel that the assessee has purchased the shares out of its own fund and no borrowed funds have been utilised by the assessee in purchasing the shares. The only fact for treating the Short Term Capital Gain as business income is that the period of holding is very less but then the Act itself provides that wherever the holding period is less than 12 months, the gains from the sale of shares would be Short Term Capital Gain. The Act nowhere provides for the smallness of the period of holding. If it is less than 12 months, it will give rise to Short Term Capital Gains and if it is more than 12 months it will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is that the Ld. CIT(A) erred in confirming the findings of the AO that the transactions of Swastick International were speculation losses and therefore cannot be set of against normal income of the assessee. 2. The assessee is a HUF, engaged in the business of maintenance of real estate and Trading of copper goods for self and for others on commission basis. Return for the year was filed on 15/09/2011, declaring total income at ₹ 2,46,74,220/-. The case was selected for scrutiny assessment. During the course of scrutiny assessment proceedings, the AO noticed that the assessee has shown Short Term Capital Gain of ₹ 2,23,34,990/-. The details of Short Term Capital Gain are as under:- 3. The AO observed that on share purchase of ₹ 1,53,88,694/-. The assessee has sold shares of ₹ 3,77,23,684/-. The AO was convinced that the assessee is engaged in the business of trading of shares and therefore the income from capital gains is nothing but business income of the assessee. The AO further observed that sales of shares were made within a very short period and neither the volume nor the value of transaction is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions of purchase and sale of shares have resulted in Short Term Capital Gain and should be assessed as such. 9. Per contra, the Ld. DR strongly supported the findings of the AO. It is the say of the Ld. DR that the volume of transactions in shares is much more in comparison to turnover of regular business of the assessee. The Ld. DR further pointed out that the shares were never held for more than two months which show s that they were never intended to be held for investment purpose. The DR further pointed out that the shares of different companies have been traded in short period. In support of her contention, the Ld. DR relied upon the decision of the Co-ordinate Bench in the case of Mahesh Chandra Agarwal vs ACIT, Circle-36(1), New Delhi, (93 taxmann.com 246). The Ld. DR further relied upon the decision of the Hon ble Delhi High Court in the case of CIT vs D M Components Ltd. 364 ITR 179(Del.) and further relied upon the decision of the Coordinate Bench in the case of Smt. Prem Jain vs ITO in ITA No.2572/Del/2016. 10. We have given a thoughtful consideration to the order of the authorities below. The details of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two types of transaction is not always easy to make. Whether the transaction is of one kind or the other depends on the question whether the excess is an enhancement of the value by realizing the security or a gain in an operation of profit making. The assessee might have invested capital in shares with an intention to resale these if in future their sale brings in a higher price. Such an investment though motivated by a possibility of enhancement value, did not necessarily render the investment a transaction in the nature of trade. 12. The CBDT vide Circular No.6/2016 read as under:- Sub-section (14) of Section 2 of the Income-tax Act, 1961 ('Act') defines the term capital asset to include property of any kind held by an assessee, whether or not connected with his business or profession, but does not include any stock-in-trade or personal assets subject to certain exceptions. As regards shares and other securities, the same can be held either as capital assets or stock-in-trade/ trading assets or both. Determination of the character of a particular investment in shares or other securities, whether the same is in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. 4. It is however clarified that the above shall not apply to such transactions in shares/securities where the genuineness of the transaction is itself questionable such as bogus claims of long term capital/short term capital loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with the sole object of reducing the litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the Act shall continue to apply on the transactions involving transfer of shares and securities. 13. On perusal of the aforementioned circular of CBDT shows that even Board recognised the fact that where the assessee itself, irrespective of the period of holding the registered shares, treated them stock in trade the income arising from transfer of such shares would be treated as business income which means that where the assessee hold the shares as inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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