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TMI Blog2022 (3) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Ramniwas Ramjivan Kasat [ 2017 (6) TMI 351 - GUJARAT HIGH COURT] and PCIT vs. Bhanuprasad D. Trivedi [ 2017 (9) TMI 840 - GUJARAT HIGH COURT] . AO is directed to verify the relevant facts of the case and decide the issue afresh in accordance with law after giving the assessee proper and sufficient opportunity of being heard. Appeal of the assessee is treated as partly allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... with an intent to take benefit of the taxation at lower rate and claiming the LTCG as exempt income. • The word "Intention" cannot be gauged by any calibration. The intention of the assessee lies primarily within his own knowledge. As there is no way to find out as to what is running into the mind and soul of any assessee. This needs to be proved by the assessee himself; as to why he considers any particular thing running in his mind as any particular type i.e. in the instant case the assessee need to prove as to why he considers his closing stock of shares held as being his 'investment'. • Despite given several opportunities, the assessee failed to furnish complete details in the prescribed format and/or the share trading activity in the form of P&L account wherein transactions have been undertaken on delivery basis. • The assessee's action / treatment given to such transactions in earlier years do not affect current proceedings and whatever, the assessee was disclosing in the earner years is binding upon the department. There is always an option left to protect the interest of revenue, by invoking provisions of Sec. 148 and for Sec. 263 of the Act as appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and magazines which does not even requires any help of nay expert. Even otherwise the trading decision needs to be taken by the assessee himself and for that purpose also no employee is required. In case, even if the assessee is not well conversant with the ONLINE system, the transactions in the stock market does not requires any help of the employees as the same can be accomplished through any 'BROKER' which is always just a phone call away. • In his individual books of accounts also the assessee has obtained un-secured loans disclosed outstanding at ₹ 33,40,698/- as on 31/03/2010. Further, the fresh capital added in the capital account stands at ₹ 86,18,878/- which are mostly form the books of the M/s Time Tin Containers and the entries were affected through OD account. This implies that almost full sum invested in share purchase transactions were made through interest bearing funds. Even otherwise, the assessee has taken heavy loans in the books of M/s. Time tin and the same was later diverted for purchase of share etc. This also gives strength to this fact." 5. On the basis of the above findings and observations recorded by him as well as by relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in individual capacity while tax audit report for tin manufacturing submitted separately. The A.O. on the basis of tax audit report at para 5 of impunged order recorded the appellant's income/loss from share investment & share trading activities in 'net' i.e. internal profit & loss adjusted white working out net STCG, net LTCG, net speculation profit, net derivative loss (being business income). The AO called for details in various Performa's to which appellant submitted details viz demat account, contract note, bills, bank account. The A.O. considered such submission at para 5.6 of the impunged order already discussed at para 4A above). The A.O. thereafter at para 5.7 brought out various test f criteria to examine ascertain about whether assessee is engaged into the business of share trading or not. At para 5.8 of the impunged order the A.O. examined the details & explanation from appellant with these tests criteria alongwith applicability of CBDT cir. no. 4/2007 dt. 15/0712007, Instruction No. 1827 dt. 31/08/89 and relied on various judicial pronouncement. It is undisputed as evidenced from the copy of asstt. order dt. 29/03/2011 for A.Y. 09-10 and order dt. 26/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. In term of value, it is phenomenal i.e. in aggregate ₹ 3,50,31,568/- for purchases. At the same time the nos. of share script particularly of the listed company which are not having record of good dividend, these nos. are exceptionally very high. Some of the examples are as follows: (i) CALSREF 36000 (ii) KAVVERITEL 35661 (iii) UGBROS 75294 (iv) ARVIND 79600 (v) NAVNEET PUBLCATION 125R2 (vi) PRISM CEMENT 45500 (vii) VIKAS WSP 18600 (viii) WOCKHARDT 12908 Besides these observations, as per details in this table, for such huge nos. of shares in single script, only single date of purchase and single date of sale is submitted. On being asked, appellant submitted copies of following DEMAT account (i) DEMAT A/C with Action Financial Services (India) Ltd. (IN 300271) (IN 300271) reflecting transaction report as on 16/03/2013 showing statement of transaction from 01/04/2009 to 31/03/2010. (ii) DEMAT A/C with National Securities Depository Ltd. maintained with Shah Investor's home Ltd. (IN 300343) with print date 16.03.13 for statement from 01/04/09 to 31/03/10. These two demat account does not reflect many of the transaction s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27/06/09, thereafter sale of long term capital gain sale on 03/07/09. As against these transactions, only in Demat a/c with Shah Investor's home Ltd. purchase of 800 shares on 05/05/09 is reflected. This further reflect that appellant's transactions are not with the intention of investment but to earn quick profit and transactions are not supported by evidences of delivery, surprisingly, the long term investment are also not reflected in demat account. It is also undisputed that appellant in separate tax audit report reflected business of share trading and trading in derivatives. Further as per provisions related to derivatives, appellant was asked to submit all the contract note & bill for derivative transactions. The details in ledger under head F&O Profit & loss a/c reflect daily purchase & sale transaction in the month of April & May of the impunged previous year. This reflect the time devoted by appellant with frequency of transaction in share market. It is therefore, I am inclined with A.O. that intention of appellant as evidenced by transaction, volume, repetition transactions, no supporting evidences for delivery of shares, time & energy devoted to this activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G as business income then A.O. is directed to give credit for STT after verification from original evidences. It is in this regard, the tax auditor in 3CD report dt. 30/09/10 at cl. 17(f) in reference to "Amount inadmissible u/s 40(a) of the Act mentioned about ₹ 189422.82 STT & service tax in the books of K.R. Mehta is to be considered. It is therefore grounds related to treatment of STCG & LTCG as business income are treated as partly allowed i.e. the A.O's treatment for business transaction is upheld but A.O. is directed to give credit for STT payment on such transactions. In reference to addition of ₹ 263040/- being dividend as incidental to business income. I am not inclined with A.O. who totally overlooked the provisions of section 10(38) & 10(35) of the Act where such dividend from shares, securities and mutual funds are exempt. It is therefore such additions is neither justified nor sustainable. The ground in this regard is treated as allowed. In conclusion for grounds no. 1 to 4, these are partly allowed with part relief in respect of addition related to dividend of ₹ 263040/- and credit to be given for security transaction tax paid." 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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