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TMI Blog2017 (11) TMI 2049X X X X Extracts X X X X X X X X Extracts X X X X ..... see and accepted returns u/s 143(1) of the Act. In the earlier year and in subsequent year, the status of the assessee as investor was not disputed. The assessee has not used borrowed funds. All these shares were purchased by the assessee were on delivery basis. He has transacted in 16 scrips, though the transactions are large in number, but mere volume of transactions is not a criteria to doubt the treatment given by an assessee about its investment in the books. Therefore, considering we allow the appeal of the assessee, and direct the AO to treat the investment made by the assessee as an investor and the assess the income resulted to the assessee on sale of such investment as short term capital gain. Appeal of the assessee is allowed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income. 4. On appeal, the ld.CIT(A) has granted partial relief. It was pointed out before the ld.CIT(A) out of total short term capital gain of Rs.27,27,007/- a sum of Rs.12,67,121/- was an opening investment and remaining short term capital gain of RS.14,59,886/- was out of purchases during the year. In other words, the ld.CIT(A) has accepted the gain arisen to the assessee from the opening or from the investment of last year as short term capital gain, but the gain arisen to the assessee on the purchases made during the year was treated as a business income. In this way, the ld.CIT(A) has confirmed the assessment of Rs.14,59,886/- as income from business. 5. With the assistance of the ld.representative, we have gone through the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action(s) in question are in the nature of trade or are merely for investment purposes: (1) What is the intention of the assessee at the time of purchase of the shares (or any other item). This can be found out from the treatment it gives to such purchase in its books of account. Whether it is treated stock-in-trade or investment. Whether shown in opening/closing stock or shown separately as investment or nontrading asset. (2) Whether assessee has borrowed money to purchase and paid interest thereon? Normally, money is borrowed to purchase goods for the purpose of trade and not for investing in an asset for retaining. (3) What is the frequency of such purchase and disposal in that particular item? If purchase and sale are frequent, or there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the records or otherwise, between two types of holdings. If the assessee is able to discharge the primary onus and could prima facie show that particular item is held as investment (or say, stock-in-trade) then onus would shift to Revenue to prove that apparent is not real. 8. The mere fact of credit of sale proceeds of shares ( or for that matter any other item in question) in a particular account or not so much frequency of sale and purchase will alone will not be sufficient to say that assessee was holding the shares (or the items in question) for investment. 9. One has to find out what are the legal requisites for dealing as a trader in the items in question and whether the assessee is complying with them. Whether it is the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impressed with the character of a commercial transaction entered into with a view to earn profit, it would furnish a valuable guideline. (b) The second test that is often applied is as to why and how and for what purpose the sale was effected subsequently. (c) The third test, which is frequently applied, is as to how the assessee dealt with the subject-matter of transaction during the time the asset was the assessee. Has it been treated as stock-intrade, or has it been shown in the books of account and balance sheet as an investment. This inquiry, though relevant, is not conclusive. (d) The fourth test is as to how the assessee himself has returned the income from such activities and how the Department has dealt with the same in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the status of the assessee as investor was not disputed. The assessee has not used borrowed funds. All these shares were purchased by the assessee were on delivery basis. He has transacted in 16 scrips, though the transactions are large in number, but mere volume of transactions is not a criteria to doubt the treatment given by an assessee about its investment in the books. Therefore, considering all these facts, we allow the appeal of the assessee, and direct the Assessing Officer to treat the investment made by the assessee as an investor and the assess the income resulted to the assessee on sale of such investment as short term capital gain. 9. In the results, appeal of the assessee is allowed. Order pronounced in the Court on 3rd Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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