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2010 (1) TMI 962 - AT - Income TaxNature of income - Income from sale of shares - treatment of income - long-term capital gain or business income'' - assessees are trading in shares and also making investments for which separate accounts have been maintained - assessees claimed as long-term capital gain but AO, treated same as business income. HELD THAT:- The volume and number of transactions is not decisive in understanding the true nature of the transactions. The volume and number will depend upon the quantum of investments being made. If funds invested are huge, obviously the number of transactions and volumes will become high. In case a large number of transactions are confined within the same year, i.e., both the purchases and sales are within the same year, this definitely will give the indication that the assessee is trading in shares but in case the number of transactions is large but sales made during the year is in respect of purchases made long ago, then it could not be said that the assessee is trading in shares merely because volume is heavy and manner of transactions is large. There is no bar on the assessee keeping a separate portfolio for trading and investments which has been accepted even by the Board in the Circular No. 4 of 2007 dated June 15, 2007. Moreover the shares sold in this year have been acquired in the earlier years in which these have already been accepted as investment. Therefore the nature of the investment cannot be changed in the year of sale. Considering the entirety of facts and circumstances mentioned above we see no reason for treating the long-term capital gain declared from sale of shares as business income - Appeals of the assessees are allowed.
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