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2015 (5) TMI 1082 - AT - Income TaxTreatment of income earned from sale and purchase of shares - short term capital gains or business income - Held that:- Memorandum and Articles of Association of the assessee company does not allow it to trade in shares and it has been consistently investing its money as an investor in shares. No borrowed funds have been used for making the share transactions. The assessee has also earned substantial income from long term capital gain and also dividend income. All these facts prove beyond doubt that the intention of the assessee has always been to invest the money in shares and not the trading in shares. High frequency of the transactions cannot be the sole factor in holding the assessee as a trader. Even there is no minimum holding period of shares is prescribed under the statute for treatment of the same as short term capital gain. Thus in our view, the assessee has to be treated as an investor and the income earned from purchase and sale of shares is to be treated as short term capital gain. - Decided in favour of the assessee. Dividend stripping - Held that:- The Assessing Officer noted that the assessee had purchased and sold shares of three companies within the time prohibited under section 94(7) of the Act which had resulted in loss. The Assessing Officer, therefore, reduced the loss suffered by the assessee to the extent of dividend earned which was computed at ₹ 2,983, and added back the same to the income of the assessee. The learned CIT(A) upheld the addition. No infirmity in the impugned order on this issue and this addition is accordingly confirmed. Disallowance of deduction under section 35D - Held that:- Asssessee debited ₹ 3,204 to the Profit & Loss account as preliminary expenses. The Assessing Officer noted that the capital employed was ₹ 2,00,000 and deduction of preliminary expenses was allowable only to the extent of ₹ 500. He, therefore, disallowed the deduction of balance of ₹ 2,704. The learned A.R. for the assessee has not advanced any arguments on this issue. No infirmity in the order of the learned CIT(A) while upholding the disallowance on this issue. Thus, the ground raised by the assessee is dismissed.
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