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2012 (10) TMI 402 - AT - Income TaxCapital Gains v/s Income from Business - Held that:- Through out the assessee’s intention was to maintain two separate portfolios – one for the investment purpose and the second for the trading purpose and has segregated his transactions. The assessee has also been consistent in this approach right from earlier years which has been accepted by the Department after full scrutiny and examination. The shares which were held for a period of less than sixty days, the assessee has incurred net loss and maximum gain has come from the shares which were held for a period of nine months or so. Thus, the theory of the AO as well as the CIT(Appeals) gets demolished from the above facts that the assessee has gained a lot and has entered into several transactions. It is a known phenomenon in Stock Exchange that a single transaction is split by the computers trading in the Stock Exchange into many smaller transactions but that does not mean the assessee has carried out several transactions. Thus, the findings of the CIT (Appeals) as well as the AO that the short term capital gain is to be assessed under the head “Income From Business” solely on account of frequency of transactions cannot be sustained. As decided in The Commissioner of Income Tax Versus Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] if the assessee has maintained two separate books of account, separate portfolios i.e., one in relation to investment in shares and other relating to business activities involving dealing in shares and such an approach has been consistently being followed by the assessee and allowed by the Department, the sale of shares shown under the head “Investment” cannot be treated and taxed under the head “Income From Business”. Thus the shares held as investment by the assessee and the income arising on sale of such shares is assessable under the heads “Short Term Capital Gains” & “Long Term Capital Gains” and not under the head “Income From Business” - in favour of assessee.
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