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2013 (10) TMI 1128 - ITAT MUMBAIClassification of heads of Income on sale of shares to be under head ‘Capital Gains’ or ‘Business Income’ – Held that:- There is thin line demarcation between the activities of such kind which can be considered purely for investment purpose or for trading purpose. The guiding parameters like volume and frequency of transactions, holding period of shares, intention of the assessee, treatment given in the books of account and host of other factors that are very relevant for such transactions whether they are for investment purpose or for trading purpose. However, these parameters may break down in certain cases and there cannot be all embracing formula or guideline to these kinds of transactions. In the instant case, assessee is mainly engaged in the business of partnership firm wherein, he is a whole time partner. For the purchase of shares, he has not borrowed any funds and has used his own fund from which is evident from the capital account. Further, right from the earlier years, he has shown these shares as investment in the balance sheet which have been accepted by the Department also. The gain from such investments has also been assessed as capital gain, even though such assessments have been completed under section 143(1) but the same have not been disturbed. From these facts, it can be gathered that the assessee's intention in the purchase of shares was mostly for investment purpose and to have maximum gain - It cannot be held that the assessee was engaged in organized and systematic activity of trading of shares - Learned Commissioner (Appeals) was not correct in holding that the assessee was carrying out the business of purchase and sale of shares for the motive of business profit. Even in case of purchase of shares for the purpose of investment, motive is only maximizing gain only – From the facts and circumstances of the present case, income from purchase and sale of shares is to be assessed under the head "capital gain" and not under the head "business income" – Decided in favor of Assessee.
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