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2014 (12) TMI 138 - AT - Income TaxTreatment of STCG on shares - business income or not – Nature of assessee investor or trader - Held that:- The AO in re-assessment proceedings has treated the income from short term capital gains as business income mainly on the ground that the volume of transactions of shares is more, there is frequency in transactions and therefore, the motive is earning of profit - the main source of income is from investment activity - the assessee's normal activity is not buying and selling of shares but his purchase and sale of shares were in the nature of investment of her own surplus money and therefore, the excess amounts received by sales were capital receipts being merely surplus and not profits - in case the assessee is earning large income from his normal business activity and it was his surplus income which he was interesting in buying the shares - whenever he found it profitable he converted his holding that the very nature of investment was such that they had to be constantly charged so that the monies invested may be used to the best advantage of the investor and that the sales were really for the purpose of employing the monies that he had invested to his best advantage. Volume of frequency, continuity and regularity of transaction of purchase and sales are found in character and however what is more important is the intention of the assessee - the sale of shares held for more than one month would be charged capital gain and surplus of shares held for less than one month will be treated as profit from business - all share transactions undertaken by the assessee would be charged to capital gain irrespective of their holding, the AO was directed to compute the capital gain - the order of the CIT(A) is upheld and the AO is directed to treat the income from sale of shares as assessable under the head ‘capital gain’ and not as business income – Decided in favour of assessee.
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