TMI Blog2010 (1) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... nvested 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from several purchases and sales of shares with heavy volume. The Assessing Officer after examining the frequency, volume, quantum of trade and the time spent in share transaction activities, observed that the assessees were engaged in the business of dealings in share transactions on full time. He referred to several judgments to point out that even a single transaction of purchase and sales outside the assessee's line of business could constitute adventure in the nature of trade. It was observed by him that, in this case, the transactions from which longterm capital gain had been declared were numerous involving high volume which clearly showed that the assessees were involved in the business activities and therefore he did not accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the volume of transactions, the number of scrips dealt in and the fact that the assessees were already engaged in trading of shares, the Commissioner of Income-tax (Appeals) concluded that the assessees had wrongly bifurcated some transactions as trading and some as investments with a view to evade tax. The investments shown in the books of account were nothing but stock-in-trade wrongly classified as investment. Accordingly he upheld the order of the Assessing Officer assessing the capital gain declared as profits from business. Aggrieved by the said decision, the assessee is in appeal. Before us the learned authorised representative for the assessee reiterated the submissions made before the lower authorities that in addition t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire interest expenditure had been claimed against the income from trading in shares which showed that no borrowed funds were utilised for making investments. It was pointed out that even in Circular No. 4 of 2007 ([2007] 291 ITR (St.) 384) dated June 15, 2007, the Central Board of Direct Taxes clearly stated that it was possible for a taxpayer to have two portfolios, i.e., an investment portfolio comprising of securities which will be treated as capital assets and a trading portfolio comprising of stock-intrade which have to be treated as trading assets. The learned authorised representative further stated that the investments in stock had been sold after a gap of several years. He referred to the computation of capital gain placed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er years similar transactions of investment and trading have been undertaken by the assessees have been accepted by the Department and income from capital gain along with separate income from trading transactions has been accepted. In the assessment year 2001-02, the similar claim was accepted even in scrutiny assessment under section 143(3). The assessees had made investments from surplus funds. Though the assessees had also made borrowings but interest on borrowings had been claimed against trading of shares which clearly shows that investments had been made from own funds. Most of the investments in shares had been acquired in the financial years 1998-99 and 1999-2000 and some even in the financial year 1992-93 and these have been sold a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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