TaxTMI 
TaxTMI 
2011 (4) TMI 19
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.....Y. 2005-06 has declared an income of Rs.2,70,98,632/-, for A.Y. 2006-07 an amount of Rs.91,34,255/- and for A.Y. 2007-08 an amount of Rs.69,53,635/-. These returns were originally accepted under section 143(1) and subsequently the case was selected for scrutiny in A.Y. 2006-07, AY 2007-08 whereas for A.Y. 2005-06 proceedings under section 147 were initiated on the reason that the assessee was showing gains from purchase and sales of shares as business income till A.Y. 2004- 05 whereas in the year under consideration, the same was shown as capital gains. In respective assessment years, assessee was asked why the short term capital gains claimed should not be treated as business income in view of the fact that in the earlier years assessee h....
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....he transactions are through a recognised Stock Exchange. Assessee submitted that there is no deliberate attempt to deprive the Revenue of any tax on account of concessional rate because all his share holding as on 01-04-2004 was sold off by May itself and only few transactions were there which were also sold off on 30.09.2004 by which time the tax on short term capital gains was reduced to 10%. It was his submission that the incomes earned upto 30.09.2004 was offered @ 30% as short term capital gains and it does not make any difference whether the income upto that date was treated as business income or short term capital gains. With reference to the subsequent purchases it was his submission that he was an investor and was dealing only as a....
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....tions were offered to tax under the head capital gain. From A.Y. 2002-03 onwards, his income from share transactions were assessed under the head business income During the appellate proceedings, the books of account of the assessee were perused. The appellant is recording the purchases and sales scrip-wise. The result of purchase and sale value is always recorded as short term capital gain. The stock in trade of shares available as on 31.03.2004 and the purchases made upto September, 2004 were completely sold by September, 2004. In the books of account the result of purchase and sale made during the entire year was recorded by the appellant as short term capital gain. In summary, the three types of transactions, the appellant had were; &nb....
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....h the capital of Rs.4 crores. It is also important to note that accounting year 2004-05 pertains to book period in share market as and when the desired appreciation in the value of shares was achieved the investor would sell the share resulting in frequent shuffling. Keeping in view that the appellant is an individual, does not have any infrastructure, transactions are delivery based and transactions are recorded as investments in books of account, the appellant should be treated as investor and not as trader. Further in case of Gopal Purohit Vs. CIT (2009) 29 SOT 117 (MUMBAI), the Hon'ble Tribunal held the income from share transactions as capital gains. The facts of the case were the person carrying out activities was broker, transactions....
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.... job he has taken to religious preaching and investing in stock market for gains with his knowledge. One could see that he is a good timer of purchase and sale of shares whereby substantially increasing his gains in the stock market. One of the reasons taken by the A.O. was about large turnover. The reason for large turnover is because of bulk purchases and sales in a scrip. There are very few transactions of purchase and sale, as the assessee is purchasing in block of a particular share in large volume. As analysed in A.Y. 2005-06 by the A.O. there are 54 scrips which are purchased and sold during the year which resulted in sales of more than Rs.24 crores. The A.O. analysed one particular share of Dhampur Sugar and concluded that there wer....
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....lysed all that orders and are of the opinion that each case has to be decided on its own facts without establishing any parameters as it is difficult to determine whether a particular transaction is in the nature of business or as in investment. In this particular case on these facts, we are of the opinion that assessee is an informed investor and therefore, the gains earned by the assessee in the purchase and sale of shares in the stock market are to be treated as short term capital gains/long term capital gains, as the case may be, as the assessee is not doing any speculative activity nor indulging in any sales without delivery, the parameter which may tilt a particular case to hold it as trading. In view of this, we support the order of ....