TMI Blog2011 (5) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... (IND.) OF 2008 AND 494 (IND.) OF 2009 - - - Dated:- 30-5-2011 - JOGINDER SINGH, R. C. SHARMA, JJ. S.S. Deshpande and Ashok Khasgiwala for the Appellant. Pradeep Kumar Mitra for the Respondent. ORDER R.C. Sharma, Accountant Member. These are the appeals filed by the assessee against the order of CIT(A) for the assessment years 2005-06 2006-07 in the matter of order passed under section 143(3) of the Income-tax Act, 1961. 2. The sort grievance of the assessee relates to treating the profit shown by the assessee on sale of shares as business income in place of treating the same as short term capital gains. 3. Rival contentions have been heard and records perused. The facts, in brief, are that during both the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther stressed on the facts that the assessee has dealt with only one script and the same were duly entered into Demat account. He further relied on various decisions of the Coordinate Bench including the decision in the case of Gopal Purohit v. Jt. CIT [2009] 29 SOT 117, which was upheld by the Mumbai High Court and CIT v. Gopal Purohit 14 ITJ 282. 5. On the other hand, the contention of the ld. Sr. DR Shri Pradeep Kumar Mitra was that the assessee had no intention to earn the dividend income thereon and the same was not purchased for making investment but for earning profit immediately on their sale. He highlighted the frequency of transaction, which is normally entered by a person engaged in the business of shares. He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e test but one of the important factors for deciding this issue. The next test is why and how and for what purpose sales was effected subsequently and how the assessee dealt with the shares during the time the assessee was holding it, whether it was treated as stock-in-trade and has been shown in the books of account and balance as investment. These tests are also important but not conclusive for reaching to the conclusion, merely because the assessee has entered these transactions in the books of account and treated the same as investment, the same cannot be held to be as investment. Book entry is not conclusive but only a guiding factor for deciding the nature of transaction and its income on sale. Frequency of purchases and disposal of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade, then onus would shift to the revenue to prove that apparent is not real. The mere fact of credit for sale proceeds of shares in a particular account or not so much frequency of shares on such purchases will alone not be able to sufficiently prove that the assessee was holding the shares as investment (sic). Ordinarily, the purchase and sale of shares with the intention of earning profit, would result in the transaction being in the nature of trade/adventure in the nature of trade, but where the object of the investment in shares of a company is to derive income by way of dividend, etc., then the profit accruing by change in such investment will yield capital gains and not revenue receipt. The CBDT Circular No. 3 of 15-6-2007 has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend income and capital gains thereon, insofar as no dividend income was shown by the assessee. In respect of shares of Marcaters Lines Limited, which were even sold before the end of the close of the year. The shares in respect of which the assessee had shown holdings for reasonable longer period with intention to earn dividend and for which dividend income had also been shown by the assessee, the Assessing Officer had already accepted the same as long term capital gains rather the business income. The detailed findings recorded by the lower authorities with regard to intention of assessee, frequency of transaction of sales and purchases have not been controverted by ld. Authorized Representative by bringing any positive material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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