TMI Blog2011 (5) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee's appeal and the ground raised by the revenue in its appeal can be conveniently decided together. These grounds read as follows: Assessee's Grounds: "1. Treatment of Capital Gains as Business Income/Trading: (a) The Learned CIT(A) erred in law and on facts in treating (i) the appellant as both investor as well as trader. (ii) Short Term capital Gain in respect of those shares which are held for less than 30 days in respect of secondary market purchase and sale as business income/loss instead of short term capital gains. (b) The Appellant prays for the leave to add, amend, alter, delete or modify any of the above grounds. Revenues's Grounds: "1. (i) On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the assessee is both an investor as well as trader in shares and securities. (ii) The ld. CIT(A) has further erred in directing the Assessing Officer to treat the surplus/loss on sale of shares held for less than 30 days in respect of secondary market purchase and sales as business income/loss and to treat the surplus/loss on sale of shares held for more than 30 days as capital gains loss. (iii) The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investor, he would be principally interested in holding the shares from the point of view of dividend. For the above reasons, the Assessing Officer held that the intention of the assessee is to derive profit from sale of shares and the assessee should not be treated as a trader and not an investor and his gains from both Long Term and Short Term be brought in the right bracket of tax instead of taking shelter of exemption and lower tax rates. 3. On appeal by the assessee the CIT(A) held as follows: "4.3 I have perused the assessment order and have carefully considered the finding and the conclusion of the Assessing Officer. I have also considered the submissions of the appellant. I have considered the facts of the case. I am of the considered opinion that both the Assessing Officer and the appellant have taken extreme views. While the Assessing Officer has treated the appellant as trader and has treated all the transactions (Short term as well as Long Term) of the appellant as Business income, the appellant has claimed to be an investor and has treated all his transactions as investment transactions and thereby offered gain on sale of shares as Capital Gains. In my considered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, hold that the appellant is both an investor as well as trader. Gain in respect of those shares which were acquired through subscribing to initial public offer of the companies cannot be treated as trading. I direct the Assessing Officer to treat the surplus/loss on sale of shares held for less than 30 days in respect of secondary market purchase and sales as business income/loss and to treat the surplus/loss on sale of shares held for more than 30 days as Capital Gains/Loss. I further direct the Assessing Officer to treat the entire long term capital gains as long term capital gains on sale of shares and given exemption under section 10(38)." 4. Aggrieved by the finding of the CIT(A) where the holding period of shares was less than 30 days the profit has to be treated as income from business the assessee has field the present appeal before the Tribunal. The revenue has filed the appeal aggrieved by the finding of the CIT(A) that where shares are held for more than 30 days the income on sale of shares has to be considered as STCG and the finding that LTCG declared by the Assessing Officer has to be accepted and exemption under section 10(38) has to be allowed the revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 21 (SC). 6. The above tests have again been reiterated by the CBDT in its Circular No. 4/2007, dated 15-4-2007. Keeping in mind, the above broad principles, we shall now examine the case of the assessee. 7. The Assessee had purchased and sold shares of the following companies which had given rise to short term capital gain, viz., Elgi Equipment, FCS Software Solutions Ltd., Gujarat Ambuja Cement, ICICI Bank, IDFC, IL FS Investments, Jindal Stainless Steel, KLG Sy. ST. Rico Auto, Shanti Gears, Shree Cements, SPLIL, TCS and Ultratech. In all there were only 37 transactions which resulted in short term capital gain. The other relevant details are as follows: l Personal Capital Rs. 16,04,60,390 l Investment in shares as at 31-3-2006 Rs. 5,64,28,742 - in Govt., Bond Units of MF, PPF, LIC Rs. 3,69,32,218 Investment in shares as at 31-3-2005 Rs. 3,67,07,513 - in Govt. Bond Units of MF, PPF, LIC Rs. 5,00,00,000 ** ** ** (sic) l Selling price of shares sold during the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 3,001 Dividend from shares 19,09,387 11,50,000 11,69,188 Dividend from mutual funds 0 86472 0 RBI Bond Interest 34,61,500 30,76,976 16,13,012 54,29,332 43,26,819 27,95,024 III. STCG No. of Scrips Total Sale Price Total Purchase cost Purchase of previous year Rs. Rs. Rs. At purchase cost 14(12 In CY) AND (2 IN PY) 5,82,20,450 4,83,02,062 1,11,10,974 LTCG: No. of Scrips Total sale price Total Purchase cost Purchase of previous years Scrips Rs. Rs. Rs. at purchase cost 8 Scrips 4,56,87,435 1,47,73,200 1,47,73,200 IV. Investment in shares A/c. F.Y 2005-06 (Assessment year 2006-07) Opening Balance Purchases Sales (At cost) Closing Balance Rs. Rs. Rs. Rs. 3,67,07,513 8,27,96,491 6,30,75,262 5,64,28,742 8. From the facts as stated above, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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