TMI Blog2012 (5) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had also speculated in stocks. Considering all the factors mentioned above, it can be reasonably be concluded that the assessee was trading in stocks and was not an investor. - Decided in favor of revenue. - IT APPEAL NO. 4622 (MUM.) OF 2009 - - - Dated:- 27-4-2012 - RAJENDRA SINGH, VIVEK VARMA, JJ. Parthasarathi Naik for the Appellant. D. Bhaskara Rao for the Respondent. ORDER Rajendra Singh, Accountant Member This appeal by the revenue is directed against the order dated 15.6.2009 of CIT(A) for the assessment year 2006-07. The only dispute raised in this appeal is regarding nature of income from sale and purchase of shares. 2. Facts in brief are that the AO during the assessment proceedings noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and submitted before CIT(A) that the assessee was doing business as a working partner in a partnership firm and also as director in a limited company. He did not have sufficient time to do any organized share trading activity. He had made share purchases only as investment and these were also declared as investment in the books. The assessee had not utilized borrowed funds for purchase of shares. Dividend income earned by the assessee had been shown separately. CIT(A) after considering the submission of the assessee, observed that both the assessee and AO have taken extreme views. It was observed by him that the assessee could also be an investor as well as trader. He noted that profit on sale of shares held for less than 30 days was Rs. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Mumbai Bench of the Tribunal in the case of Gopal Purohit v. Jt. CIT [2009] 29 SOT 117, in which it was held that income from delivery based share transactions should be treated as capital gain, and which had been upheld by the Hon'ble High Court of Bombay. He also referred to decision of the Tribunal in case of Sugamchand C. Shah v. Asstt. CIT [2011] 139 TTJ 610/48 SOT 189 (Ahd.) (URO)/16 taxmann.com 204 in which similar share transactions had been accepted as investment and also the decision of the Tribunal in case of Hitesh Satishchandra Doshi v. Jt. CIT [2011] 46 SOT 336/12 taxmann.com 79 (Mum.) order dated 15.6.2011. It was accordingly pleaded that the claim of the assessee should be accepted. 4.1 The ld. DR o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o by the assessee. The issue whether the share transactions in a particular case should be treated as investment activity or trading activity has been a highly debatable issue. There are decisions of the Tribunal on both the sides. Each case will depend on its own facts and circumstances. There are various factors such as frequency, volume, entry in the books of accounts, nature of funds used, holding period etc. which are relevant in deciding the true nature of transactions and no single factor is conclusive. The most important factor is the intention of the assessee at the time of purchase which has to be gathered from the actual conduct of the assessee while dealing with the shares subsequently and not only on the basis of entry in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages and are substantial as with total purchases at Rs. 2.61 crores, total sale at Rs. 3.30 crores. The dividend income of Rs. 65,675/- on purchases of Rs. 2.61 crores is quite negligible and nobody will make investment for such negligible return. The dividend income was obviously incidental to trading of shares as assessee is entitled to dividend in respect of trading shares also, where the shares remained unsold on the record date. The assessee had also used borrowed funds which is normally not resorted to by an investor even if borrowing may be interest free as share market is a risky activity. The assessee had also speculated in stocks. Considering all the factors mentioned above, it can be reasonably be concluded that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Luck) holding that facts in the case of Sarnath Infrastructure (P.) Ltd. ( supra ), were identical. However, it is noted that in Sarnath Infrastructure (P.) Ltd ( supra ), the shares sold out of investment account had been held for 2-3 years and revenue could not show any shares sold which had been purchased during the year or in the immediately preceding year. Therefore, only in respect of such cases, the decision in case of Gopal Purohit ( supra ), could be applied. The Hon'ble High court of Bombay had upheld the decision of the Tribunal in the case of Gopal Purohit ( supra ), on the ground that there was no substantial question of law involved. Even before Hon'ble High Court, there was no question raised that all delivery based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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