TMI Blog2012 (9) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the Commissioner (Appeals) II, Mumbai, for assessment year 2005 06. The only ground raised by the Revenue is, as to whether the Commissioner (Appeals) has erred in facts and on the circumstances of the case in holding that the short term capital shown by the assessee is assessable under the head Business Income . 2. The relevant facts are that the assessee is a public limited company engaged in the business of trading in machinery. For the assessment year under consideration, the assessee filed return of income declaring total income of Rs. 30,86,808. 3. In the assessment year under consideration, the assessee has declared short term capital gain of Rs. 18,17,014, on sale of shares. The Assessing Officer has stated that on verification of the details furnished, the frequency of sale and purchase of shares is very high and also the quantum of shares purchased in some cases are very high. The Assessing Officer has given the details of the shares for which the assessee has accounted for short term capital gain at Page 9 in Para 3.25 of the assessment order, which is as follows: Scrip s Name Scrip s Name Date of Purchase Date of Sale TCFC 100000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of shares. Besides the intention of the assessee is evident from the balance sheet in which the assessee has shown the shares as investments and not as stock in trade. In view of these factual findings, the decision of Mumbai ITAT in the case of Janak S. Raangwala v/s ACIT, 11 SOT 627, will hold good wherein it was held that mere magnitude of transaction would not change the nature of transaction. Respectfully following the decision of ITAT, Mumbai, I direct the A.O. to treat the income of the assessee as short term capital gain. This ground of appeal is allowed. Hence, the Department is in appeal before the Tribunal. 7. At the time of hearing, before us, the learned Departmental Representative relied on the order passed by the Assessing Officer. He submitted that the assessee s activity of dealing in shares continued regularly throughout the year. Hence, the assessee is a Dealer in shares. 8. On the other hand, the learned Counsel for the assessee supported the order passed by the Commissioner (Appeals). He submitted that the Assessing Officer himself treated the assessee as Investor in shares. The learned Counsel submitted that there was a short term capital l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Counsel submitted that the assessee has also purchased shares of Bharti Shipyard on 24th December 2004, and sold on 10th January 2005, showing short term capital gain of Rs. 20,050. He submitted that the observation of the Assessing Officer that there were repeated purchases and sales of shares or there is high frequency of share transactions is not factually correct, as there were only five scrips in which the shares were purchased and sold. The learned Counsel further submitted that the Assessing Officer, in the assessment order, has only discussed theoretical part but nowhere has stated, as to how the instances mentioned by him fit to the case of the assessee. The learned Counsel further submitted that the assessee had been dealing in machinery and making investment in shares right from the assessment year 1994 95 and the same has been accepted as investment in the preceding assessment years as well as the succeeding assessment year to the assessee year under consideration. To substantiate his submissions, the learned Counsel referred to Page 29 of the paper book, which contains the details of investment in shares from the assessment year 1995 96 to 2005 06. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not factually correct as the Assessing Officer himself has accepted first three share transactions which were completed before 1st October 2004, as investment and the short term capital loss declared by the assessee of Rs. 53,467, has not been disputed by the Assessing Officer. We also observe that out of short term capital gain of Rs. 18,17,014, the short term capital gain of Rs. 17,41,000 (approximately) relates to only two scrips namely Infosys Technology and NTPC. We observe that the shares of Infosys Technology, there are no repetitive transactions. All the shares were purchased on the same day i.e., on 6th July 2004, and were also sold on 24th March 2005. The said shares were held by the assessee for a period of more than eight months. Similarly, the shares of NTPC were also purchased on 27th October 2004, and were sold in December 2004. In that scrip also, it cannot be said that the assessee has repetitively entered into the transactions of purchase and sale of shares. We observe that there are also three other scrips and in respect of one of the scrips namely Indian Semless, there is short term capital loss of Rs. 19,865, and the assessee stated that this transaction took ..... X X X X Extracts X X X X X X X X Extracts X X X X
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