TMI Blog2012 (11) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, in line with the preceding years and also apply the tests as prescribed by the Board, in Instruction No. 1827 dated 31-08-1989 (filed in the APB) to come to the correct conclusion – Order of the CIT(A) is set aside and direct the AO to re-examine the issue afresh, after giving reasonable and adequate opportunity to the assessee - appeal is allowed for statistical purposes. Disallowance u/s 14A - Held that:- As the issue whether Income is Business Income - Application of sec.14A has to be decided accordingly - Order of the CIT(A) is set aside and direct the AO to re-examine the issue afresh, after giving reasonable and adequate opportunity to the assessee and accordingly applicability - appeal is allowed for statistical p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to explain the modus operandi of the conduct of business of shares. The assessee vide letter dated 20/11/2008 gave a reply wherein the assessee explained the nature and conduct of business by him, which is as under : 2.We are further asked to certify as to divisibility of inome arising from trading in shares speculation income and income from capital gains. We believe we have already given explanations for issues raised however our further reply is as under: (i) The stock of shares carried on trading account and income arising from the same is shown as trading receipt. During the year there is no purchase on account of trading activity. Depending on the intention to hold the shares and frequency of transactions in the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , frequency, continuity and regularity of transactions of purchase and sale in a class of goods and transaction must ordinarily be entered into with a profit motive. Such motive must pervade the whole series of transactions effected by the person in the course of activity. Further, there is no justification assessee is not corporate assessee and the relevant instruction and the relevant instruction are not applicable. Hence in view of the above discussion the income is charged under the head Business Income and not as capital gain . He, therefore concluded that considering the activity of the assessee, it has to be concluded that the assessee was carrying on business activity and not investment and he has to be assessed under the head bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains which is claimed as long term capital gain typically holding period would be in excess of three years barring some straight transactions. The ratio of sale or purchase is not alarming as the proceedings (?) from sale arising was partly invested in mutual funds and major portion was lying in savings hank account. The assessee has not devoted any substantial time for the purpose of share transaction. The shares are listed securities and not unlisted ones. The shares are not dealt in the capacity of promoter of the company. The total number of stock dealt is not substantial. Assessee has not paid and received the money and transactions are not settled by way of book entries . He emphasised from this detail that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of scrutiny as may be considered by the Bench. The A.R., to emphasise that the assessee was merely an investor and not a trader pointed out that the trader would also go in for hedging transactions to minimise his risks. He referred to and placed before the Bench a synopsis on Essentials of Day Trading , typically undertaken by the trader. According to the A.R., a typical trader would indulge in limited number of scrips, i.e. a trader targets a particular scrip and trades in that share or shares. Since the trader is indulging in very limited scrips, the frequency becomes essentially high. There would be squaring up of the deals at quick intervals. The trader would indulge in hedging, looks for market capitalisation and indulges in hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricals where the holding period is in excess of four months and in Rolta India and Star Paper, the holding period is close to one month. From the records submitted before us, we find that the pattern of transaction is the same in the preceding year, so far as the treatment of investments are concerned and the income pattern also remains the same. We have also considered the Circular No. 4/2007 dated 15-06-2007, wherein the Board has accepted the fact of the person having two portfolios. Besides this we have considered the case law submitted by the A.R., in the case of Gopal Purohit. On consideration of both these, on the one hand we have observed that the assessee had actually maintained distinct portfolios but so far as the fortificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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