TMI Blog2013 (3) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no change in the facts and circumstances of the case in the present year with that of earlier years wherein long term capital gain and short term capital gain has been accepted by the department. All shares purchased are delivery basis. The holding period of the shares on which long term capital gain have been declared was more than 12 months and in the cases where short term capital gain has been declared, the holding period varies from few days to 7 to 8 months. Thus CIT(A) is correct in observing that the period of holding of shares and non-receipt of dividend income was not a decisive factor for treatment of particular transactions as investment or trading transaction. One has to see the intention of the person who is doing purchase and sale of shares. Also Circular No. 4 of 2007 dated 15.6.2007 issued by the CBDT mentions that a person can have two portfolios, one for investment purposes and another for trading purposes with no time limit prescribed for holding a share to determine whether the shares were held for investment or stock in trade. See Commissioner of Income Tax vs. Gopal Purohit 2010 (1) TMI 7 - BOMBAY HIGH COURT, Income tax Officer, Ward 33(4), New D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004. The application for surrender of trading membership was approved by NSE vide its letter dated 04.1.2005. The assessee has sold the carried forward the opening stock of the shares which were kept in the trading account by the assessee. During the year no purchases in the trading account has been made by the assessee it has sold shares of Rs. 6,67,057/- in the trading account. In the investment account the assessee had shares of Rs. 13,49,16,950/- as on 31st March, 2007. Out of such investments the assessee has sold the shares and has earned long term capital gain of Rs. 1,23,79,769/- and short term capital gain of Rs. 71,07,555/-. The assessee has also received dividend income of Rs. 39,08,815/- out of such investments. In the assessment order passed by the Assessing Officer for the year under consideration, the Assessing Officer has treated the entire transactions as trading activities in shares and treated the income earned from such sale and purchase of shares as business income and added Rs. 1,76,26,326/- instead of short term and long term capital gain offered by the assessee in the return of income. 5.1 The Assessing Officer gave the following reasoning for not acceptin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se view was taken by the department for the LTCG and STCG declared by the assessee in the return of income. 6.1. Ld. Commissioner of Income Tax (A) further observed that assessee has shown investment in shares as on 1.4.2007 of Rs. 13,49,16,950/-. Out of these investments the assessee has sold shares during the year and has declared long term capital gain of Rs. 1,23,79,769/-. That from the details it was found that more than 50% of short term capital gain have been declared out of such investments carried forward from the last year. That the entire long term capital gain has been earned by the assessee out of shares held by the assessee as on 31.3.2007. That the assessee has constantly being showing the investment in shares in his balance sheet from Asstt. year 2004-05. Ld. Commissioner of Income Tax (A) noted that detail of investments from Asstt. year 2004-05 to Asstt. year 2008-09 and dividend income earnerd from such investments was as under:- A.Y. 2004- Investments Dividend 2004-05 2005 75791790 6395939 2005-06 2006- 76170819 4063716 2006-07 2007- 111265646 4578699 2007-08 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had purchased shares only for investment purposes and not for trading purposes. In the entire year he has dealt only in shares of 29 companies and the frequency of the transactions is limited. The appellant has not entered into any transactions of F O, or day trading during the entire year. In view of the facts stated above, it is clearly established that the shares purchased by the appellant were for investment purposes and capital gains received on such sale is liable to be tax under the head short term capital gain and long term capital gain. Hence, the action of the Assessing Officer of treating the short term capital gain and long term capital gain as business income was not justified. I, therefore, directed the Assessing Officer to treat the surplus received on sale and purchase of shares as short term capital gain and long term capital gain as claimed by the appellant in the return of income. As a result, this ground of appeal of the appellant is allowed. 6.4 Further in this regard, Ld. Commissioner of Income Tax (A) relied upon the following case laws:- Commissioner of Income Tax vs. Gopal Purohit (2010) 188 Taxman 140 (Bom.) ITO Ward 33(4), New Delhi vs. Rohit Anand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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