TMI Blog2013 (8) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... h with regard to the treatment of shares one as investments and other as stock in trade separately, but the same has also been consistently allowed by the Department - there is no bar for an assessee to maintain two separate portfolios i.e. one in relation to investment in shares and other relating to business activities involved in dealing of shares - It is also noticed that, in the case of assessee, under the head 'short term capital gains' most of the shares have been held for a period of more than three months and six months and there are no intra-day transactions of shares under this head - on the shares held as investment by the assessee, the income arising on sale of such shares is assessable under the head 'long term capital gain' a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utual funds resulting into short term and long term capital gains. In view of such a large volume of sale and purchase of shares, the Assessing Officer came to a conclusion that the assessee is not a small investor but is doing trading in shares. This conclusion was drawn by the fact that majority of the share transactions, assessee had sold shares within a period of 12 months of the acquisition. Accordingly, he held that the intention of the assessee was to earn profit by taking advantage of the fluctuations in the share markets and the tax concession as provided u/s 111A /112 r.w.s. 10(38) which was otherwise available only for the small investors and not to persons like assessee who are dealing in huge volume of shares. After relying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sale of investments have been shown separately. Further, he held that whatever may be the accounting entries in the books and the method of accounting disclosed, the substance behind the form is relevant which in this case shows that majority of the shares and mutual funds transacted have resulted in short term capital gains, which in fact is trading in shares. The period of holding was also within twelve months of acquisition. There were huge volumes of transactions which was illustrative of the intention of the assessee behind the purchase of shares / mutual funds. Accordingly, he confirmed the finding of the Assessing Officer. 6. Learned Counsel on behalf of the assessee submitted that the assessee has maintained two separate accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other hand submitted that most of the scrips were repetitive and period of holding was very less which is evident from the details submitted by the assessee. He also pointed out that PMS expenses have also been remitted which show that assessee was doing business in shares. He finally strongly relied upon the findings given by the CIT (A). 8. We have carefully considered the rival submissions and also perused the material on record. From the details of transactions, it is seen that, under the head long term capital gains , the assessee had shown sale of mutual funds at Rs.76,56,553/- and on shares 4,52,098/- whereas in short term capital gains , mutual funds had been shown at Rs. 14,29,925/- and sale of shares at Rs. 32,94,562/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in dealing of shares. It is also noticed that, in the case of assessee, under the head short term capital gains most of the shares have been held for a period of more than three months and six months and there are no intra-day transactions of shares under this head. On these facts and circumstances of the case, we hold that on the shares held as investment by the assessee, the income arising on sale of such shares is assessable under the head long term capital gain and short term capital gain and not business income as held by AO and CIT (A). Accordingly, the order of the CIT (A) is reversed and the assessee s grounds are allowed. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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