TMI Blog2013 (12) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to work out the frequency of transactions of holding period is not collected by the AO – The issue was restored for fresh decision. - I.T.A. No.2807/Ahd/2012 - - - Dated:- 8-2-2013 - Shri Mukul Kr. Shrawat And Shri T. R. Meena,JJ. For the Appellant : Shri Y. P. Verma, Sr. DR For the Respondent : Shri J. P. Shah ORDER Per Shri Mukul Kr. Shrawat, Judicial Member :- This is an appeal filed by the Revenue arising from the order of ld.CIT(A)-II, Surat dated 26.09.2012 passed for A.Y.2008-09 and the only ground is reproduced below:- [1] On the facts and circumstance of the case and in law, the Ld. CIT(A)-I, Surat has erred in deleting the addition of Rs.16,90,044/- made on account of Short Term Capital Gain treated as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to find out whether transact ion (s) in question are in the nature of trade or are merely for Investment purposes:- (1) What Is the intention of the assessee at the time of purchase of the shares (or any other tern) ? This can be found out from the treatment it gives to such purchase in its books of account. Whether it is treated as stock-in-trade or investment ? Whether shown in opening/closing stock or shown separately as investment or non-trading asset ? (2) Whether assesses has borrowed money to purchase and paid Interest thereon ? Normally, money is borrowed to purchase goods for the purposes of trade and not for Investing In an asset 'or retaining. (3) What Is the frequency of such purchases and disposal In that particular It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for Investment or for trading and what distinction he has kept In the records or otherwise, between two types of holdings. If the assessee is able to discharge the primary onus and could prima fade show that particular Item is held as investment (or say, stock- in-trade) then onus would shift to Revenue to rove that apparent is not real. (8) The mere fact of credit of sale proceeds of shares (or for that matter any other item in question) in a particular account or not so much frequency of sale and purchase will alone not be sufficient to say that assessee was holding the shares (or the items in question) for Investment. (9) One has to find out what are the legal requisites for dealing as a trader in the items in question and whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had some borrowed funds it would not by itself show that they were deployed in investment. Notwithstanding, even borrowings are required to settle payment obligations in respect of investments, like one takes loan for purchasing a house. In any case, high cy transactions and low period holdings indicate trade, whereas low frequency transactions j nigh period holdings indicate investment. 17. In this case, the assessee has discharged the onus of showing that it is making investment but e ;s able to show that there are high frequencies and low holdings in many transactions of indicating that assessee has some intention of purchasing and selling shares as a trader, se of the assessee is supported by the fact that it has entered the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating that they are held as investment. Therefore, a criteria has to be fixed for determining as to when he is acting as trader and when as investor. Accordingly, we decide following criteria to hold when gains are to be taxed as profit to be earned under the business or to be taxed as short term capital gain, we hold that if shares are not held even say for a month, then the intention is clearly to reap profit by acting as a trader and he did not intend to hold them in investment portfolio. We believe that if a person intends to hold his purchases of shares as investment, he would watch the fluctuation of rates in the market for which a minimum time is necessary, which we estimate at one month. Where shares are held for more than a month, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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