TMI Blog2014 (3) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... s correct and calls for no interference. Relying upon PVS Raju and Others vs. Addl. CIT [2011 (7) TMI 818 - Andhra Pradesh High Court] – The character of a transaction cannot be determined solely on the application of any abstract rule, principle or test but must depend upon all the facts and circumstances of the case - Ultimately, it is a matter of first impression with the Court whether a particular transaction is in the nature of trade or not – the findings of the AO are approved that assessee has indulged in share trading during the year – thus, the order of the CIT(A) set aside – Decided in favour of Revenue. - ITA. No. 358/Hyd/2011 - - - Dated:- 21-3-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Mr. Jeevan Lal Lavidya For the Respondent : Mr. A.V. Raghuram ORDER Per B. Ramakotaiah, A. M. This is Revenue s appeal against the Orders of the CIT(A)-VI, Hyderabad dated 15.11.2010. The issue in this appeal is whether the income declared by the assessee under the head Capital Gains is to be assessed as such or as Business Income . 2. The A.O. noticed that assessee has sold shares to an extent of Rs.1.30 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a concessional rate of 10%. It also seen that the appellant paid Securities Transaction Tax on the shares I also rely on the judicial pronouncement in the case of CIT vs. Dharma Reddy (1969) 73 ITR 751 (SC) where the term business has been defined to be continuous exercise of an activity. In the present case the appellant held the shares for certain time before selling the same within 12 months. The I.T. Act does not specify that an asset/share has to be held for n number of days, within a year for claiming short term capital gains. On these facts and circumstances, it is not possible to hold that the appellant carried on trading in shares as a continuous and regular activity. There is no basis for treating the appellant as trader, when her intention was to hold shares in Indian companies as an investment and not as stock in trade. It is not a case where the appellant is holding himself as an investor in some case and a trader in some case and there is a shifting stand. After a cumulative consideration of all the facts, I am of the opinion that the profit from sale of shares should be considered as Income from short term capital gains . In view of the above discussion, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular day has not been reflected in the statement submitted by the assessee before the Ld. CIT(A), Ld. Counsel fairly admitted that the statement prepared by the A.O. in the assessment order is correct. Further, it was also fairly admitted that assessee has borrowed funds from the sister concern and there was claim of interest also paid in that account. Ld. Counsel placed on record a paper book, on the directions given on 18.02.2014, dated 14th February, 2014 but filed on 20th February, 2014 in the course of hearing. 7. We have considered the issue and examined the facts on record. Prima facie, as seen from the order of the CIT(A), the CIT(A) did not examine the facts correctly in arriving at the conclusions drawn by her. As admitted, assessee statement filed before the CIT(A) to support that there are no day transactions is not correct and the statement as prepared by the A.O. and extracted in the assessment order is correct. Even though the statement indicates that assessee went on buying shares from 07.07.2006 to 26.07.2006 in the case of M/s Bhagyanagar Metals Ltd and accumulated a large amount of shares, subsequently, from 27.07.2006 there are both sales and purchases i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the computation of income, assessee has received interest to an extent of Rs.3,76,700/- and paid interest to an extent of Rs.2,15,990/-. The ledger account placed on record also indicates that assessee did borrow funds from the said firm. The finding of A.O. on this account is to be approved. As seen from the ledger account copy placed in paper book at page 16, the interest claimed in the computation income of Rs.2,15,980/- was on the debits in the account at 12% on the borrowals made by the assessee. Therefore, the observations of CIT(A) are not correct. Since the CIT(A) order is not on the basis of the facts, we cannot approve the findings of the CIT(A). 8. Ld. Counsel in the course of arguments submitted that assessee was having similar incomes in earlier years also and filed copies of the returns from earlier assessment orders in the paper book. As seen from the computation for the A.Y. 2000-2001 there was long term capital loss of Rs.1,28,861/- ( on what transaction was not available) but there is no such income or loss claimed in A.Y. 2001-2002. In A.Y. 2002-03 there was only long term capital gain on sale of land. Assessee was not doing any share activity. Similar is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 regularly earning both loss as well as gains in the same scrip. Another scrip which was transacted in high volume was the TASC Pharma Ltd. In this case the assessee has purchased 1 lakh shares to an extent of Rs.1,14,25,000/- on 06.10.2004 and these shares were sold on 18.11.2004, 17.12.2004, 31.12.2004, 17.01.2005 and 18.01.2005 i.e. within a period of 3 months gaining an amount of Rs.68,62,041/- in this transactions. As can be seen these 2 scrips have given large amount of gain. In addition, there was gain of Rs.9,02,552/- on the scrips of Micro Technology purchased on 18.11.2004 and sold entirely on 08.02.2005. There is also gain of Rs.4,11,873/- on purchase of Sterling Tools Ltd. of 10000 shares and selling them entirely on 04.03.2005. Thus the assessee has earned most of the profits after 01.10.2004 to 31.03.2005 in only 5 scrips whereas there is loss of Rs.1,21,380/- in purchase of Tricom shares on 06.01.2005 and selling them on 31.01.2005. These indicate that the assessee has purchased the shares with an intention to make profit in the share market. This fact can also be compared with the gain shown from 01.04.2004 to 30.01.2005. In the first 6 months of the year the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 (Mum) given in that set of facts is not applicable to the facts of the present case. For the reasons given above, we concur with the findings of AO and CIT(A) and uphold the order of the CIT(A). 9. The Hon ble High Court in the case of PVS Raju and Others vs. Addl. CIT 340 ITR 75 held as under : 16. The character of a transaction cannot be determined solely on the application of any abstract rule, principle or test but must depend upon all the facts and circumstances of the case. Ultimately, it is a matter of first impression with the Court whether a particular transaction is in the nature of trade or not. [Sutlej Cotton Mills Supply Agency Ltd. (supra). If, on the material on record, the Tribunal has come to the conclusion that the appellant was dealing in shares as a business, it cannot be interfered with by the High Court. [Raja Bahadur Visheshwara Singh vs. CIT (supra)]. The Tribunal is the final fact-finding body. Its findings on questions of fact are not liable to be interfered with unless it has taken into consideration irrelevant material or has failed to take into consideration relevant material or the conclusion arrived at by it is perverse in the sense that no ..... 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