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TMI Blog2014 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Smt. Sadhana Nabera V/s ACIT (ITA No.2586/Mum/2009), Jayshree P Shah V/s ACIT (ITA No.3608/Mum/2007) and in the case of ACIT V/s V Nagesh (ITA No.5410/Mum/2008)" 2. Apropos Ground No.1, the relevant facts are that the assessee in the present case, who is an individual, filed her return of income for the year under consideration on 30.7.2009 declaring total income of Rs.1,05,06,771/-. The income so declared was comprising of income from speculation, income from Short Term Capital Gain (STCG), income from Long Term Capital Gain (LTCG) and income from other sources. During the course of assessment proceedings, it was noticed by the AO from the relevant details of shares transactions furnished by the assessee that the assessee had claimed to have purchased 8000 and 6000 shares of M/s Orbit Corporation through the brokers M/s Priyasha Meven Finance Ltd and M/s Jalan Securities Pvt.Ltd on 22.5.2007 and 21.5.2007 for Rs.231.40 and Rs.225.19 per share respectively. In order to verify the exact date of purchase of shares , inquiry was directly made by AO with Bombay Stock Exchange and National Stock Exchange which revealed that there were no such purchases made in the name of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker's names and codes respectively. I am unable to agree with the AO on this issue as there is no bar to have transactions to be off market. Even if, there are irregularities by brokers or appellant w.r.t. these transactions, I do not find any adverse material on record to suggest that either BSE and/or NSE had ever taken a punitive action against the brokers or appellant. I further find this AO has also not treated the existence or genuineness of these transactions in the month of May 2007 to be in doubt but she had refused to treat these purchases to have been made on behalf of the appellant by the brokers. First of all, one has to understand that unless, these transactions were made by brokers to transfer to appellant as the purchase are on appellant's behalf in the month of May 2007, no broker is going to transfer it on the same purchase price of May 2007 in the month of December 2007. This phenomenon is not in dispute as AO has also observed the fact that shares are transferred to appellant in December at the original purchase price of the shares in May 2007 but inference drawn by the AO is incorrect and baseless being devoid of any supportive adverse material on record. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Commissioner of Income-tax V Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal V/s Commissioner of Income-tax 214 ITR 801(SC), he contended that preponderance of probability is required to be seen to decide the exact period of purchases of shares by the assessee. 5. The ld. Counsel for the assessee, on the other hand, submitted that the genuineness of purchase of shares of M/s Orbit Corporation by the assessee was never disputed by the AO and the case of AO on the issue was based on the dispute raised regarding the exact date of purchase of these shares. He submitted that although 14000 shares of M/s Orbit Corporation were purchased by the assessee in the month of May 2007, the brokers who had purchased the said shares on behalf of the assessee made the entries regarding the said purchases in their own account. He submitted that the assessee therefore did not get credit for the said shares in her own D-mat account and therefore no payment was also made against the said shares by the assessee. He submitted that the contract notes, however, were issued by the brokers in the month of May 2007 itself and invited our attention to the copies of the said contract n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f December 2007, the shares were actually purchased on behalf of the assessee by the concerned brokers in the month of May 2007 itself. In this regard, the ld. counsel for the assessee has taken us through the relevant documentary evidence placed in the paper book to point out that the shares purchased on behalf of the assessee in the month of May 2007 were wrongly bunched by the concerned brokers as their own transactions and the same therefore were not transferred in the name of the assessee immediately in the month of May 2007. The contract notes, however, were issued by the concerned brokers in the name of the assessee to show that the said shares were purchased by them on behalf of the assessee in the month of May 2007 itself. Since the said shares were not transferred to the D-mat account of the assessee, the assessee did not make any payment to the concerned brokers and when this matter was finally sorted out and the shares were transferred to the D-mat account of the assessee by the concerned brokers in the month of December, 2007, the assessee made the payment against the said shares immediately thereafter. The documentary evidence placed on the record by the ld. counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the scrips, the holding period was less than 15 days. He further found that the shares allotted to the assessee through IPOs were immediately sold by the assessee at profit. Having regard to all these facts, the AO was of the opinion that the motive of the assessee was clearly to trade in shares and earn profit and not to hold the shares as investment. He, therefore, treated the assessee as dealer in shares and brought to tax the profit derived from the transactions in shares as business income in the hands of the assessee instead of STCG and LTCG as declared by the assessee. 9. The treatment given by the AO to the profit derived from the shares transactions as business income instead of STCG and LTCG was disputed by the assessee in an appeal filed before the ld. CIT(A). It was submitted on behalf of the assessee before the ld.CIT(A) that that there was dual portfolio maintained by the assessee and all the delivery based transactions in shares were treated as investment transactions. It was submitted that this treatment given by the assessee was accepted by the AO in the earlier years and there was no justifiable reasons to take a different view during the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to the profit derived from the share transactions as capital gain relying simply on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Gopal Purohit, 228 CTR 582(Bom) as upheld by the Hon'ble Supreme Court. 11. The ld. Counsel for the assessee, on the other hand, strongly supported the impugned order of the ld. CIT(A) accepting the treatment given by the assessee to the profit derived from the transactions in shares as capital gains. He submitted that there were no repetitive transactions made by the assessee in the same scrip as alleged by the AO and even the shares allotted through IPOs were immediately sold by the assessee as the lots of shares so allotted were odd and the assessee got a better price even for such odd lots. He submitted that even the frequency of share transactions was very low and the entire investment made in shares was made by the assessee out of her own funds. 12. We have considered the rival submissions and also perused the relevant materials on record. It is observed that the assessee had transacted only in 24 scrips during the year consideration out of which 12 scrips were allotted to her through IPOs. It, therefore, can not be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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