TMI Blog2015 (6) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of appeal in favour of the AO,in part. - Decided in favour of assessee in part. - ITA No.6050/Mum/2010 - - - Dated:- 26-3-2015 - Sh. I P Bansal and Rajendra, JJ. For The Revenue : Shri Pawan Kumar Beerla For The Assessee : Shri Bhupendra Shah ORDER Per Rajendra,A.M. Challenging the order dt.10.06.2010 of the CIT(A)-35,Mumbai,the Assessing Officer(AO) has raised following Grounds of Appeal: (i) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in directing the AO. to accept the claim of Short Term Capital Gains and Long Term Capital Gain on profit arriving from purchase and sale of shares instead of business income treated by the AO. without appreciating the fact that the assessee is dealing in large volume of shares, most of the shares are bought and sold within short period, while some are not sold due to market conditions and their holding with the assessee remains beyond few days, it will not change the nature of transactions and the assessee is very well engaged in the business of share trading, which denotes that the motive of the assessee is to carry on business in shares to book profit, rather than investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss, that the assessee had earned dividend income of ₹ 93095 as against the income of ₹ 36.59 Lakhs (LTCG 1.03 Lakhs +STCG 35.55 Lakhs), that the dividend income was incidental to the share trading and was not the main intention of the assessee for purchasing shares, that this was a regular activity of the assessee, that because a particular scripts was not sold for 12 months would not automatically make it a long Term Capital Asset, that the intention of the assessee was to hold the shares not an investment but rather the primary motive to book profit.Considering the frequency, volume and organised activity of purchase and sale of the shares with a profit motive the AO issued a show cause notice to the assessee asking him as to why the share transactions should not be treated as business income for the year under consideration. After considering the submission of the assessee the AO held that mere entries in the books of accounts was not a determining factor to decide the real nature of the transaction, that the assessee had taken loans to do the share business. The AO referred to the circular issued by the CBDT on 15.06.2007 in this regard i.e. Circular No. 4/07. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Referring to the cases of Gopal Purohit and Janak S. Rangwala, he held that the delivery based transactions has to be treated as investment. Finally, he directed the AO to accept the claim of the assessee by accepting STCG and LTCG as declared by the assessee. 4.Before us,the Departmental Representative(DR) stated that the assessee was engaged in the large scale trading of shares,that intention of the assessee could be gathered from the surroun -ding circumstances,that it had purchased shares worth more than ₹ 3 crores, that as compared to dividend received by the assessee the income from share trading business was manifolds,that AO had passed the detailed order and held that assessee was not an investor. Authorised Representative(AR) supported the order of the FAA. He relied on case of Gopal Purohit(336ITR287),delivered by the Hon ble Bombay High Court. 5.We have heard the rival submissions and perused the material before us.The only issue to be decided by us is as to whether the profits on the sale of shares during the year which had been shown by the assessee as Capital Gains arising out of investment in the shares in question is to be assessed under the head Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understanding that it was his usual trade or business or incidental to it. We find that the assessee had shown income of ₹ 64,000/-approximately from his brokerage business.As a senior citizen,as claimed by the assessee himself,how much job of a Estate Broker he would have done is known to him only.Nothing is coming out of documents filed by the assessee in that regard.On the other hand we get a clear picture of his share business from the paper book filed by him.From the trading and P L A/c it is found that the assessee had claimed depreciation of ₹ 1.10 Lakhs and expenditure under the head electricity had been paid to ₹ 25,850/-.These figures indicate the activities carried out by him.As compared to his business income,the assessee has shown income more than ₹ 33 lakhs under the head capital gains.It is found that shares of Hind zinc Indo-Asian, Mangalam Cement were traded by the assessee on more than once.The assessee had purchased and sold more than 1.85 lakh shares of various scripts and the total sales turnover is more than 4 Crores.We have also taken note of the dividend earned by the assessee.For entering in to purchase and sale transaction of s ..... 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