TMI Blog2015 (7) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,756/- treated by Assessing Officer as business income instead of short term capital gain shown by the assessee. - Decided against revenue. Addition on interest income - CIT(A) deleted the addition - Held that:- Without appreciating the fact that FD’s have not matured at the end of the year and, hence, the said interest figure cannot be adopted, the ld. Assessing Officer has erred in taking the figure of ₹ 2,63,748/- against the figure of ₹ 1,12,748/-. The assessee has produced TDS certificate from the bank for the period from 01-04-2007 to 31st March, 2008 showing the bank interest income on FD at ₹ 1,35,552/-. This income has been offered by the assessee for taxation.Commissioner of Income Tax (Appeals) has rightly deleted the addition because that income has not accrued to the assessee. Ld. Assessing Officer has erroneously adopted the higher figure, therefore, we do not find any merit in this ground of appeal also. It is rejected.- Decided against revenue. - ITA No. 1639/Ahd/2011 - - - Dated:- 24-7-2015 - Shri G. D. Agrawal and Shri Rajpal Yadav, JJ. For the Petitioner : Smt. Sonia Kumar, Sr. D.R. For the Respondent : Shri Hardik V. Vora, A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 33,045/-. The finding of the ld. Commissioner of Income Tax (Appeals) reads as under:- 4.4 I have considered the facts of the case, the order of the AO and the submissions of the appellant. It is a fact that the appellant is a full time employee in Sarin Technologies India Pvt. Ltd. drawing a salary of more than ₹ 3.05 crores per annum and for the said job, she has to also frequently make visits out of India. The learned AR further explained that the appellant is the vice-president of the company handling the operation of Surat and Mumbai office and marketing the products of the company through out the country and for which she has even been allotted a residential accommodation at Mumbai in addition to her own residence at Surat and thus, leaving no time for her to indulge in any other business activity. Thus, the quantum of salary and the scope of the job prime-facie suggests that the appellant is fully engaged in her job and has no time to indulge in business activity. It is also seen that the appellant has invested only her surplus funds in shares and mutual funds and there is no borrowings whatsoever. Further, the purchase and sales of shares i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle of frequency of transactions without considering all the other principles is laid down in the said Circular as discussed earlier. Further, the AO's observation that the purchase and sale of shares on the same day, in different lots, of the same company, vide a single contract note, is very high and thus, the volume and frequency of transactions in the case of the appellant is very high and in some cases, there are even 50 to 100 transactions in a day is also not correct, since the purchase and sale of shares on the same day, in different lots of the same company cannot be treated as separate transaction in order to judge the frequency of transaction but in fact it is a single transaction as the broker executes the purchase or sale of the ordered quantity in different lots during the market hours on the same day so as to fetch a best price for his client instead of buying or selling on a single time and moreover, sometimes, even the entire lot as ordered by the buyer for purchase of sale may not be available in one go. The said view even stands affirmed by the Mumbai Bench of the ITAT in the case of Mr. Nehal V. Shah Vs. ACIT 21(1) in ITA No. 2733/Mumbai/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure Pvt. Ltd. reported in 120 TTJ 216. These tests read as under:- 13. After considering above rulings we cull out following principles, which can be applied on the facts of a case to find out whether transaction(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 item). This can be found out from the treatment it gives to such purchase in its books of account. Whether it is treated stock-in-trade or investment. Whether shown in opening/closing stock or shown separately as investment or nontrading asset. (2) Whether assessee has borrowed money to purchase and paid interest thereon? Normally, money is borrowed to purchase goods for the purpose of trade and not for investing in an asset for retaining. (3) What is the frequency of such purchase and disposal in that particular item? If purchase and sale are frequent, or there are substantial transaction in that item, if would indicate trade. Habitual dealing in that particular item is indicative of intention of trade. Similarly, ratio between the purchases and sales and the holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2007 that an assessee can have both portfolios, one for trading and other for investment provided it is maintaining separate account for each type, there are distinctive features for both and there is no intermingling of holdings in the two portfolios. 11. Not one or two factors out of above alone will be sufficient to come to a definite conclusion but the cumulative effect of several factors has to be seen. 7. It is pertinent to observe that expression business is being defined in sub-section 13 of section 2. It includes any trades, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. This expression has been construed to mean that it is used in the taxing statute in a sense of an occupation or profession which occupies the time attention and labour of a person with an object of making profit. Hon ble Madras High Court in the case of Commissioner of Income Tax vs. Amalgamation Pvt. Lt reported in 108 ITR page 855 has observed that, requirement of business is that there must be real, substantial and systematic, organized course of activity or conduct with the set purpose of earning profit is to be termed business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of business. 9. In the case of Sarnath Infrastructure Pvt. Ltd, after a detailed evaluation of a large number of decisions, the ITAT had culled out the broad test to be applied on facts of any given case. Hon ble jurisdictional High court has also propounded certain broad test under which the transaction of an assessee to be examined. 10. In the light of the above, let us examine the facts of the present case, the stand of the assessee is that she is a full time employee in Sarin Technology (India) Pvt. Ltd drawing yearly salary of more than 3.05 crore. He had surplus funds with her which have been invested in shares and mutual funds. In other words, she has not borrowed any money on interest for making investment. She explained that frequency of transactions noticed by the Assessing Officer is misconstruction of the facts and circumstances. According to the assessee, if, on 2nd of April, 2007 she had placed an order for purchase of Petronet LNG Ltd, which, the broker acquired on the same day in 15 different lots as detailed in the single contract dated 2nd April, 2007. According to the assessee, it was a single transaction of 10,200 of shares and not 15 transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,09,219/- 1,12,748/- Total bank interest on FD for the current year 13,21,967/- 13. The ld. Assessing Officer while appreciating the facts with regard to interest income from Bank of Baroda had adopted the figure of ₹ 2,63,748/- (i.e. ₹ 1,30,154/- + ₹ 1,33,594/-). This amount has been taken by the Assessing Officer on the basis of FD certificate of Bank of Baroda which shows total interest up to the maturity date. Without appreciating the fact that FD s have not matured at the end of the year and, hence, the said interest figure cannot be adopted, the ld. Assessing Officer has erred in taking the figure of ₹ 2,63,748/- against the figure of ₹ 1,12,748/-. The assessee has produced TDS certificate from the bank for the period from 01-04-2007 to 31st March, 2008 showing the bank interest income on FD at ₹ 1,35,552/-. This income has been offered by the assessee for taxation. 14. On due consideration of the facts and circumstances, we are of the view that ld. Commissioner of Income Tax (Appeals) has rightly deleted the addition because that income has not accrued to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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