TMI Blog2015 (8) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee herself for AY 2006-07 it is held that long term capital gain and short term capital gain is not the business income of the appellant but is chargeable to tax under the head “capital gains”. - Decided in favour of assessee. - ITA No. 3432/Mum./2012 - - - Dated:- 19-5-2015 - Shri R. C. Sharma And Shri Sanjay Garg,JJ. For the Petitioner : Shri P.K. Birla For the Respondent : Shri Sanjay R. Parikh ORDER Per Sanjay Garg, Judicial Member This appeal is filed by Revenue against the order of CIT (A) -30, Mumbai dated 13.12.2010. 2. Brief facts of the case are that the assessee is an individual and is having income from house property and other income. During the year, assessee had earned long term capital gain of ₹ 1,28,18,747/- as well as short term capital gain of ₹ 43,09,990/- from sale of shares. However, AO treated these long terms and short-term capital gain disclosed by the assessee as her business income. For this, firstly AO analysed the Instruction no 1827 dated 31.08.1989, circular No. 4/2007 dated 15/6/2007 and then tested the facts of the case of the assessee on ten test such as usual trade or business of the assessee; nature, q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than capital gains meaning thereby that 75% of the income of the assessee is from share trading activities. Assessee has dealt with in more than 40 companies for having capital gains. He also submitted that some of the transactions have resulted in to very nominal profits. It was also submitted that characterisation of such holding in the books of assessee as investments is also against the motive of the profit and conduct of the assessee therefore investments in shares cannot be of capital assets but is stock in trade of the assessee. He further relied on the decision of Smt. Sadhna Nabera V ACIT 25(3) (ITA no 2586/Mum/2009) dated 26.03.2010 and said that in case of the orders of earlier years of the assessee cannot be followed without appreciating the facts of the year under appeal. Therefore, he vehemently submitted that short term and long-term capital gains disclosed by the assessee in her return of income is in fact chargeable to tax as business income. 5. LD AR of the assessee on other hand vehemently controverted the arguments of the Ld DR and submitted that main sources of income of the assessee is income from house property where rental income is generated from prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares is not business income of the assessee but chargeable to tax under the head capital gains . The relevant part of the said order is reproduced as under:- 10. The breakup of gains on divestment as given by the assessee are extracted below for ready reference: Holding Period. Gains 0 - 30 days 3,888,101 31 - 90 days 3,841,807 91 - 180 days 1,191,155 181 - 365 days 3,907,610 Above 365 days 29,682,268 Total 4,15,10,141 The average period of holding of shares, which was sold, is 229 days. 71% of the profits are as shares held for more than 365 days. 81% of the profits are on shares held for than 6 months. A perusal of Annexure A-1 to the assessment order shows that in very few cases the transactions have taken place on a single day. The assessee claimed that this was due to a mistake committed while purchasing shares. Otherwise, a perusal of Annexure A-1 shows that the assessee in number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uphold the finding of fact given by the first appellate authority, based on the period of holding, the income derived by the assessee by way of dividends, the fact that there are no borrowings for investment in shares, the volume of transactions which as per the learned CIT(Appeals) was not high and the fact that the assessee has diversified portfolio and has not indulged in repetitive purchase and sale of shares of the same company and the order u/s 143(3) of the AO in the assessee's own case for the earlier two assessment years, the fact that the assessee has invested substantial amounts in mutual funds etc., held that the assessee is an investor in shares and not a trader. Thus, we uphold the order of the first appellate authority and dismiss the appeal of the Revenue. 8. Now the facts of the present case needs to tested whether the issue is in this appeal covered by the order of Hon ITAT in case of assessee for AY 2006.07. therefore same is tested on following lines and same are not controverted by Ld. DR:- a) The number of scrips in both the years is more or less similar. b) Dividend income earned during the year is 40.16 lakhs compared to ₹ 19.48 lakhs in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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