TMI Blog2010 (10) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... order for the sake of convenience. 2. The only issue that arises for consideration in these appeals is with regard to classification of income from the share transactions. Admittedly, both the assessees are trading in shares. 3. Shri A.V.Raghuram, the learned counsel for the assessees submitted that the assessees classified certain shares as investment and offered the same as short term capital gains on the sale of such shares under S.111A of the Income-tax Act. The profit arising on the sale of other shares were shown as business profit. Referring to S.111A of the Act, learned counsel submitted that S.111A was introduced in the statute book with effect from 1.4.2005. According to the learned counsel, S.111A is applicable for investor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra Sugar on 5.11.2004 at the rate of ₹ 101.72 per share. On 17.11.2004, 1,000 shares of Andhra Sugar were sold at the rate of ₹ 122.97 per share. On 18.11.2004, another 2,000 shares of Andhra Sugar were sold at the rate of ₹ 119.98 per share. Similarly, the other shares were also purchased and the investments were classified separately in the books of account. Referring to the judgment of the Apex Court in CIT V/s. Associated Industrial Development Co (P)Ltd. (1971) 82 ITR 586(SC), learned counsel for the assessee submitted that the intention of the assessee at the time of purchasing the shares has to be considered, viz. whether the assessee intended to treat the shares as investment or as a trader. According to the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment. Therefore, the classification of such shares as investment in the books of account cannot be treated as investment for the purpose of claiming the benefit under S.111A of the Act. Referring to the details of purchase and sale of shares treated as investment, learned representative submitted that all the shares were purchased in a periodical manner and the same were sold periodically at regular periodical intervals. Therefore, according to the learned representative, profit on sale of shares cannot be treated as short term capital gain as claimed by the assessee. Referring to the assessment order, the learned representative submitted that certain shares kept by the assessees for longer period, were treated as investment by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account. We do not understand how the assessee could sale the shares even before purchasing the same. This clearly shows that the assessees obtained orders for the purchase of shares form the customers and therefore purchased the shares in the market for the purpose of selling the same to their customers. In these factual situation, merely because the shares were classified as investment in the books of account, in our opinion, it cannot be treated as investment, since the intention of the assessees at the time of purchase of the shares is very clear that they are going to sell the same immediately on purchase. Therefore, the purchase and sale of shares in these factual circumstances cannot be considered to be investment, as contended b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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