9911796707
TMI Blog2015 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... actions as business income as against the capital gains reported by the assessee. 4.1. The brief facts of this issue is that the assessee invested in shares and held the same for a period ranging from one month to one year. The assessee stated that he is an investor in shares and accordingly declared capital gains both long and short term depending upon the period of holding the shares. Apart from this, the assessee was also dealing in purchase and sale of shares on speculation basis and deriving income from futures and options and offered the same as his business income. The fact of assessee declaring income from share transactions in the form of capital gains and business income are not disputed. The only point of dispute on this issue is whether the gains on share transactions are to be accepted as gains arising to the assessee in the capacity of investor or a trader. The Learned AO treated the gains from share transactions as business income of the assessee on the following grounds:- a) The assessee did not maintain separate books for share investment and share business. b) Share trading is not the incidental activity of the assessee but a regular and continuous activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been engaging himself in the share transactions both as an investor and as well as trader. It is seen that the assessee had clearly bifurcated the investment and trading transactions including speculative share transactions in his books of accounts and it is also seen that the average period of holding of shares range from one month to more than one year and accordingly short term or long term capital gains are duly offered to tax by the assessee depending upon the period of holding the shares. It is also seen that the Learned AO had also accepted the stand of the assessee in the immediately succeeding assessment year as investment transactions under scrutiny proceedings vide 143(3) order dated 12.10.2009. We find that the frequency of transactions does not really matter and what is to be seen is the intention of the assessee whether he wants to penetrate into the capital market for the purpose of investment or for making speculative gains by doing day trading and dealing in futures and options. It is also seen that the Learned AO had clearly stated in his assessment order that the interest on borrowings were paid by the assessee only for trading in shares and this itself goes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t delivery). The Tribunal has correctly applied the principle of law in accepting the position that it is open to an assessee to maintain two separate port folios, one relating to investment in shares and another relating to business activities involving dealing in shares. The Tribunal held that the delivery based transactions in the present case, should be treated as those in the nature of investment transactions and the profit received there from should be treated either as short term or, as the case may be, long term capital gain, depending upon the period of the holding. A finding of fact has been arrived at by the Tribunal as regards the existence of two distinct types of transactions namely, those by way of investment on one hand and those for the purposes of business on the other hand. Question (a) above, does not raise any substantial question of law. In so far as Question (b) is concerned, the Tribunal has observed in paragraph 8.1. of its judgment that the assessee has followed a consistent practice in regard to the nature of the activities, the manner of keeping records and the presentation of shares as investment at the end of the year, in all the years. The revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in receipt of a loan from Sri Ram Niranjan Saraogi in the sum of Rs. 1,00,000/- on 10.5.2005 during the assessment year under appeal. The assessee furnished the complete details of the loan creditor before the Learned AO including the PAN, income tax assessment particulars of loan creditor, balance sheet and statement of total income together with confirmation of having given the loan to the assessee together with the respective sources. The Learned AO observed that the immediate source of credit was towards cash deposit of Rs. 75,000/- in the bank account of Sri Ram Niranjan Saraogi on 7.5.2005 and balance Rs. 25,000/- out of own funds of the lender. Accordingly, he concluded that the credit worthiness of the loan creditor is not proved by the assessee and accordingly taxed the same u/s 68 of the Act which was also upheld by the Learned CITA. Aggrieved, the assessee is in appeal before us on the following ground:- "2.(a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs. 1,00,000/- made by the A.O. on account of loan received from Sri Ram Niranjan Saraogi." 5.2. The Learned AR argued that the loan creditor was hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs. 1,00,000/- should not be added u/s 68 of the Act. The Ground No. 2 (b) raised by the assessee is only payment of interest on the said loan of Rs. 1,00,000/-. The Learned AO and Learned CITA observed that the assessee had not actually paid the said interest of Rs. 25,751/- but only credited to the parties account. However, we find from the face of the assessment order itself that the assessee is following mercantile system of accounting and accordingly the assessee is duly entitled for deduction of Rs. 25,751/- towards interest payable on the loan from Sri Ram Niranjan Saraogi. Accordingly, the ground no. 2 (b) raised by the assessee is allowed. 7. The next ground of appeal to be decided in this appeal is as to whether the Learned CITA is justified in confirming the addition of Rs. 2,55,000/- towards loan received from Sri Naresh Kumar Bharech u/s 68 of the Act. 7.1. The brief facts of this issue is that the assessee was in receipt of a loan from Sri Naresh Kumar Bharech in the sum of Rs. 2,00,000/- on 22.8.2005 and Rs. 55,000/- on 27.12.2005 during the assessment year under appeal. The assessee furnished the complete details of the loan creditor before the Learned AO inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pages 46- 57 of the paper book. In view of these, she pleaded that the assessee had duly discharged his onus in terms of section 68 of the Act in full and accordingly no addition u/s 68 would lie in the facts and circumstances of the case. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 7.3. We have heard the rival submissions and perused the materials available on record including the paper book and we find that the assessee had duly discharged his onus in full in terms of section 68 of the Act by furnishing all the details and creditworthiness of the loan creditors. Nothing prevented the Learned AO from making verification of these transactions and details filed by the loan creditor with the concerned assessing officer of the loan creditor. We also find that the concerned loan creditor Sri Naresh Kumar Bharech had got sufficient sources in his books to advance monies to the assessee herein. Hence we have no hesitation in directing the Learned AO to delete the addition made in the sum of Rs. 2,55,000/- u/s 68 of the Act. Accordingly, the ground no. 3 (a) raised by the assessee is allowed. 8. The next ground to be decided in this a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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