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Commissioner of Income Tax-19 Versus Shri Chetan K. Desai

Transaction of shares - Capital Gain or business profits - whether the entire activity of declaring the gain made on account of sale of shares/units of mutual funds was only with the view of avail of lower rate of taxation applicable to profits made on account of capital gains? - Held that:- This issue has been dealt with by the Tribunal by recording the fact that it was not the case of revenue before the Tribunal that the respondent-assessee had converted it's stock in trade into the investment .....

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in books of accounts that shares are held as investment, make the respondent individual an investor, whereas the period of holding of these scrips, the frequency, the volume and value of transactions are indicative of being trader and not an investor? - Held that:- We find that the Assessing Officer in the Assessment Order gives a table of the transaction entered during the year. From the table, it is evident that a single purchase/sale transaction which are received/delivered in multiple lots i .....

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and profit of ₹ 9 crores during the subject assessment year. Thus the value of the transactions for purposes of deciding the issue is to be considered from case to case and there can be no absolute value beyond which the transaction would be considered to be trading. Therefore in the facts of the present case, the view taken by the CIT(A) and Tribunal on the aforesaid facts is a plausible view. The determination of whether an assessee is carrying a trading or investment activity is to be .....

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Jasani and Ashok Bhogani, Adv ORDER P. C. This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the 'Act') challenges the order dated 5 December 2012 passed by the Income Tax Appellate Tribunal (the 'Tribunal'). The Assessment Year involved is A.Y. 2005-06. 2. Mr. Pinto, the learned Counsel submits that the proposed revised questions of law for our consideration as under: 1) Whether in law and on the facts of the instant case, was the Tribunal right in .....

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ke the respondent individual an investor, whereas the period of holding of these scrips, the frequency, the volume and value of transactions are indicative of being trader and not an investor? 3. The respondent-assessee is an individual who filed return of income for the subject assessment year declaring a total income of ₹ 1.49 crores. In the return it had declared short term capital gains of ₹ 84.88 lakhs and long term capital gains of ₹ 22.46 lakhs aggregating to ₹ 1.0 .....

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eal of respondent-assessee. In particular so far as long term capital gain is concerned, the order of the CIT(A) records the fact that this was on account of redemption of mutual funds which were held for more than 12 months. It also records the fact that the respondent-assessee had received dividend on these mutual funds and on redemption there was a gain of ₹ 22.46 lakhs. Moreover, the said mutual funds were held as investment and treated the same in the books of accounts. Further, the C .....

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BDT reached the finding of fact taking into account the time devoted by the appellant to its investment activity bearing in mind that he is an active partner of business alongwith his brother which has a turnover of ₹ 19.27 crores. Further the investment activity is an independent activity and has no relation to the business carried out in partnership of embroidery. On examination of the facts, it was concluded by the CIT(A) that motive for the investments by the assessee was for long term .....

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or its investments in shares. Thus taking an overall view including frequency of transactions and number of stock invested, concluded that the gain earned on short term capital gains claimed by the respondent-assessee could not be classified as income from trading. Thus the appeal of the assessee was allowed. 6. Being aggrieved, the revenue preferred an appeal to the Tribunal. So far as long term capital gain is concerned, the Tribunal on independent examination of the facts concurred with the v .....

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aday trading. 7. The Tribunal particularly records the fact that it is not the case of revenue that shares which were reflected in the respondent-assessee's books of account as stock in trade were reclassified as investment with intent to avoid and/or reduce taxability. This was in response to the submission by the Departmental Representative that the impugned gains have been offered as capital gains only to avail of concessional rate of tax applicable to it. It is very pertinent to note tha .....

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e Tribunal dismissed the revenue's appeal. Regarding Question No.1: 8. Mr. Pinto state that the grievance of the revenue is that the entire activity of declaring the gain made on account of sale of shares/units of mutual funds was only with the view of avail of lower rate of taxation applicable to profits made on account of capital gains. We find that this issue has been dealt with by the Tribunal by recording the fact that it was not the case of revenue before the Tribunal that the responde .....

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ee. It is not shown to be perverse in any manner. Consequently, Question No.1 as proposed does not give rise to any substantial question of law and accordingly not entertained. Regarding Question No.2: 9. The grievance of the Mr.Pinto is that the impugned order completely overlooked the fact that purchase turn over of ₹ 8.07 crores and sales turn over of ₹ 9.13 crores of the respondent-assessee is indeed very high. The transactions entered into by the respondent-assessee are 205 duri .....

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