TMI Blog2010 (12) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment bond of ₹ 2,34,000/- and claimed exemption. The AO verified the details of the transactions on sale and purchase and noticed that the assessee himself treated the share dealing as business in the assessment year 2004-05 and offered gain on the sale of shares as trading profit. The AO asked the assessee as to why the gain from sale of shares should not be taxed as business income in stead of short term or long term capital gain. 4. In response, the assessee explained that the assessee is a senior citizen and is alone in the family and his health does not permit him to do the business. He does transactions of shares through share broker, Jawai Securities Limited. He left investment and disinvestment of shares in the hands of the broker as he is not in a position to decide the worth of the investments. The assessee filed the details regarding the purchase and sale of shares for the last 2-3 years and it has been shown in the books of account as investments. The AO did not accept the version of the assessee. The AO was of the view that the volume and periodicity of transaction does not alter the nature of the transaction. The assessee accounted for the investment gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was offered by the assessee, however, the profit on sale of shares was offered as income from business and profession due to the increase of volume of transactions. The learned AR further submitted that except the assessment year 2004-05, the assessee has been consistently treating the purchase of shares as investment and therefore if the principle of consistency is applied, the transaction should be treated as investment. He has filed the chart showing various details of sales and purchases and submitted that during the period relevant to the assessment year under consideration, the assessee has done 38 transactions of purchases and 41 transactions of sales and thus, the total number of transactions during the year was 79. As far as the number scripts is concerned the learned AR has submitted that only the assessee has purchased the shares of 22 scripts during the year. The learned AR of the assessee has submitted that where the holding period of shares is less than one month, the assessee has sold these shares not for earning the profit but to avoid the loss to the assessee being the prudent person. He has further submitted that the assessee is not indulged in any speculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the authorities below that the assessee has been maintaining full office cum residence for the purpose of share trading. He has pointed out that that no stock and no office expenses are debited in the books of account by the assessee, therefore, observations made bys the lower authorities is without any basis. 9. We have considered the rival contentions and relevant record. The assessee has filed the chart giving details of share purchased and sold and also short term capital and long terms capital gain. The chart is reproduced below: Shri Chhiturbhai N Patel Statement showing details of sales and purchase of shares for the year ending 31.03/2006 SHORT TERM CAPITAL GAIN Name of scrip Name of scrip Holding period(in days Purchase amount Sales Amount Capital gains Dividend No. of transaction during the year purchase + sales 31 InfoTech ltd 8,400 156 1,105,895.00 1,509,780.00 403,885.00 2 + 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 (145811.00) 2500 1 + 2 Sail 31500 10 months (LT) 1562127.97 1670514.18 108386.21 1 + 1 Tata chemicals 1000 4 197998.00 191133.00 (68.6500) 1 + 1 Thirumalai Chemicals 500 20 68155.00 67140.00 (1015.00) 1 + 2 TISCO 28950 5 to 10 months 5729896.62 10352322.00 4622426.38 426175 2 + 8 Reliance industries new 1100 44 504994.00 770622.00 265628.00 11+ 1 Reliance Natural resoruces 31500 10 652203.00 1096145.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The characterization of securities in the books of account and in balance sheet as stock in trade or investments; x. Whether the securities purchased or sold are listed or unlisted; xi. Whether investment is in sister / related concerns or independent companies; xii. Whether transaction is by promoters of the company; xiii. Total number of stocks dealt in; and xiv. Whether money has been paid or received or whether these are only book entries. 10. Thus, it is clear that there is no single criterion for determining the nature of transaction and each case has to be decided on its peculiar facts and circumstance of the case. The intent of the assessee at the time of the purchase and sale of the shares is an important factor in determining the nature of transaction. From the details as reproduced above, it is clear that the number of transactions and the frequency of the transactions are not to that extent to arrive at the conclusion that the sale and purchase was for earning the income on trading in the shares. It is to be noted that all transactions, the holding period of those are less than 30 days are about 10 in number and except two all other resultant los ..... X X X X Extracts X X X X X X X X Extracts X X X X
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