TMI Blog2012 (8) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... x(A)-XIV, Ahmedabad may be set-aside and that of the Assessing Officer be restored. 2. Brief facts till the assessment stage are noted by Ld. CIT(A) in para 3.1 of his order which is reproduced below: 3.1 The second ground of appeal is against the action of A.O. in treating the short term capital gain of ₹ 1,49,83,284/- eligible to concessional tax treatment u/s. 111A as business income and in taxing the same at the normal considerably higher rate of tax. The A.O noticed that the appellant has shown short term capital gain of ₹ 1,49,83,284/- and other incomes under various heads. From die details submitted, it was noticed that the appellant has shown total sales of ₹ 33,41.08,406/- against purchase of ₹ 31,88,94,245/- and the share trading has been spread over the year and constituted 91 transactions. The appellant has shown a net gain of ₹ 1.52.14.161/-, whereas in respect of long term capital gain, he has shown only one transaction, i.e. sale of 70 ONGC shares out of which he has shown LT capital gain of ₹ 20,218/- and he has shown dividend income of ₹ 2,65,051/-. In view of the above facts, the A.O. observed that it was very c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved. Hon'ble SC in the case of CIT vs. Associated industrial Development Co. Pvt. Ltd- as relied upon by the appellant was on different facts. Considering alt these facts narrated above, the A.O. held that the appellant was indulging in frequent buying and selling of shares on a very lame scale continuously during the year and for the purpose of earning a profit and, therefore, this profit has to be treated s income from business and needs to be taxed under this head. The A.O. in his support, placed reliance on the decision of Hon ble ITAT, Ahmedabad in the case of Purnima K. Shah (I.T.A.No. 3154/Ahd/2002) wherein, it was held that profit earned form frequent buying and selling is to be taxed as income form business, which fact also finds support form the decision in the case of Neerja Birla Vs ACIT, 66 IYTD 148 (Mum.). The A.O., therefore, treated the shorts term capital gain of ₹ 1,49,83,284/- as business income and taxed accordingly. 3. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has decided this issue in favour of the assessee as per the impugned order and now, the revenue is in appeal before us. 4. Ld. D.R. supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Hon ble Delhi high Court rendered in the case of CIT Vs Allied Finance Pvt. Ltd. as reported in 289 ITR 318 (del.). In support of the same contention, reliance was also placed on the judgment of Hon ble Gujarat High court rendered in the case of Taraben Ramanbhai Patel Vs ITO as reported in 215 ITR 325, wherein Hon ble Gujarat High Court has considered the judgment of Hon ble Apex Court rendered in the case of Radhaswami Satsang Vs CIT as reported in 193 ITR 321 (S.C.). 7. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that the issue in dispute has been decided by Ld. CIT(A) as per para 3.3 of the impugned order and for the sake of ready reference, this para of Ld. CIT(A) s order is reproduced below: 3.3. I have considered the facts of the case and the submissions as given by the A.R. of the appellant carefully. In support of his contentions, the A.R. has relied upon several judicial decisions, as also the Press Note issued by the CBDT clarifying the position visa- vis the draft of the Circular, which had been issued earlier than the Circular itself. It is also seen the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase and sale of shares. It was also noted that in the earlier as well as in the subsequent years, receipt from the sale of shares was accepted for the capital gain. By noting these facts, it was held by the tribunal in that case that the receipt on sale of shares should be treated as short term capital gain. In the present case also, the basis of the A.O. s decision is this that the assessee purchased shares of certain company in different dates and had sold them in different dates and, therefore, transactions are clearly in the nature of trade. Apart form this, the 2nd objection of the A.O. in the present case is that the magnitude of transaction is very large as per the A.O. He has also noted that the assessee is also having OD account in the bank and has also shown unsecured loan and has incurred interests expenditure of ₹ 1,30,378/-, which has been debited to the assessee s capital account and the dividend income of the assessee is very small i.e. ₹ 2,65,051/- as against short term capital gain of ₹ 149.83 lacs. In respect of this objection of the A.O. that assessee has used borrowed funds for making investment in the shares, we find that as per the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the whole year, it cannot be said that continuity and regularity of transaction is there regarding purchase and sale of the shares. If these two are ruled out then the only adverse factor remaining is volume and on this basis alone, it cannot be concluded that the assessee is doing business of purchase and sale of shares. One of the tests suggested by Hon ble Gujarat High Court is that whether the transaction was treated as stock in trade in the books of accounts and the balance sheet or whether it was shown as investment. On this point, the decision goes in favour of the assessee although it is not conclusive. One other test suggested by Hon ble Gujarat high Court is the treatment given by the assessee in respect of similar activities in the preceding and succeeding assessment years. The result of similar transaction was declared by the assessee as income form capital gain and it was accepted by the department although u/s 143(1) and nothing has been brought out on record to show that such other assessments were reopened by invoking the provisions of Section 147 of the Act. Considering all these facts, in our considered opinion and as per the judgement of Hon ble Gujarat H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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