TMI Blog2011 (5) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... from sale of shares and units of mutual funds on which tax had been paid @ 10%. The AO noted that the assessee had made substantial transactions in purchase and sale of shares on frequent intervals. There were purchase and sale of shares of 74 companies and 10 mutual funds. Considering the frequency, volume and the ratio between purchase and sale the AO concluded that the assessee was trading in shares and units and accordingly treated income declared by the assessee as business income as the assessee gave no explanation despite specific query made by the AO. In appeal the assessee submitted that he was an investor in shares and units and the same had been shown as investment in the books of account. The assessee had also earned dividend i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which was sold at short term intervals were declared as short term capital gain. Some of the investment was sold after short holding to optimize earnings. The assessee had an organized activity in investments and was not a trader. Accordingly it was requested that claim of the assessee as investment should be accepted. The Learned DR on the other hand strongly supported the order of the CIT(A) and placed reliance on the findings given therein. 4. We have perused the records and considered the matter carefully. The dispute is regarding nature of income from purchase and sale of shares and units which had been shown as short term capital gain but have been treated by the AO as business income. In understanding the true nature of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within a month. In other cases also the shares have been frequently purchases and sold though after holding for more than a month. No satisfactory explanation has been given for such frequent purchases and sales when the assessee is claimed to be an investor though the assessee had also dividend but such dividend appears only incidental as even in case of trading purchase and sales the assessee will be entitled to dividend if on the record date the assessee was holding the shares in its name. Moreover, the assessee has also made long term investments in shares and mutual funds units from which it must have received dividend. In our view on the facts of the case, the transactions declared as short term purchases and sales have to be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
