9911796707
TMI Blog2013 (2) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares at ₹ 75,07,446/- as the business income of the appellant. The appellant prays that short term capital gain should not be treated as business income." 2. The income arising to the assessee out of sale and purchase of shares amounting to ₹ 75,07,446/- has been treated as business income against the claim of the assessee that the same is short term capital gain. The AO observed that the assessee has traded in 30 different scrips and period of holding varies from 1 to 9 days. The total value of shares purchased and sold are ₹ 4,84,35,456/- and ₹ 5,59,42,902/- respectively of which the assessee has derived profit of ₹ 75,07,446/-. Therefore, the prime intention of the assessee was to trade in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding period of scrips and motive behind purchase will be relevant to decide that whether or not assessee carries on business in shares. 3. The addition was agitated in appeal before Ld. CIT(A). It was submitted that the investment in shares is shown under the head investment. With respect to all the shares transactions, the assessee had taken / given delivery of shares through her D-Mat account. Only 30 scrips have been dealt in by the assessee for which there are no frequent sale or purchases. There is only one transaction per scrip. None of the scrip was repurchased after it was sold. The nature of transaction is more relevant than the magnitude of transaction. Out of 30 scrips, 18 scrips were purchased through IPOs. There is no singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation on which also interest is paid. Considering all the facts and circumstances of the case Ld. CIT(A) has upheld the action of AO on the ground that magnitude and frequency of the transaction is high and period of holding is low. He observed that the principle of res-judicata is not applicable to income tax proceedings. The assessee was engaged in the activity of trading in shares. Therefore, the AO was right in assessing the income arising there from as business income. 5. The assessee is aggrieved, hence, has raised aforementioned ground of appeal. 6. After narrating the facts the first argument raised by Ld. AR was regarding consistency. He submitted that for earlier two years i.e. for A.Y 2005-06 and 2006-07 the assessment h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08 i.e. in subsequent year the AO had accepted the share transactions of the assessee in the nature of investment, therefore, even if assessee had transacted into 158 shares it was not considered to be the sole criteria to conclude that assessee was trader in the shares. A copy of the order was filed before us and copy was also given to Ld. DR. 6. Coming to merits it was submitted by Ld. AR that though the number of scrips dealt in by the assessee is 30 but in 20 scrips the total purchases of these scrips is only a sum of ₹ 2,01,091/- which are sold for ₹ 2,96,338/- giving rise to income of ₹ 95,247/-. He submitted that balance 10 scrips the assessee has earned profit of ₹ 74,11,967/-. Both these details are ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only 10 scrips as in other 20 scrips the investment by the assessee is less than ₹ 25,000/-. The main investment of the assessee was in the shares of Power Grid Corporation which was purchased by the assessee on 13/9/2007 and in the month of November they were sold on which the assessee has earned profit of ₹ 1.18 crores. The period of holding such scrip is 69,71 and 74 days(average 71 days). Realized amount of such share was reinvested in Corramandal Fertilizers shares. It can be seen that assessee has not dealt in the shares of Power Grid Corporation on day to day basis or on trade basis. These shares were held by the assessee for a period of more than two months and such realised amount is mainly invested in Corramandal Fer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,176/- dealing in 19 scrips where holding period is between 3 to 363 days. The assessee had purchased shares for an aggregate sum of ₹ 1,05,02,162/- and sold the same for ₹ 1,13,40,081/-. Thus assessee is consistent in investing in the shares and such activity of the assessee remains the same for the year under consideration. There is no material difference in the facts of the case except that for the year under consideration the volume of investment and sale is high. If it is so, the arguments of Ld. AR regarding consistency has to be accepted. As per decision of Hon'ble Bombay High Court in the case of CIT vs. Gopal Purohit, 336 ITR 287, wherein it has been held that where assessee has followed consistent practice in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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