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2016 (3) TMI 728 - ITAT MUMBAI

2016 (3) TMI 728 - ITAT MUMBAI - TMI - Short term capital gain V/S business income - criteria for judging the transaction as capital asset or trading asset - Held that:- The conduct of the assessee is clear from the details of shares held by the assessee as on 31.03.2008 that the assessee had held the investments in shares for fairly long period of time ranging from 17 days to 2971 days which is placed at pg. no. 5&6 of the paper book. Similarly the period of holding in the case of long term cap .....

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hares as short term capital gain and not as business income - Decided against revenue - I.T.A. No 7040/Mum/2012 - Dated:- 5-2-2016 - SHRI C.N. PRASAD, JM AND SHRI RAJESH KUMAR, AM For The Appellant by : Shri Reepal Tralshawala For The Respondent : Shri R.A. Dhyani ORDER PER RAJESH KUMAR, A. M: This appeal by the assessee is directed against the order dated 06.08.2012 of Commissioner of Income Tax (Appeals)-24, Mumbai (Hereinafter called as the CIT(A)) for assessment year 2008-09. The assessee ha .....

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in of ₹ 7,79,403/- as against the business income by ld. CIT(A). 3. The brief facts of the case are that the assessee filed her return of income on 31/07/2008 by declaring income of ₹ 17,61,946/-. The return was processed u/s 143(1) of the Act and subsequently selected for scrutiny. Statutory notice u/s 143(1) were duly issued and served on the assessee. During the year the assessee has shown income inter alia of short term capital gain of ₹ 7,79,403/-, long term capital gain o .....

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rm capital gain of ₹ 6,29,952/- from sale of shares by treating the same as business income of the assessee vide order dated 24/12/10. 5. The assessee aggrieved by the order of the AO preferred an appeal before the CIT(A) who while deleting the addition in respect of long term capital gain of ₹ 6,29,952/- sustained the addition of short term capital gain of ₹ 7,79,403/- by holding that the income from long term capital gain could be treated as income from investment as investme .....

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e Sheet of the preceeding year. Of the 98 transactions of the sales, 86 transactions relate to shares which were held for less than 30 days. Hence, a huge 88% of the transactions relate to shares which were held for less than 30 days.22 transactions out of the 98 transactions relate to shares which were held for only 1 day while 62 out of 98 transactions of sale relate to shares which were sold within 10 days of their purchase. This translates into 63.25% of the sales transactions where the shar .....

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arise since almost all the shares barring a few were bought and sold within the current year itself. There may be a few shares which have been held for a period of time. However, the single activity of the assessee cannot be compartmentalized and it is the overall impression which will decide whether the assessee is an investor or a trader. Since the intention of the assesee was not to hold the shares for a longer period to earn income from appreciation in the value of shares as is evident from .....

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us that in all the proceedings and succeeding years the similar income from the short term capital gain was accepted as such by the department. The ld. AR brought to our notice that holding of the assessee in mutual funds and debentures were duly shown as investment in mutual funds and investment in shares/debentures which is placed at pg no. 3 of the paper book. The ld. Counsel also drew our attention to pg.no.5 & 6 showing details of investments, pg.no.7 long term capital gain/ loss and o .....

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rchase of shares. The ld. AR vehemently argued that similar short term capital gain on sale of shares was accepted by the department in the earlier years and succeeding years in the case of the assessee and also brought to our notice that the assessment orders for Assessment Years 2006-2007, 2009-2010 & 2011-2015 passed u/s 143(3) of the Act which are placed at pg. no. 154-161 of the paper book. The ld. Counsel relied on the some decisions of the Tribunal in defence of the assessee namely:- .....

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ide and AO be directed to treat income from sale of shares as short term capital gain as returned by the assessee. The ld. DR on the other hand relied on the order of the authorities below. 7. We have heard the rival submissions and perused the material on record. We find from the assessment orders passed u/s 143(3) in the case of the assessee for the assessment years 2006-07, 2009-10 & 2011-12 placed at pg. no. 152-161 that income from short term capital gain from shares was accepted as suc .....

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;6 of the paper book. Similarly the period of holding in the case of long term capital gain from the shares ranged between 740-239 days. We are in agreement with the plea of the ld. AO that during the year there was heavy activity by way of sale and purchase of shares in which the period of holding ranged between 1-356 days but that in itself is not enough to treat the income from sale of shares as income from the business contrary to what had been shown by the assessee. In the case of Shri Mahe .....

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ell as in the case o CIT vs. H Holsck Larzen reported in 160 ITR 67 has laid down various principles, which has been considered by the CBDT for issuing the circular no. 4/2007 dated 15.6.2007. In short, the principles laid down in those cases for deciding the question of nature of the transaction as trading or investment, mainly/broadly are:- what is the intention of the assessee at the time of purchase of shares; whether the assesee has borrowed money to purchase and paid interest thereon; what .....

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