TMI Blog2011 (4) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... on to derive dividend income. Further, the sale/purchase of shares during the current financial year is purely delivery based and shares have been sold without obtaining delivery. Accordingly, it was submitted that the long term capital gain and short term capital gain declared by the assessee should be accepted. 2.1 However, the Assessing Officer was not convinced with the explanation given by the assessee. He noted from the chart showing short term capital gain that during the financial year 2005-06, the assessee has made 198 transactions starting from 15th April 2005 to 31.3.2006 and has earned a short term capital gain of ₹ 19,29,867/-. She has also earned long term capital gain of ₹ 55,85,578/- and has made 97 transactions beginning from 4.4.2005 to 9.3.2006. The intention of the assessee is evident from the number of transactions during the year which combined together comes to 295 transactions. The Assessing Officer held that if the Stock Exchange functions for 230 days in a year excluding Saturdays, Sundays and Public Holidays, it is obvious that the assessee is trading on a daily basis. From the frequency of transactions, he was of the opinion that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and short term capital gain shown by the assessee should be accepted. 2.3 It was submitted by the assessee that the assessee has been regularly treating purchase of shares as investments. Referring to past six year s tax returns, it was submitted that the same clearly established that the purchase and sale of shares were treated as investment by the assessee. Referring to the decision of the jurisdictional High Court in the case of CIT vs Gopal Purohit reported in 228 CTR 582, it was submitted that rule of consistency should be followed. It was submitted that frequency and magnitude of transactions are not the decisive factor for treating the short term capital gain and long term capital gain as business income . It was submitted that period of holding for sufficiently long period is enough to justify the capital gain. It was also submitted that the assessee has not borrowed funds for investing in shares and all the investments made by the assessee are out of her own savings. It was brought to the notice of the CIT(A) that out of long term capital gain amounting to ₹ 55,85,578/-, long term capital gain amounting to ₹ 34,79,090/- is from sale of IFLEX shares, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than 1 year. ii) The ld CIT(A) while providing relief to the assessee has taken 30 days as holding period of shares to distinguish between trading and investment which is arbitrary and not in consonance with the CBDT vide its instruction no. 1827 dated 31.8.1989 supplemented with CBDT circular no.4 of 2007 dated 15.6.2007 iii) The appellant prays that the order of the ld CIT(A) on the above grounds be set aside and that of the AO restored. 4.1 The assessee has filed Cross Objection with the following grounds: CROSS OBJECTION NO. 202/MUM/2010(by the assessee) On the facts and circumstances of the case, the ld CIT(A) erred in confirming the decision of the Assessing Officer in holding that the shares held for less than 30 days be treated as business income. 5 The ld counsel for the assessee, referring to the Cross Objection filed by the assessee submitted that there is a delay of 89 days in filing of the Cross Objection. Referring to the affidavit filed by the assessee, explaining the delay in filing of the CO, he submitted that the CIT(A) had given sufficient relief to the assessee. On receipt of notice, she approached the counsel t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, following the same ratio, the appeal filed by the revenue should be dismissed and the CO filed by the assessee should be allowed. 7.2 The ld DR, on the other hand supported the order of the Assessing Officer. 8 We have considered the rival submissions made by both the parties, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the entire short term capital gain and long term capital gain declared by the assessee has been treated as business income by the Assessing Officer. From the various details furnished by the assessee in the paper book, we find the assessee has declared long term capital gain on shares which have been held by her for a period starting from 14 months to 134 months. Similarly, as regards the income from short term capital gain declared by the assessee, we find the period of holding varies from 1 day to 343 days. We find the long term capital gain and short term capital gains declared by the assessee has been accepted by the Assessing Officer in the scrutiny assessment in Assessment Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the learned CIT(A) that only own funds were utilised for purchase of shares was not contradicted by the learned DR. It was also highlighted by the learned CIT(A) that assessee had not indulged in any squaring-up of the transactions on the same day. On a conspectus of the matter, we are of the view that the transactions of purchase and sale of shares, in the instant case, deserves to be considered as investment and profit thereon has to be assessed to tax under the head capital gains . We direct the Assessing Officer accordingly. 10 Since the facts of the instant case are identical to the facts in the case of Nagindas P Sheth (HUF) (supra), therefore, following the decision of the coordinate Bench of the Tribunal, we hold that transactions of purchase and sale of shares by the assessee, in the instant case, has to be treated as investment and profit thereon has to be assessed to tax under the head capital gains . We hold and direct accordingly. The grounds raised by the revenue in its appeal are accordingly dismissed and the grounds raised by the assessee in the CO are allowed. 11 In the result, the appeal filed by the revenue is dismissed and the CO filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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