TMI Blog2012 (10) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ,09,885/- and purchases of ₹ 8,37,27,757/- and accordingly looking at such high volume of transactions upheld the order of A.O. 3. The CIT(A) erred in holding that the A.O. gave a finding that the transactions in shares are in the nature of adventure or trade ignoring the fact that the AO merely taxed the impugned income under the head business income. 4. The CIT(A) ought to have applied the judgement of the Special Bench ITAT, Mumbai in the case of M/s. Daga Capital Management (P) Ltd., Vs. ITO in relation to transaction in shares and accordingly, applied section 14A disallowing the expenditure towards exempted dividend income. 4. While disposing of this appeal, we are taking the brief facts in the case of Sanjay Ishwarlal Ranka as both Ld. A.R. D.R. also agreed that the facts involved in both these appeals are similar. Similar grounds have been taken except change in the figures in ground no.2 in place of turnover of ₹ 9,22,09,885/- turnover of ₹ 2,32,61,213/- and in place of purchase of ₹ 8,37,27,757/- purchase of ₹ 2,21,98,527/- and in place of 351 number of scrips, 101 number of scrips has been taken. 5. The assessee subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to a conclusion that the shares held for short period or for a few number of days would not qualify as short term capital gain. It has already been held that there are certain transactions which qualify as trading transactions or investment portfolios on the basis of certain inherent characteristics. The scrips sold by the assessee during the year under consideration are from his investment portfolio and any gain arising on such sales has to be accepted as short term or long term capital gain depending on the period of holding as prescribed in the IT Act, 1961, and for all the transactions out of investment portfolio, appellant s claim of long term capital gain at ₹ 4,09,074/- and short term capital gain at ₹ 82,89,260/- is accepted. 9. The Ld. D.R. contended that it is apparent that the number of transactions involved in this case and the assessee has continuously purchased and sold the shares. It is not a case where he has entered into 2 or 3 transactions. Intention is a matter which is known to the assessee and the onus is on the assessee to prove that he has the intention for investment. Referring to the decision of the Mumbai High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition filed before the Supreme Court was also dismissed vide order dated 15.11.2010. Reliance was also placed on the decision of ACIT Vs. Dineshbhai C. Patel (HUF) Nagpur bench of this Tribunal ITA No.616/2008, it was pointed out that the appeal filed against the order of the Nagpur bench was dismissed in the High Court vide order dated 28.10.2010 in ITA No.37/2009. It was again stressed that similar view has come before the Mumbai Bench in the following cases Nagindas P. Sheth (HUF) Vs. ACIT ITA No.961/Mum/2010 and ACIT Vs. Naishadh V. Vachharajani ITA 6429/Mum/2009. Thus, it was contended that the order of the CIT(A) be confirmed. Assessment Year Amount(Rs) 2005-06 35,54,752/- 2006-07 18,07,028/- 2007-08 66,52,110/- 12. We have carefully considered the rival submissions and, perused the material on record along with the order of the tax authorities below. We have also gone through the case law as has been cited before us. We find that in the case of CIT (Central), Calcutta vs Associated Industrial Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fairly long period; and - Whether the shares once sold have never been re-purchased. 14. We noted that in the case of CIT Vs. V A Trivedi 172 ITR 95 (Bom) Hon ble jurisdiction High Court has clearly laid down under para 12 of the order that the onus of establishing that a purchase is made with the intention to trade is on the Revenue. 15. We noted that the main contention of the revenue in treating the gain to be the income from business is the number of transactions and the period of the holding by the assessee. The period of the holding and number of transactions cannot be the only basis to determine whether the assessee has carried out the business in share transactions. It may be one of the relevant consideration but cannot be the main consideration for deciding whether the assessee is engaged in a business or not. We have to look into all the surrounding circumstances. This is a fact on record that the assessee in this case is engaged in the employment and has derived the salary income. Out of the surplus fund, he invested into the shares and the units and those shares and units has duly been shown by the assessee as investment in his balance sheet in the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a fact that the assessee derived the dividend income and has also made the investment in the shares not out of the borrowed funds, but out of its own surplus funds. The CIT(A) while allowing the appeal of the assessee has extensively dealt with the various factors as well as various case laws to arrive at a finding that the shares were held by the assessee as a capital investment and not as stock in trade. He has also relied on the decision of this Tribunal in the case of CIT Vs. Dineshbhai C. Patel (supra). It is not denied that the facts involved in this case in the case of Dineshbhai C. Patel (supra) are similar to the facts in the case of the assessee. Similarly, the facts involved in the case of Gopal Purohit Vs. JCIT 20 DTR 99 (Mumbai) were also the same as in the case of the assessee. In all those cases, the Tribunal took the view that period of holding cannot be the basis to determine whether the share transaction entered into by the assessee is a business income or capital gain. In this case also, we noted that the assessing officer has built up his case mainly on the basis of period of holding and on that basis, he took the view that the shares held for a short period o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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