TMI Blog2012 (8) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... eat ₹ 2,57,59,291/- as income under the head Short Term Capital Gains instead of treating it as Business Income . 3. The assessee is an individual and a Chartered Accountant by profession. Apart income from business and profession and income from other sources, the assessee also admitted income from Long Term Capital Gain and Short Term Capital Gain arising from purchase and sale of shares as under: i) Long Term Capital Gain : ₹ 20,37,515/- (Exempt u/s 10(38) of Income Tax Act 1961) ii) Short Term Capital Gain : ₹ 2,57,59,292/- In the course of assessment proceedings, the AO asked the assessee as to why the Short Term Capital Gain of ₹ 2,57,59,292/- should not be treated as business income . In resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r may be revived. 5. On the other hand, the learned AR of the assessee has submitted that AO has referred three companies namely M/s. Videocon Industries, Andhra Bank and M/s. Deep Industries which are not representative transactions for the assessee because two of these transactions were not as a result of action of the assessee, one related to close out of share by the Exchange (Videocon Industries for only one share valued at just ₹ 590/- and the other Andhra Bank Transaction amounting to only ₹ 8,817/-) pertained due to punching error by the stock broker. In case of M/s. Deep Industries, loss was booked within 7 days so as to stop further erosion of capital and therefore, it cannot be treated as a trading transaction. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. The finding of the AO based broadly on the observations viz., (i) huge turnover with large number of transactions (ii) short period of holding in respect of three scrips (iii) speculative transactions on three occasions and (iv) borrowed funds. The volume of transaction itself cannot be a sole criteria when the frequency of the transactions were not so high. In the case in hand, the number of days during which either the purchase or sale transactions carried out were 64 days in the entire year which shows that the frequency is not high in comparison to the volume of transaction. Further, the total number of scrips in which the sale and purchase done giving raise to Short Term Capital Gain and Long Term Capital Gain are only 27. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained at table no.8, and not due to any organized or systematic activity of the appellant requiring time and efforts. Noting has been brought before us to controvert the finding of the CIT (A) on this point. In view of the fact that the Broker has confirmed the punching error for these three transactions and were scored off and reversed immediately on the same day, it cannot be said that the assessee was engaged in the speculative transactions. Turning to the next objection of the Assessing Officer regarding borrowed funds, it has been explained by the assessee that the funds were taken from the assessee s HUF which are non-interest bearing funds. This fact has been duly considered by the CIT (A) in para 7.8 of the impugned order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is evident from the fact that the unrealized gain in respect of shares which are held by the assessee at the end of the financial year is more than the capital gain offered by the assessee. If the motive of the assessee was to realize the profit in the volatile conditions of the market, then the assessee would have sold the shares instead of retaining the same at the end of the year. 9. In view of the above discussion, we do not find any error or illegality in the order of the CIT (A) in holding the income arisen from sale and purchase of shares as capital gain. 10. In the Cross Objections, the assessee has raised the following grounds. 1. The ld. AO and the ld. CIT (A) erred in law and on facts in not applying the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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