TMI Blog2016 (5) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... nchanda repeatedly stressed that the ITAT had gone only by the order passed by the AO for AY 2005-06 whereas the said assessment had been reopened subsequently under Section 153A of the Act, but in the considered view of the Court, independent of that fact, the finding of the ITAT that the earning of the Assessee was only a Short Term Capital Gains does not suffer from any legal infirmity - Decided against revenue - ITA 829/2015, ITA 908/2015, ITA 886/2015 - - - Dated:- 26-4-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr. Ashok K. Manchanda, Senior Standing counsel with Ms. Vibhooti Malhotra, Advocate For the Respondent : Dr. Rakesh Gupta and Mr. Somi Agarwal and Ms. Monika Ghai, Advocates ORDER 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly entered during the years under consideration and the purchase and sales of shares were not occasional but continuous. It was observed that none of the shares were held for more than one year and, therefore, it revealed the intention of the Assessee not to hold it as investment and to earn dividends but to earn profits by sale and purchase of shares. For AY 2006-07, the AO held that since the Assessee had claimed ₹ 2308 as speculation loss, it reveals the intention of the Assessee to trade in shares. The other factor which weighed with the AO was that no separate books of account were maintained for the alleged investments and regular business. 5. The appeals filed by the Assessee for the aforementioned assessment orders w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the main objective i.e. real estate business, the Assessee had increases its authorised share capital and claimed the preliminary expenses in that connection as revenue expenses in terms of Section 35D of the Act. This by itself according to him belied the claim of the Assessee that only surplus funds were invested in the sale and purchase transactions of shares. It was submitted that considering the value of the transactions and the quantum of profit earned by the Assessee, it could not be said that the Assessee intended to earn dividends by investing in shares. Reliance has been placed by Mr. Manchanda on the decisions in CIT (Central) v. Associated Industrial Development Company (P) Ltd (1971) 82 ITR 586 (SC), Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T also referred to the decision of the Lucknow Bench of the ITAT in Sarnath Infrastructure P.Ltd. v. ACIT, (2009) 313 ITR (AT) 13 (Lucknow) which carved out the principle to determine whether a transaction is in the nature of trade or are for merely investment purposes. After analysing a large number of judgments of the Supreme Court, the tests as culled out by the ITAT included the following: (i) what is the frequency of the purchase and sale of shares. (ii) ratio between purchases and sales and the holdings which show whether the Assessee is trading or investing. (iii) high transactions may indicate trade whereas low transactions may indicate investments. 11. The CBDT guidelines dated 13th December 2005 also summarises these v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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