TMI Blog2016 (5) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in any intra-day sale/purchase transactions. We repeat that assessee has carried out 85 purchase transactions and 67 sale transactions during the relevant previous year. Meaning thereby that there is no transaction carried out in more than ½ of the relevant previous year. We conclude in these peculiar facts and circumstances that the CIT(A) has rightly treated assessee’s profits of ₹ 2,59,43,473/- a short term capital gain and not business income. - Decided against revenue - IT(SS)A Nos. 531, 532 & CO No. 205/Ahd/2011 - - - Dated:- 22-3-2016 - Shri Pramod Kumar, Accountant Member and Shri S. S. Godara, Judicial Member For The Revenue : Mrs. Vibha Bhalla, CIT-D.R. For The Assessee by: Shri S.N. Soparkar with Mr. P.M. Mehta, A.R. ORDER PER : S. S. GODARA, JUDICIAL MEMBER:- These two Revenue s appeals for A.Y. 2008-09 and 2009-10 followed by assessee s cross objection in former case, arise from two separate orders of the CIT(A)-II, Ahmedabad dated 01-07-2011 07-07-2011 in appeal nos. CIT(A)-II/CC.1/115/2010-11 CIT(A)- II/CC.1/109/2010-11;respectively, in proceedings under section 143(3) r.w.s. 153C of the Income Tax Act, 1961; in short the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s profit from sale of shares and mutual funds amounting to ₹ 2,59,43,473/- as business income inter alia on the ground that its scrips had been dealt with as an adventure in the nature of trade, frequency thereof indicated trading element therein and so were the relevant holding period, quantum of scrips and presence of profit motive in the corresponding transactions. 6. The assessee filed its reply on 18-04-2010. It pleaded to have entered into corresponding shares and mutual fund transactions as investment not involving any trading adventurism. It termed its profits therefrom as merely incidental arising from its shares and mutual fund investments. The assessee stated that the relevant financial year involved investments at cost of ₹ 7,37,69,971/- as on 31-03- 2008. Next submission was that mere number and frequency of transactions would not form the sole parameter for ad-judging this issue. It submitted that it had only dealt with in a few listed companies in BSE and NSE. And that the relevant intention was only to maximize profit from appreciation in market value of investments which were sold because of bull ride in stock market. The assessee highlighted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which emerges from the records and from the discussion given above. In the written submissions the appellant has commented on the various grounds indicated by the Assessing Officer for treating the short term capital gain as business income. The most important point which can be said to be relevant for deciding the issue is the motive and intention of the appellant at the time of purchase of shares. The Assessing Officer has mentioned that the shares were purchased with the motive of selling within a short period of time ranging from one month to three months with the motive to earn quick business profit. In this regard he has also brushed aside the term and condition in the partnership deed debarring the firm to engage in trading of shares and mutual funds. Having regard to the clear facts of this case, I do not find any substance in this assumption of the Assessing Officer. From the details furnished, which are part of the record, it is clear that on sale of such shares which have been held by the appellant-firm for various periods ranging from 1 day to 180 days, appellant has incurred loss of around ₹ 1.27 crores. There could have been no motive to incur such loss by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, as per details given above the net short term capital gain entirely comprises of sales of shares of RNRL. As mentioned above, the shares of this company were purchased from 5th April, 2007 to 2nd July, 2007. These shares were held by the appellant for various periods ranging from 246 days to 334 days and were sold on 4th March, 2008 on one day. Obviously, this was done by the appellant having regard to the market trend. It is also significant to note that the shares of this company were accumulated without any sales having taken place before purchase of total accumulated shares of particular script. Thereafter, the shares were held for sufficiently long period of time. In my view there can be no assumption that the motive was to trade in shares of this company. I also find that similarly in respect of other scrips also the shares are not frequently purchased and sold but are purchased from time to time and thereafter accumulated shares were sold. Even the assessee firm has not involved itself in hedging transactions of shares. Summary of some transactions are as under:- 5.4 I also feel that the Assessing Officer was not justified in drawing any adverse inference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/units shall constitute the investment portfolio of the partnership and not stock in trade 10. We proceed further and find that the assessee has always valued its investments at cost price and not market price. Its short term capital gains read the impugned sums of ₹ 2,59,43,473/- comprising a sum of ₹ 2,95,48,114/- from a single scrip namely M/s. Reliance Natural Resources Ltd. purchased on 5th April, 10th May, 23rd May and 2nd July 2007 (this last day involves three transactions). This followed sale of the scrip involving all shares on 04-03-2008. The same makes it clear that the assessee s holding period of these shares ranging from 8 to 11 months during which not even a single share was sold. If we exclude this scrip, what is left is net result of loss of ₹ 36 lacs approximately. We confronted the Revenue with all this factual evidence. It fails to controvert the lower appellate authorities findings that the assessee has always been treating its shares and mutual funds in question as investments by maintaining a separate account accepted for the last many years. This is not the Revenue s case that assessee has been engaged in any intra-day sale/purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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