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2016 (7) TMI 58 - ITAT JAIPUR

2016 (7) TMI 58 - ITAT JAIPUR - TMI - Sale of equity shares - short term gain OR business income - Held that:- It is undisputed fact that the assessee had disclosed these transactions as investment in the return during the year under consideration. It is also a fact that the assessee was in investment in shares from 2000-01 to till date and in all the years, he has disclosed short term/long term capital gain on account of investment in shares which has been accepted by the department. - AO a .....

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he made investment in part time individually with his own fund without any assistance of the man power or office, which itself shows that the intention of the assessee was to invest in shares to get gain from it on the basis of period of holding. Accordingly, he has disclosed short term capital gain in the return. After considering both sides, we have considered view that the assessee was in investment of shares not share trading. - Decided in favour of assessee - ITA No. 367/JP/2014 - Dated:- .....

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by the assessee in return of income of ₹ 29,21,048/- earned on sale of equity shares as business income. Looking to the facts and circumstances of the case the treating the short term gain on sale of equity shares as business income is unjustified and bad in law. 2. On the facts and circumstances of the case of ld CIT(A) has erred in holding the finding of assessment proceedings that the investment in equity shares in the assessment year 2008-09 as business assets and profit earned on sal .....

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t shown as investment assets. Looking to the facts and circumstances of the case the action of the Assessing Officer is unjustified and bad in law. 2. The assessee is having income from salary, house property, business, capital gains and other sources. Return for A.Y. 2009-10 was filed on 31/3/2010 declaring total income of ₹ 31,29,370/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that the assessee had shown short t .....

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found that the assessee had shares as on 31/3/2008 at ₹ 4.00 lacs. Thereafter the assessee made transaction throughout the year in the Demat account wherein total purchase value came at ₹ 13,80,972/- and the total value for the financial year was at ₹ 72,79,970/-. These transactions led to a gain of ₹ 58,98,998/-. The transactions, which were carried through a share broker had a total purchase value of ₹ 1,01,03,377/- and total sales value of ₹ 1,28,21,809/- w .....

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pital gain. The activity of the share buying and selling was done and the amount fetched by the same is a clear proof of the intentions of the assessee and lends support to the presumption that the assessee had no intention of holding the shares so bought and was solely driven by the market sentiments. He found that holding period and quantity of purchase and sale of shares was not investment but were made for the purpose of business to earn profit. The taking delivery and making full payment, p .....

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case of Karan Chand Thapar and brothers (P) Ltd. Vs. CIT (1971) 83 ITR 899 wherein it has been held that certain shares has been shown in the books as well as balance sheet as investment by itself not a conclusive circumstance though it was relevant circumstances. He further relied on the following case laws:- (i) Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs CIT (SC) 227 ITR 172 (ii) Chowringhee sales Bureau P Ltd. 87 ITR 548 (SC) (iii) CIT Vs Provincial Farmers (P) Ltd. 35 ITR 223. The a .....

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general principles for the purposes of share business. The Assessing Officer has to examine purchaser was a trader or purchase for commodity, quantity of purchase and repetition of the transaction. The ld Assessing Officer analysed the sale and purchase on which short term capital gain claimed by the assessee through a chart reproduced on page No. 8 and 9 of the assessment order and held that the assessee is a salaried person and transaction in sale purchase of shares is not an incidental to th .....

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able on the facts and circumstances of the case. He again considered CBDT circular No. 1857 dated 31/8/1989, no. 04/2007 dated 16/06/2007 on sale of shares. On that basis he came to conclusion that the assessee was in share trading business. He further relied various decisions on this issue and held that short term capital gain income claimed by the assessee at ₹ 29,21,048/- is a business income. 3. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter b .....

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9 6172/- 1.3.09 3958/- 25 days M/s Confi Shares 7236022/- 25.3.09 1220000/- 31.3.08 6016022/- 11 months 25 days M/s Confi Shares 39990/- 31.3.09 90820/- 1.3.09 -50830/- 30 days M/s Confi Shares 1/- 31.3.09 3048103/- 1.3.09 -3048102/- 30 days Similarly the assessee has also shown long term capital loss of ₹ 38340/-. As per AO the transactions in respect of dealing in shares and accordingly showing of short term capital gain were of adventure in the nature of trade / business nature and acco .....

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also claimed that such shares were kept in D-mat account and also sold through D-mat account. It was further stated that some of the shares were kept even for more than Vi years. It is also claimed that intention of the appellant was always to treat such transaction as investment and not a stock in trade. In support of such submission the appellant has also placed reliance on various case laws. On the other hand the AO s case is that that the appellant is a salaried employee and the component o .....

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decide the real nature of transaction. For such finding the AO has placed reliance on various case laws including decision of the Hon ble Apex Court (Refer page 4 of this order). As per the AO the real intention of the appellant was not to hold such shares for investment purposes and to derive dividend income but to earn the profit at the earliest possible. The AO further observed that the assessee is a salaried person and purchasing of shares and is subsequent sales was not incidental to the re .....

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ture and as per AO the fact of substantial quantum of transaction, magnitude of purchase and sales and the ratio between purchase and sale holding essentially indicated that or such transaction were in the nature of business activity. On consideration of all the facts and circumstance discussed above it is noted that all the objections raised by the assessee has been properly dealt with by the AO. It is undisputed fact that the assessee is a salaried person and carrying on such dealing in shares .....

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way of own D-MAT A/c as also through the regular share broker. The holding of the shares is not for substantial period indicating that there was no intention to keep the shares for a long period to derive dividend income/ appreciation of capital. The sale and purchase of the same scripts at different times also indicate that the appellant was always profit/loss conscious in respect of such shares and not dividend conscious. The appellant case is broadly covered under the guidelines and circumsta .....

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ved any dividend. The facts and circumstance discussed above suggest that the assessee s activity in relation to share transactions and showing of short term capital gain was a clear cut business activity. Accordingly the AO has rightly taxed such amount business income. The ground of appeal is accordingly dismissed. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that whether an assessee is a trader in shares or is an investor primarily depends upon his inten .....

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ed as capital gain or business income. (a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income, (b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Cap .....

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aforesaid Circulars issued by the CBDT (i.e. Circular No.4/2007 dated 15th June, 2007 and Instruction No. 1827 dated 31.08.1989). He has also drawn our attention on circular No. 4/2007 dated 15/6/2007 and Instruction No. 1827 dated 31/8/1989 and argued that recent circular issued by the CBDT in file No. 225/12/2016/ITA.II dated 02/5/2016 has decided that the income arising from transfer of unlisted shares would be considered under the head capital gain irrespective of the period of holding, with .....

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holding. The assessee is a salaried employee, has income from interest, EPF and dividend. He has drawn our attention on computation of income and argued that in A.Y. 2007-08 the dividend income was ₹ 21,451/- and in A.Y. 2008-09 ₹ 23,080/-. The dividend during the year is ₹ 1,03,675/-. The assessee is a regular investor and carried out the share transaction through share broker Mehta Equities Ltd. The assessee had used own fund not maintained any office, employed any staff or .....

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d through circular that where listed shares are held more than 12 months and the assessee treated this transaction as investment and shown capital gain on it. The ld Assessing Officer shall not dispute and has to accept the disclosure made by the assessee. The assessee has shown shares as investment and earned the dividend not as business in the return. The latest circular issued by the CBDT is squarely applicable. He further relied on the following case laws:- (i) CIT Vs Devasan Investment Pvt. .....

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