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DCIT Versus Shri Mulchand Amin,

2015 (7) TMI 1114 - ITAT AHMEDABAD

Profit/gains earned on the transactions of purchase and sale of shares and securities - long term capital gain OR business income - Held that:- Assessee is an investor and not a trader in shares. Treat the profit on sale of shares as short term capital gain. - Decided against revenue - ITA No. 2226/Ahd/2011 - Dated:- 24-7-2015 - SHRI G. D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER Revenue by: Smt. Sonia Kumar, Sr. D.R. Assessee by: Shri Rasesh Shah, A.R. ORDER PER : RAJPAL Y .....

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77; 75,05,935/- as long term capital gain instead of treating the same under the head business income . 3. Learned counsel for the assessee at the very outset submitted that issue in dispute is squarely covered in favour of the assessee by the orders of ITAT passed in ITA No. 127/Ahd/2009 and ITA No. 2076/Ahd/2009 for Assessment Year 2005-06 and 2006-07. He placed on record the copies of the Tribunal s orders. 4. The brief facts of the care are that assessee has filed his return of income electr .....

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nding recorded by the Assessing Officer reads as under:- 4. On perusal of P & L account, it is seen that the assessee earned Long Term Capital Gain and Short Term Capital Gain of ₹ 75,05,935/-. The AR was required to submit the explanation as to why the same should not be treated as business profit. The AR vide letter dtd. 19.11.2010 submitted that the addition made on the same issue was restricted by the CIT(A) in A.Y. 2007-08. The Id. CIT(A) held that profit earned in respect of shar .....

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8, the amount of ₹ 75,05,935/- is treated as business income. 5. Dissatisfied with the action of Assessing Officer, assessee carried the matter before ld. Commissioner of Income Tax (Appeals). Ld. first appellate authority after following the order of his predecessor in Assessment Year 2007-08 and the orders of ITAT, Ahmedabad set aside the action of Assessing Officer and directed him to treat the assessee as an investor and accordingly assess the gains from sale of shares as a long term c .....

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involved in the instant appeal are found to be covered by the above appellate order. I, therefore, following the above appellate order dtd. 13.09.2010 in the appellant's case in A.Y. 2007-08, direct the Assessing Officer to treat the capital gain from sale of shares held for a period of 1 year or more as long term capital gain and to assess the same under that head. 4.2 In so far as capital gain declared by the appellant under the head short term capital gain is concerned, I direct the Asses .....

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s than a month, gain from sale of these shares should be treated as "profit from business.' The above decision of 'D' bench of the ITAT, Ahmedabad, in the case of Shri Sugamchand C Shah (Supra), has also been recently followed by the ITAT, Ahmedabad in another case of Smt. Dipikaben Mukeshbhai Saraiya, Surat in A.Y. 2005-06 vide order dtd. 25/3/11 in ITA No. 2669/Ahd/2008. The appellant shall, accordingly, furnish details of all such scrips, viz. gain from shares which have been .....

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ssessing Officer in Assessment Year 2007-08. We find that in assessment year 2005-06 under similar circumstances an addition of ₹ 68,87,173/- was made by the Assessing Officer. The assessee in that year also claimed investment in shares and disclosed income under the head of short term capital gain and long term capital gain. The ld. Assessing Officer treated the assessee as trading in share and assessed the income from purchase and sales of shares as a business income. The ld. Commissione .....

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ssee but the Tribunal has accepted the contentions of the assessee and directed the Assessing Officer to treat the profit on sale of shares as short term capital gain. The ITAT has made an elaborate discussion on the issue and referred a large number of decisions in order to determine whether the transactions of the assessee were of an investor or of a trader. The conclusions drawn by the ITAT on page 21 of the order are worth to note. It reads as under:- 5.12 In view of the foregoing, following .....

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ed. 6. As regards ground no.1 in the appeal of the Revenue, the Id. CIT(A) pointed out in the impugned order that the AO ignored the fact that the relevant shares had been held by the assessee for a substantially longer period and the various criteria which the AO applied throughout the assessment order in treating the share transactions allegedly giving rise to STCG as income from business, could not be applied to the transaction in shares which had been held for much longer durations. It was f .....

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