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TMI Blog2016 (7) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... s return of income for AY 2006-07 on 28/03/2007 declaring total income of Rs. 15,67,540/- The case was selected for scrutiny and thereafter assessment was framed u/s/143(3) of the I.T. Act, 1961 by order dated 12/12/2008 and the income was determined at Rs. 15,67,540/- inter alia by considering profit on sale of shares as "business income" as against the "capital gains" offered by the assessee. Aggrieved by the order of the AO, assessee carried the matter before ld.CIT(A), who vide order dated 18th January-2010 in appeal No.CIT(A)-XV/DCIT(OSD)/Circle-9/215/08-09 granted partial relief to the assessee. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal and has raised the following grounds:- 1) The ld. CIT(A) has completely e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is about treatment of profits earned on sale of shares. During the course of assessment proceedings, AO noticed that the assessee had shown income from Short Term Capital Gain (STCG) of Rs. 11,45,160/- and Long Term Capital Gain (LTCG) of Rs. 3,37,983/-. On further perusal of the details filed by the assessee, he noticed that the assessee had made 372 transactions of purchase and sale of shares from which he had earned STCG. The AO therefore concluded that the assessee had indulged in frequent selling of shares throughout the year with the motive of earning profits and assessee has also indulged in trading in Future and Options from which he suffered a loss of Rs. 1,92,301/-. The submission of the assessee that the transactions through P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es through Franklin Templeton Rs.2,18,731 On sale of shares through ASK Raymond James Rs. 7,83,950 Rs.11,45,160 This breaking up of shares does not mean that the appellant was holding the shares for a long time or was investing just for investment and long term gain. The number of companies for STCG is not 20 or 100 but more than 300. Rather still more- because the names of companies dealt into through portfolio managers have not been informed. 3 The observation of the AO that the appellant dealt in 372 scrips has not been disputed. The table filed with paper book (page No.4 to 14) showed that the shares had at times being held just for two days like those of AVG shipyard were purchased on 13.12.2005 and sold on 15.12.2005. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has not shown any business income and the AO has observed on page 5 of the assessment order that the appellant paid interest of Rs. 2,06,089. The observation of the AO that borrowed funds were used for buying shares has not been disproved, and therefore in my view Hon'ble IT AT decision in the case of Purnima K. Shah by Hon'ble IT AT C Bench, Ahmedabad in ITA No.3154 /Ahd/2002 in the case of ITO.Ward-7(2.) is applicable. 6 The above discussion in various points of para 5 above proves that the appellant fails the tests laid down - the number of transaction, frequency of transaction, quantity of shares transacted, value of transactions - by Hon'ble Gujarat High Court in the case of CIT vs. Rewashanker A Kothari 283 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ITAT "D" Bench Ahmedabad) in the case of Udayan Finstock Pvt.Ltd. ACIT in ITA No.849/Ahd/2012 for AY 2008-09, dated 08/04/2016. She placed on record the aforesaid judgements/decision. She therefore submitted that the order of the ld.CIT(A) needs to be set aside in view of the aforesaid judgements/decision of the High Court/Coordinate Bench. Ld.Sr.DR on the other hand supported the orders of lower authorities. 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements/decision relied upon by both the parties. The issue in the present case is about the treatment of profits earned on sales of shares. It is an undisputed fact that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service. 11. In our opinion, investment through Portfolio Management Service, which may deal with the shares of the assessee so as to derive maximum profits cannot be termed as business of the assessee but would only be a case of a more careful and prudent mode of investment, which has been done by the assessee. Funds which lie with the assessee can always be invested (for earning higher returns) in the shares either directly or through professionally managed Portfolio Management Scheme and by doing so, it would not mean that the assessee is carrying on the business of investment in shares. Profits from such investment, either directly or through professionally managed firm, would still remain as profits to be taxed as capital gains as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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