TMI Blog2011 (5) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... s income or as capital gains. The AO treated the profit of ₹ 12,82,471/- as business income though declared by the assessee as short term capital gains. 3. During the course of assessment proceedings the AO found that assessee is dealing in sale and purchase of shares. It had declared dividend of ₹ 136,785/- and short term capital gains of ₹ 12,82,471/-. The assessee dealt in 104 scrips and in every scrip the assessee had transacted on an average 18-20 times showing that it is carrying out 10-12 transactions every day. The AO gave an example that in shares of TISCO assessee has carried out 40 purchase transactions and 42 sale transactions whereas in the share of SAIL it has carried out 23 purchase transactions and 26 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned transactions as capital gains rather than profit under the head business. Therefore, appellant s alternative pleas become redundant and ground number 3 is therefore not required to be adjudicated upon. 5. We have heard the parties and perused the material on record. The ld. AR very fairly submitted that the issue may be considered in the light of decision of the Tribunal, Ahmedabad D Bench in the case of Sugamchand C. Shah vs. ACIT (2010) 37 DTR (Ahd)(Trib) 345 wherein the Tribunal had culled out several principles after considering several decisions and finally held that if shares are held for less than 30 days i.e. they are disposed of within 30 days then the profit may be treated as business income and if they are held ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Is for realizing profit or purchases are made for retention and appreciation in its value. Former will Indicate Intention of trade and latter, an Investment. In the case of shares whether intention was to enjoy dividend and not merely earn profit on sale and purchase of shares. A commercial motive is an essential ingredient of trade. (5) How the value of the Items has been taken in the balance sheet. If the items In question are valued at cost, It would indicate that they are Investments or where they are valued at cost or market value or net realizable value (whichever Is less), it will indicate that items in question are treated as stock-in-trade. (6) How the company (assessee) is authorized in memorandum of association/artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other for investment provided it is maintaining separate account for each type, there are distinctive features for both and there is no intermingling of holdings in the two portfolios. (11) Not one or two factors out of above alone will be sufficient to come to a definite conclusion but le cumulative effect of several factors has to be seen. 16. The question is whether therefore, merely from frequency of the transactions carried on by the assessee, he is treated as dealer in shares or still he is held as investor. As found in the case of Infrastructure (P) Ltd. vs. Asstt. CIT (supra) also, assessee adduced evidence to show that holdings are for investment as recorded in the books of account. The holdings are valued at cost an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in them but after dematization where shares are delivered in the demat account the next day, it cannot be held that in all such t would be investment and not trading. If that is so held, then all those traders in shares in whose demat accounts shares are delivered can be said to have earned capital gains and not profits. Therefore, only one criteria, i.e. delivery of shares alone will not be sufficient to decide the issue. Even otherwise in Sarnath Infrastructure (P) Ltd. (supra) itself it has been held that cumulative effect of several factors will decide the issue. 19. Considering the totalitity and peculiarity of the facts of this case, we find that assessee is neither fully acting as a trader nor as an investor. Demarcation is quite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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