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2016 (8) TMI 1034 - ITAT HYDERABAD

2016 (8) TMI 1034 - ITAT HYDERABAD - [2016] 50 ITR (Trib) 84 - Profits from sale of shares - capital gains OR business income - qualification for deduction u/s 111A - Held that:- The assessee has indulged in purchase & sale of shares, no doubt with the intention of making profit but intention and timing of holding of investments determines the nature of transactions. It is worth to note that assessee also entered into F&O transactions, which clearly demonstrates that the intention was to make .....

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ck profit, will definitely gives the impression that it was carried on as short term business to make quick money. - As held in the case of CIT Vs. Rewa Shankar A. Kothari [2006 (1) TMI 80 - GUJARAT High Court] where on finding that there was a long gap between date of acquisition of shares and their sales, also shares having been shown as investments in Wealth Tax returns right from its purchase, it was held that profits from sale of shares were required to be taxed under capital gains and .....

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enue : Shri K.J. Rao ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the assessee against the order of the learned Commissioner of Income-tax(A) - 1, Hyderabad for AY 2008-09. 2. Briefly the facts of the case are that the assessee filed his return of income for the AY 2008-09 on 24/10/2008 admitting the total income of ₹ 38,85,856. The return was processed u/s 143(1). Later the case was selected for scrutiny through CASS. 2.1 The AO noted that the assessee has shown an amount .....

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ares were purchased and sold on the same day. In few cases the shares were held for even one day. The details of such shares were as under: S.No. Name of the Scrip Date of purchase Date of Sale Capital gain (Rs.) 1 Aptech Training Ltd. 11/07/2007 11/07/2007 4,287 2 Gei. Hamon India Ltd. 27/07/2007 27/07/2007 343 3 Hindustan Oil Explorations 05/04/2007 05/04/2007 951 4 -do- 18/04/2007 18/04/2007 6,345 5 -do- 18/05/2007 18/05/2007 14,264 6 Hyderabad Indu Ltd. 26/04/2007 26/04/2007 15,492 7 LIC Hou .....

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sked the assessee to submit his explanation as to why the profit derived on sale of above shares shall not be treated as business income as against short term capital gain admitted by the assessee. 2.4 AO after considering the submissions of the assessee and referring to the provisions of section 111A as well as Board s Circular No. 4/2007, dated 15/06/2007, held that the intention of the assessee is to make profit by sale of shares and he had no intention to hold the shares for a long period to .....

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selling of shares. c) That the assessing authority has taken few transactions where purchases and sales were made on the same date to suit his view and not looked into other transactions where there was a gap between purchases and sales. d) As per the Board s Circular where the purchases and sale of shares constitute investment or trading shall be judged case to case taking into many facts into account, such as intention of the assessee, volume and frequency of transactions, time and effort dev .....

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ransactions of assessee as under: The quantum of purchases were ₹ 3,76,49,515/- The quantum of sales were ₹ 2,46,29,142/- The shortest period of holding shares - 1 day The longest period of holding shares - 77 days (Hyderabad Industries purchased on 09/04/07 and sold on 11/07/07) The appellant also traded in futures & options. Most of the shares were purchased and sold within a week. 5.2 In view of the above observations, the CIT(A) held that the number of shares, frequency of tr .....

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rm Capital Gains is 'Business Income' on the ground that the appellant did not invest in shares but carried on trading activity on regular basis. 3. The Learned Commissioner of Income Tax (Appeals) erred in treating the appellant as 'Trader' and not as 'Investor' and confirming the order of the Assessing Officer without considering the facts of the case and intention of the appellant to keep the shares as investment. 7. Before us, the ld. AR submitted that neither the A.O .....

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factors to find out as to whether appellant deals in shares as trading assets or hold shares as investor but certainly not a criteria. He submitted that the assessee was in full time employment of a company and was not having time to carry on business of purchase and sale of shares. He submitted that without bringing on record contrary material, the A.O., and the commissioner of appeals cannot change the intention and manner of investment made by the appellant. 7.2 Ld. AR submitted that the inte .....

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the asst year 2008-09 (under consideration) contrary to the considered view both for the preceding as well as the subsequent years. Since the intention of the assessee mainly was to purchase shares for holding them as 'investment' only the gains arising from the sale of shares is assessable under the head 'short term capital gains' and not under the head 'income from business'. 8. The ld. DR, on the other hand, relied on the orders of revenue authorities. 9. Considered th .....

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