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TMI Blog2016 (9) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the Assessing Officer (AO) in treating the Short Term Capital Gains (STCG) arising out of sale and purchase of shares as business income. For this the assessee has raised following Ground No.1:- "On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the decision of ld. Assessing Officer in treating the Short Term Capital Gain of Rs. 18,41,755/- as appellants Business Income. The appellant prays that gains of Rs. 18,41,755/- should be treated as Short Term Capital Gain and not business income." 3. Briefly stated, facts are that the assessee is in the business of dealing in shares and earned income from business, Long Term Capital Gains (LTCG) on sale and purchase of shares, Short Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares involving 6 purchase transactions and 11 sale transactions and no churning is involved. Nevertheless the appellant has not furnished any explanation whatsoever to controvert the fact recorded by the A.O. that the appellant has borrowed an amount of Rs. 1,01,44,225/- from Rohit Financial Services which has been used in purchase and sale of shares during the year. It is an accepted principle that an investor does not involve in borrowing of funds for the purpose of investment. Further the appellant herself submitted before the A.O. that the borrowed funds were utilized for investing in shares and payment of margin money for dealing in shares during the year. Having regard to the fact that the entire activity of the appellant in buying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Services. Ld. Counsel for the assessee also stated that this ledger account of Rohit Financial Services clarifies purpose of taking loans from Rohit Financial Services, which is not for investment in the scrips of Munjal Auto of Rs. 32,52,662/- in the month of July. The assessee had repaid the sum of Rs. 53,45,848/- to Rohit Financial Services. According to him, this observation of the lower authorities is totally wrong that borrowed funds were utilized for investment in these shares, whereas the assessee taken this loan after the transaction and that also in August. The ld. Counsel for the assessee narrated the fact relating to STCG that it has dealt only in three scrips during the year i.e., Munjal Auto, NTPC and Jaiprakash Industries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,623/- and closing balance as on 31.03.2005 is at Rs. 2,21,708/-. During the year i.e., precisely on 2nd and 3rd March, 2004, the assessee has taken loan for purchase of shares of Rs. 20.00 lakhs and Rs. 7.00 lakhs respectively from Rohit Financial Services. But before that it had repaid a sum of Rs. 53,45,848/- . This means that the basic charge of the Revenue regarding investment of loan funds into these purchases of shares of Munjal Auto is totally baseless. Even otherwise these amounts were taken by the assessee after the purchase of shares on 29.07.2004. It is also a fact that the assessee has kept these shares as investment in its accounts and holding period is almost 4 to 8 months. Admittedly, the assessee has kept these investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm or, as the case may be, long term capital gain, depending upon the period of the holding. A finding of fact has been arrived at by the Tribunal as regards the existence of two distinct types of transactions namely, those by way of investment on one hand and those for the purposes of business on the other hand. Question (a) above, does not raise any substantial question of law. 3. In so far as Question (b) is concerned, the Tribunal has observed in paragraph 8.1 of its judgment that the assessee has followed a consistent practice in regard to the nature of the activities, the manner of keeping records and the presentation of shares as investment at the end of the year, in all the years. The revenue submitted that a different view shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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