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2016 (9) TMI 1200

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..... 005-06. The factual matrix in the instant assessment year under appeal is similar to the preceding assessment years i.e. 2005-06 and 2006-07 and we do not find any reasons of deviating from the settled position in this year. Keeping in view of the above facts and circumstances of the case, we are of the considered opinion that principle of consistency has to be maintained and followed in this year as facts are almost similar to that of preceding years and hence we direct that the income earned by the assessee from purchase and sale of shares with respect to shares held for not more than one year be held as short term capital gains chargeable to tax under the head ‘Capital Gains’ and not as business income chargeable to tax under the head ‘Profits and Gains from Business or Profession’ as held by the authorities below . - I .T.A. No. 975/Mum/2013 - - - Dated:- 17-8-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Rahul K. Hakani For The Revenue : Shri Aarsi Prasad ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 975/Mum/2013, is directed against appellat .....

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..... e, frequency, continuity and regularity of the share transactions , it can be inferred that these transactions made by the assessee with a profit motive and considering the facts that the assessment in assessee s own case for the immediately preceding assessment year i.e assessment year 2006-07 under similar facts and circumstances of the case the entire profits on purchase and sale of shares were treated as income of the assessee under the head profit and gain from business and profession and hence the gains offered on short term capital gains of ₹ 5,51,677/- was treated as income of the assessee from business vide assessment order dated 16th December, 2009 passed by the AO u/s 143(3) of the Act. 5. Aggrieved by the assessment order dated 16.12.2009 passed by the A.O. u/s 143(3) of the Act, the assessee filed his first appeal before the ld. CIT(A). 6. Before the ld. CIT(A), the assessee submitted that the assessee is an individual deriving income from M/s Kind Metal Works as remuneration, interest and share of profit as partner. The assessee is also partner in other three firms. The assessee has received share of profit of ₹ 24,59,286/- which was disclosed as sha .....

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..... r was substantially high and purchase and sale of shares was the main activity of the assessee. The transactions were continuous and regular and systematic. The ld. CIT(A) relied upon various decisions which are detailed in his order and came to the conclusion that the assessee is engaged in adventure in nature of trade on full-scale and it has shown purchase of shares as investments and gains as short term capital gain with a view to avoid tax. The investments shown in the books of account are nothing but stock in trade. Purchase and sale of shares frequently in short period of time indicate that the assessee has a motive to earn profit in short period. Looking into the overall activity of the assessee in the share transaction, the ld. CIT(A) held that intention of the assessee is to gain profits and hence the decision of the A.O. was upheld by the learned CIT(A) vide appellate order dated 29.11.2012. 7. Aggrieved by the appellate order dated 29.11.2012 passed by the ld. CIT(A), the assessee filed appeal before the Tribunal. 8. The ld. Counsel for the assessee submitted that the assessee had made investments in shares which were purchased through recognized stock exchanges t .....

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..... income instead of short term capital gains as claimed by the assessee. 10. We have considered the rival contentions and also perused the material available on record including case laws relied upon. We have observed that the assessee is a working partner in partnership firms from where he is deriving income from share from partnership firm(exempt), interest on capital and remuneration . We have observed that the assessee has purchased and sold the shares through recognized stock exchanges through brokers or IPO and the payments were made through cheque. The shares /Mutual Funds have been shown as investment in the books of account and valued at cost. There were no borrowings by the assessee and no interest was paid. The number of transactions has also come down in the impugned assessment year as compared to the preceding assessment year. The average period of holding was 95 days and number of transactions were 70 , while for assessment year 2005-06 it was 70 days and 119 transaction while for assessment year 2006-07 , the average period of holding was 129 days and transactions were 107. In the preceding assessment year 2006-07, the learned CIT(A) has allowed the appeal of the as .....

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