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TMI Blog2016 (10) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... l challenges the CIT(A)'s order upholding Assessing Officer's action in treating the short term capital gains of Rs. 29,07,962/- as business income and also in further enhancing the same to the tune of Rs. 40,26,576/-. 3. We come to the relevant facts first. The assessee is a share trader. He filed return on 20.09.2008. The assessee had declared capital gain of Rs. 47,45,954/- arising from sale of shares during scrutiny. The Assessing Officer applied this tribunal's decision in case of Sugamchand C. Shah vs. ACIT to hold that the same profits arising from shares having holding period of less than a month would be treated as business income and more than that resulted in short term capital gains. He accordingly computed a sum of Rs. 29,07,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 52.50 0.30 4 Income/Profits 8.57 30.76 10.61 5 Capital Gains both STCG & LTCG. 15.03 47.53 (-) 110.67 6 Sales figure Not provided Not provided Not provided From the Table above, it is very clear that the appellant has been substantially trading in shares and also investing in the Mutual Funds and shares. It is also clear that the investment in Shares was less than investment in Mutual Funds. Preceding to the current year (i.e.2006-07), the appellant had accumulated S-I-T of shares of 252.68 lakhs which was disposed of during the current year leaving only 26.55 lakhs as S-I-T, At the same time, the Investment in Mutual Funds & Shares jumped from 96.62/1.47 lakhs to 209.76/237.03 lakhs. This strongly indicates tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensex determine the purchase and sales of shares. The normal trend is that when the market is bullish go and sell and when the market is bearish go for buy. The trend of market is watched and decisions are taken accordingly. Most of the time the advice of the brokers play important role in selecting the pick of the scripts. In the instant case a large number of shares were bought and sold within 30 days of purchases made. In fact further large quantity of shares! bought and sold within less than a year of purchase. The transactions are so hectic that the appellant had also suffered losses in some scripts. This, in a nutshell, speaks of the frequency of purchases and sales of shares done by the appellant during the year. I may quote here wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase and sale of shares in short period indicates that the assessee purchased the shares with a motive to earn profit in short period; (d) The assessee undertook transactions without delivery in a few select scrip; (e) The assessee borrowed funds to purchase shares; (f) The dividend received was meager; (g) Though in the preceding years, the assessee consistently declared the gain/profit on the sale of the shares as 'Capital Gains' and the same has been accepted by the A.O. but ratio of consistency cannot be applied in this case that the findings of the AO and my observations clearly pierce the veil of intention the assessee had to gain profits by dealing in short term period only. Moreover, the rule of res-judicata is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the CIT(A) taken against the Revenue for one year. Factually, the Hon'ble ITAT also recorded that the share holding periods varied from 533 days to 3981 days. Also in some cases, the holding period varied from 387 days to 9016 days as noted in para 16 of the Order. After analyzing the parameters, the ITAT, held in favour of the appellant. This case is completely distinguishable with the instant case. Because, here we are dealing with the shares which are held for at best 192 days only. The AO had not disturbed the profits and gains from the sale of investments in the form of Mutual Funds and Shares. On the other hand the AO has correctly applied the decision of the jurisdictional ITAT in the case of Sugam Chand Shah. As I have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident to us that yet another co-ordinate bench in case of Smruti Shreyans Shah - ITA No.3295/Ahd/2010 has already expressed disagreement with the earlier tribunal's decision. The Assessing Officer's view is held as to be not sustainable in this factual and legal backdrop. We come to the CIT(A)'s order to notice that he has enhanced Assessing Officer's action in treating Short Term Capital Gain as business income from Rs. 29,07,962 to Rs. 40,26,576/- (supra). We do not find any such enhance notice under section 251(2) of the Act to have been issued to the assessee at the instance of the lower appellate authority. Learned Departmental Representative fails to rebut this factual position. We observe in these peculiar facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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