TMI Blog2016 (10) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... es that this issue required to be examined afresh by the Assessing Officer as per law after affording adequate opportunity of hearing to the assessee. Ordered accordingly. - Decided in favour of assessee for statistical purposes. - ITA No.2810/Ahd/2011 - - - Dated:- 23-8-2016 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Appellant : Urvashi Shodhan, A.R. For The Respondent : Shri Shiv Sewak, Sr. D.R. ORDER PER S.S. GODARA, J.M. : This assessee s appeal for assessment year 2008-09, arises from order of the CIT(A), Valsad dated 23.08.2011 passed in case No.CIT(A)/VLS/275/10-11 in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee s sole substantive ground raised in the instant appeal challenges the CIT(A) s order upholding Assessing Officer s action in treating the short term capital gains of ₹ 29,07,962/- as business income and also in further enhancing the same to the tune of ₹ 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 ₹ 47,45,954/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the appellant has accumulated Investments and disposed of the Shares in trading activities. In this background the sale of shares within 30 days or within a year is important to determine the nature of profits/gains. If the frequency of transactions is more, then it can be safely said that the profits/gains is Business i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole operation from the first step the purchase of shares was seems to have taken as a trading transaction. 6.3.8 Now let me apply the guiding principles set out by various Courts / Tribunals to the following facts emerging from the case of the appellant: (a) There is no dispute that the appellant has been doing trading of shares and also making investment in the Mutual Funds Shares. There is also no dispute that the list of shares submitted before me were sold within a year of purchase. The holding of shares were between 1 day to 192 days. Except couple of scrips, the holding period of shares was less than 6 months. Most of the gain was earned in shares held for a period for short periods. (b) The AO has not disturbed the Investments recorded in the B/S. The only contention raised by the AO was that those shares which has holding period of less than 30 days, the profits from the sale of such shares was treated by the him as Business income. His view was strengthen by the decision of the Hon'ble ITAT, Ahmedabad. (c) Purchase and sale of shares in short period indicates that the assessee purchased the shares with a motive to earn profit in short per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays 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 noticed from the list of traded shares submitted before me the maximum holding period was only 192 days and minimum was i day. In view of the above findings, my considered opinion is that the profits/gains from the shares held for less than one year should be treated as Business Income. This position is further strengthen by the fact as referred in the Table of para. 6.3.5 above that during the current year the appellant had accumulated shares investment from 1.47 lakhs in March ending 2007 to 237.03 lakhs in March ending 2008. Similarly, the S-I-T of shares in 2007 was 252.68 lakhs reduced to only 26.55 lakhs in March 2008. In this circumstances, I cannot disagree with the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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