TMI Blog2016 (12) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 11-11-2016 - MS. SUSHMA CHOWLA, JM For The Appellant : Shri Nikhil Pathak For The Respondent : Smt. Sumitra Banerji ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT(A)-1, Pune, dated 03.02.2014 relating to assessment year 2007-08 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1] The learned CIT(A) erred in confirming the action of the A.O. in taxing the income of ₹ 29,76,435/- arising on sale of shares as business income as against short term capital gains declared by the assessee. 2] The learned CIT(A) erred in holding that the income arising on sale of shares was to be taxed as business income of the assessee on the following grounds a. The assessee is engaged in the systematic and continuous activity of trading in shares with an intention to earn profits and hence, the said activity was in the nature of business activity. b. The magnitude and frequency of transactions in shares was quite substantial and therefore, the same had to be treated as business activity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income declaring total income of ₹ 19,76,922/- after setting of current year losses of ₹ 10,63,136/-. The case of the assessee was picked up for scrutiny. The assessee was found to have derived income from petty beauty parlor and had also declared income from short term capital gains and other sources. The assessee was partner in two partnership firms i.e. Vraj Constructions and Yash Developers. The assessee had declared income from short term capital gains on sale of shares at ₹ 29,76,435/-. The Assessing Officer noted that the shares available with the assessee were shown as investment. However, the assessee had dealt in various numbers of scrips and the frequency of activity of purchasing and selling the shares was found to be regular and recurring. The Assessing Officer was of the view that where the assessee had been effecting transactions regularly in order to achieve handsome gains, then the said activity being carried on day-to-day basis is in the nature of business. Looking at the volume, frequency, continuity and regularity of the transactions and where high profits had arisen to the assessee, the Assessing Officer show caused the assessee to expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative for the assessee pointed out that the CIT(A) relied on the ratios laid down in Ajinkya Electromelt Pvt. Ltd. Vs. ACIT in ITA No.1519/PN/2009 relating to assessment year 2005-06, order dated 30.07.2010 and in ACIT Vs. Blue Moon Securities Pvt. Ltd. in ITA No.1019/PN/2007, relating to assessment year 2004-05, order dated 23.07.2010. He further pointed out that earlier order of Tribunal in ACIT Vs. Blue Moon Securities Pvt. Ltd. (supra) was recalled and subsequently, the income was held to be income from short term capital gains and hence, the reliance by the CIT(A) on the said decision is misplaced. He stressed that where major shares sold by the assessee were shown as investment as on close of preceding year, then the gain arising on sale of said shares in current year would be taxable as income from capital gains and not as business income. In this regard, reliance was placed on the ratio laid down by Mumbai Bench of Tribunal in Janak S. Rangwalla Vs. ACIT (2007) 11 SOT 627 . The second aspect pointed out by the learned Authorized Representative for the assessee was that the borrowed funds were not utilized for making the above said investments and hence, it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res was sold during the financial year 2006-07 and the gain arising to the extent of about ₹ 23 lakhs was declared by the assessee as short term capital gains. There are other shares also which were bought by the assessee in the preceding year and were sold during the year. All those shares also were shown as investment as on 31.03.2006. Some of the shares were purchased by the assessee during the year itself and were held for short duration and the assessee had declared profit / loss on such transactions. As per list, one share of Essar Steel was held for less than eight days on which the gain was of ₹ 11,060/-. In the list itself, there are two transactions i.e. purchase and sale of shares of I Bulls and Astramic, which were held for less than one day, where the gain was ₹ 1,10,633/- and loss of ₹ 1,18,030/-. The learned Authorized Representative for the assessee fairly admitted that in the absence of delivery of shares and since the shares bought on the previous day were sold on the next day may be assessed as Income from business . In respect of balance shares where the period of holding was more, the plea of assessee was that the same are to be assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
