TMI Blog2011 (4) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... e real, substantial and systematic or organized investment would constitute business. The assessee has also filed the Cross Objection along with an application for condonation of delay of 120 days on following grounds :- (1) For that the ld. CIT(A.) erred in confirming the addition of ₹ 68,511/- made by the ld. Assessing officer u/s. 14A of I.T. Act, when the assessee denied of having incurred any specific expenses for earning tax free dividend income. (2) For that the disallowance be restricted to 1% of the dividend income ₹ 3,12,264/-. 2. At the time of hearing, the ld. A.R. submitted that he could not justify the delay of 120 days. He further submitted that he does not press for Cross Objection and the assessee is ready to withdraw the same. The ld. D.R. submitted that he has no objection if the assessee withdraws the Cross Objection. 3. In view of the above, the Cross Objection filed by the assessee is dismissed as withdrawn. 4. Now coming to the appeal filed by the Department, the relevant facts are that the assessee filed the return declaring total income of ₹ 31,33,220/-. The Assessing Officer has stated that in the details of income encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt without examining the issue on this line. Whatever is shown by the assessee with its nature is accepted without any interference. In the light of the above facts, it is concluded that the transactions undertaken by the assessee is impressed with the character of commercial transactions entered into with a view to earn profit. The transactions are numerous and carried in a planned, systematic and organized manner. Accordingly these profits arising to the assessee from the above transactions in share and units of mutual funds are treated as profit from business profession . 5.1. Further, the Assessing Officer after considering the decision of the Hon ble Apex Court in the cases of CIT vs.- Distributors Baroda [83 ITR 377], CIT vs.- Sutlez Cotton Mills Supply Agency Ltd. [100 ITR 706], G. Venkataswami Naidi Co. vs.- CIT [35 ITR 594], Rajputana Textiles (Agencies) Limited vs.- CIT [42 ITR 743] and Raja Bahadur Visheshwara Singh vs.- CIT [41 ITR 685] and also the decision of the Hon ble Madras High Court in the case of CIT vs.- Amalgamations Pvt. Ltd. [108 ITR 885], CIT vs.- K.S. Venkatasubbaiah Reddiar [221 ITR 18], decision of the Hon ble Gujarat High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds at one instance, i.e. at one go and subsequent sales were made after a reasonable time period. That the weighted average period of holding for equity shares in the category of short-term capital gain was 3.06 months and in the long-term capital gains category, the weighted average length of holding was 41 months. The assessee also filed a calculation sheet before the ld. CIT(Appeals). It was also contended that not a single mutual fund was sold which had been held for less than a year. The assessee also stated that the cases relied upon by the Assessing Officer do not apply to the facts of the cases of the assessee, which have been discussed by the ld. CIT(Appeals) at pages 12 to 14 of the impugned order. The ld. CIT(Appeals) after considering the submission of the assessee and also relying on the following cases (a) CIT vs.- N.S.S. Investments (P) Ltd. [277 ITR 149 (Mad.)]; (b) CIT vs.- Trishul Investments Ltd. [305 ITR 434]; (c) Bombay Gymkhana Ltd. vs.- ITO [115 TTJ (Mum.) 639]; (d)Vesta Investments trading Co. (P) Ltd. vs.- CIT [70 ITD 200 (CHD.)]; (e)CIT vs.- Rewashanker A. Kothari [283 ITR 338 (Guj.)]; (f) CIT vs.- Girish Mohan Ganeriwala [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of shares/ mutual funds as capital gain and the same had been accepted by the Department. He submitted that there is no change of facts in the assessment year under consideration and, therefore, the ld. CIT(Appeals) has rightly held the profit in respect of shares as capital gains as against business profit assessed by the Assessing Officer. He also relied on the case laws, which were cited by the ld. CIT(Appeals). 9. We have carefully considered the submissions of the ld. Representatives of the parties, orders of authorities below and the cases cited by the authorities below as also relied before us (supra). We observe that the stress of the ld. D.R. to justify the order of the Assessing Officer that the short-term/long-term capital gain claimed by the assessee is to be considered as business income only because there are large number of purchase and sale of shares by the assessee in a systematic and organized manner. However, we observe that in the financial year relevant to the assessment year under consideration, the assessee-company purchased equity shares of only 7 Companies, by way of 9 transactions and there were 11 transactions to sale shares of only 6 compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were shown as an investment as on 31.03.2005. We are of the considered view that when the Department has accepted those shares as investment in the preceding assessment year, the same very shares could not be considered as stock-in-trade in the assessment year under consideration merely because there was profit when the shares were sold by the assessee. The Authority for Advance Rulings in the case of Fidelity Northstar Fund Others In Re (2007) 288 ITR 641 has held that while distinguishing a Trading Company with that of an Investment Company, the intention of the investor is an important factor to determine the question of trader or investor. The Hon ble Madras High Court has also held in the case of CIT vs.- N.S.S. Investments (Pvt.) Ltd. (supra) that when shares in question were never treated by the assessee as stock-in-trade and the shares were held for earning dividend, gain arising on sale was a capital gain. In the case before us also, the ld. A.R. contended that the shares were purchased by the assessee with an intention to earn dividend and/or bonus shares and not treated as stock-in-trade at any point of time. Since the Department has failed to bring any evidence on r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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