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ACIT (OSD) Range-1 Ahmedabad Versus Shri Bharat P. Padia

Income from share transactions - capital gains or business income - period of holding - Held that:- It is evident that the assessee has carried out 31 transactions in 20 scrips out of which eighteen transactions involve holding period of more than a month further inclusive of eleven instances wherein the said holding period is more than 100 days. He has further not claimed any interest expenditure deduction qua the above stated borrowings. Ld. Departmental Representative fails to rebut this fact .....

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me day. We thus do not deem it appropriate to adopt judicial consistency in the impugned assessment year in view of these peculiar facts. We however find force in assessee’s submissions challenging the CIT(A)’s directions to the Assessing Officer for treating his share profits having holding period upto 30 days as business income in absence of any such statutory provision contained in the Act. We accordingly reverse the CIT(A)’s blanket directions to the Assessing Officer. The Assessing Officer .....

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assessee s cross objection for assessment year 2008-09 arise against CIT(A)-VI, Ahmedabad s order dated 18.05.2011 in appeal no. CIT(A)-VI/DCIT.(OSD) Cir.1/98/10-11in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. We come to the rival pleadings first. The Revenue s sole substantive ground states that the CIT(A) has erred in law and on facts in directing the Assessing Officer to treat assessee s profits amounting to ₹ 63,20,152/- derived from share tran .....

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profits derived from share transactions only. 3. We come to relevant facts. The assessee - an individual derives salary income from M/s. Dishman Pharmaceuticals along with income from other sources. He disclosed profits of ₹ 76,75,440/- derived from sale of share investments as short term capital gains. His total income reads a figure of ₹ 85,14,871/-. We further deem it appropriate at this stage to reproduce assessee share transactions details in the impugned assessment year as fol .....

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e been carrying out share trading activity only. 5. We come to lower appellate proceedings. The CIT(A) partly reverses Assessing Officer s action as follows: 2.3 I have considered the facts of the case, assessment order and appellant's submission. Assessing officer treated short-term capital gain disclosed by the appellant as business profit on the ground that appellant was not making investment but trading in shares. On the identical facts, ITAT Ahmedabad in the case of Shri Sugam chand C S .....

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also considered the circular issued by the Central board of direct Taxes and has come to this considered finding. The relevant extract of this order is quoted below- "15. In respect of profit of ₹ 55,40,679/- being 'short-term capital gain' as claimed by the assessee and held as profits assessed under that business by two authorities, we find that in many cases there is delivery of shares and share were registered in the name of the assessee. The holding period of the shares I .....

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ce to show that his holdings are for investment as recorded in the books of account. The holdings are valued at cost, and such accounting has been accepted by the Revenue in earlier years. There is no material to show that assessee has declared himself as a trader in shares and legal requirements therefore have been complied with. It is also a fact that he has not borrowed any money for investing in shares. Merely because, assessee had Some borrowed funds it would not by itself show that they we .....

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dings in many transactions of shares indicating that assessee has some intention of purchasing and selling shares as a trader. The case of the assessee is supported by the fact that it has entered the purchases in the books as investment, shares are valued at cost and Revenue is holding such accounting treatment as investment in the past. Thus, there cannot be a fixed criteria to decide as in the present case whether, assessee has traded in Shares eventhough assessee held them as investment. 18. .....

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Therefore, only one criteria i.e. Delivery of shares alone will not be sufficient to decide the Issue. Even otherwise in Sarnath Infrastructure (P) Ltd. (supra) itself it has been held that cumulative effect of several factors will decide the Issue. 19. Considering the totality and peculiarity of the facts of this case, we find that assessee Is neither fully acting as a trader nor as , fully Investor. Demarcation is quite hazy; though In the books he is showing all the purchases as Investment b .....

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the business or to be faxed as short- term capital gain, we hold that if shares are not held even say for a month, then the intention is clearly to reap profit by acting as a trader and he did not intend to hold them in investment portfolio. We believe that if a person intends to hold his purchases of shares as investment, he would watch the fluctuation of rates in the market for which a minimum time is necessary, which We estimate at one month. Where share are held for more than a month, they s .....

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e assessee has held the shares for the period more than 30 days, the same is treated as investment resulting in capital gain and wherever shares are held up to 30 days, the income arising there from is treated as business income of the appellant. Assessing officer is directed to recalculate the income from business and income from capital gain in the light of this decision. This leaves both parties aggrieved to the extent of their pleadings. 6. Heard both sides. Case file perused. Learned repres .....

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reason to interfere in the CIT(A) s conclusion hereinabove so far as he has treated the assessee to be an investor in case of share transactions involving holding period of more than a month. We accordingly reject Revenue s sole substantive ground as well as its appeal ITA No.1906/Ahd/2011 supporting the Assessing Officer s twin reasoning narrated in preceding paragraphs. 7. We now deal with assessee s cross objection C.O.No.218/Ahd/2011 seeking to treat all his profits from share transactions e .....

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