TMI Blog2017 (5) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... Convincing materials can also be presented with the help of corresponding order no., order time, trade no. and trade time. From the materials presently available before us, it is not possible to conclude whether the shares claimed to have been sold by the assessee are exactly the same as the shares claimed to have been purchased by the assessee as far as assessee s claim of long term capital gain is concerned. As relevant facts for adjudication of this issue are not presently available; in the fitness of things, we set aside the orders of Ld.CIT(A) and AO on this issue and restore the issue in dispute in the second ground of appeal to the file of the AO with the direction to pass a fresh order denovo after carrying out necessary inquiries and after providing opportunity to the assessee. For statistical purposes, the second ground of appeal is partly allowed. - I.T.A .No. 3807/Del/2011 - - - Dated:- 19-5-2017 - SH. I.C.SUDHIR, JUDICIAL MEMBER, AND SH.ANADEE NATH MISSHRA, ACCOUNTANT MEMBER For The Assessee : Sh. S.Krishnan, Adv. For The Revenue : Sh.S.K.Jain, Sr.DR ORDER PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). The present appeal has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us has been filed by the Revenue against aforesaid order dated 18.05.2011 of Ld.CIT(A). During appellate proceedings in ITAT, the assessee filed a Paper Book containing 25 pages. The assessee also filed papers containing broker s notes for purchase and sale of shares of Reliance Capital to support the claim of long term capital gain. He also contended that Ld.CIT(A) granted relief to the assessee without sufficient material. At the time of hearing before us, Ld. Departmental Representative (in short DR ) supported the order of the AO by highlighting relevant portions of the assessment order. At the same time, Ld. Counsel for the assessee supported the order of the Ld.CIT(A) by reading out relevant portions of appellate order passed by the Ld.CIT(A). On the issue of the amount of ₹ 45,51,746/- shown by the assessee as short term capital gain and upheld by the Ld.CIT(A), he drew our special attention to the case of Gopal Purohit vs JCIT 20 DTR 99 [Delhi]; which was also duly considered by Ld.CIT(A) in his order. (C.) We have heard both sides patiently. We have also perused all materials on record carefully. As far as the first ground of appeal regarding treatment of amount s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are substantial transactions in that item, it would indicate trade. Habitual dealing in that particular item is indicative of intention of trade. Similarly, ratio between the purchases and sales and the holdings may show whether the assessee is trading or investing (high transactions and low holdings indicate trade whereas low transactions and high holdings indicate investment). In the instant case, there are 49 transactions in the entire year for the purchase of shares of 5 companies and which have shown substantial gain in value within the year and have been sold by the year end. (4) Whether purchase and sale is for realizing profit or purchases are made for retention and appreciation in its value? Former will indicate intention of trade and latter, an investment. In the case of shares whether intention was to enjoy, dividend and not merely earn profit on sale and purchase of shares. A commercial motive is an essential ingredient of trade. It has been submitted that there was no commercial motive involved in case of the appellant as these transactions were done on the basis of various news and market reports. (5). How the value of the items has been taken in the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is maintaining separate account for each type, there are distinctive features for both and there is no intermingling of holdings in the two portfolios. The assessee has investment portfolio only. (11) Not one or two factors out of above alone will be sufficient to come to a definite conclusion but the cumulative effect of several factors has to be seen. In the instant case, the entire facts circumstances of the case clearly lead to the conclusion that the purchase/sale of shares by the assessee has to be treated as an investment activity and not as trading in view of the following facts as brought out in the preceding paragraphs; As per the books of accounts, the assessee has treated the entire investment as investment and not as stock in trade. The entire short term capital gain is from equity shares and which were held for an average of about 67 days. There were no derivative transactions by the assessee. All the transactions were delivery based (except for one transaction and which has been rightly treated as business income). The assessee is not a share broker nor is having registration with any stock exchange. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per records of stock exchange for the relevant date exactly match with distinctive numbers of sale transactions in the shares of Reliance Capital as per records of stock exchange for the relevant date. To substantiate his claim for long term capital gain on sale of shares; the assessee needs to furnish conclusive evidence that the shares (of Reliance Capital ) claimed to have been sold are exactly the same shares (of Reliance Capital ) having regard to corresponding distinctive numbers of shares. Convincing materials can also be presented with the help of corresponding order no., order time, trade no. and trade time. From the materials presently available before us, it is not possible to conclude whether the shares claimed to have been sold by the assessee are exactly the same as the shares claimed to have been purchased by the assessee as far as assessee s claim of long term capital gain is concerned. As relevant facts for adjudication of this issue are not presently available; in the fitness of things, we set aside the orders of Ld.CIT(A) and AO on this issue and restore the issue in dispute in the second ground of appeal to the file of the AO with the direction to pass a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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