TMI Blog2018 (10) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-49, Mumbai [in short CIT(A) ] and arise out of the assessment completed u/s 143(3) r.w.s. 153A of the Income Tax Act 1961 (the Act ). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. We begin with the assessment year (AY) 2006-07. ITA No. 135/MUM/2016 Assessment Year: 2006-07 2. The grounds of appeal filed by the assessee read as under: 1. The Ld. CIT(A) erred in confirming the treatment of Short Term Capital Gain to the extent of ₹ 1,29,033/- out of the total short term capital gains of ₹ 13,47,000/- under the head Business Income instead of Capital Gains . 2. The Ld. CIT(A) ought not to have treated the Short Term Capital Gain of ₹ 1,29,033/- under the head Business Income instead of Capital Gains . 3. The Short Term Capital Gain of ₹ 1,29,033/- on sale of shares requires to be taxed under the head Capital Gains and not as Business Income . 4. Without prejudice to the above, if the gain on sale of shares is treated as business income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controlling interest etc., the transaction can be regarded as investment. There is no such factor in the present case, (vi) the plea of the assessee that he has maintained two separate portfolios is not supported by any evidence, (vii) the assessee has claimed that he has shown these shares as investment in his accounts and not shown them as stock-in-trade. However, this is a factor which is clearly at the discretion of the assessee and shares will always be shown as investment because of preferential tax treatment available for capital gains, (viii) the asseessee has purchased these shares from secondary market, (ix) the shares purchased and sold by the assessee are liquid shares and traded on BSE/NSE (x) the assessee has sold shares of ₹ 1,46,35,551/- and purchased shares of ₹ 1,31,97,477/-. Hence, the magnitude of transaction is very large, (xi) the assessee has stated that he has earned dividend of ₹ 38,799/- and Long Term Capital Gains (LTCG) of ₹ 1,87,561/- on shares. He has not stated how much dividend has been earned from the shares sold on which STCG has been claimed as earned. It is unlikely that there is any chance to earn dividend on these shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the sale of shares and mutual funds is to be taxed as income from capital gains and not as business income except for the gains amounting to ₹ 1,29,033/- involving repetitive transaction. Accordingly, the Ld. CIT(A) directed the AO to recompute the total income and bring to tax the profit arising from the sale of shares under the head STCG at ₹ 12,17,967/-, LTCG at ₹ 1,87,561/- [exempt u/s 10(38)] and under the head business income at ₹ 1,29,033/-. Also it is clarified by him that no allowance against business income is given considering that the same was not claimed by the assessee in the return of income and further considering that such amount, even if allowed would be liable to disallowance u/s 14A r.w. Rule 8D(2)(iii) of the Income Tax Rules, 1962. 5. Before us, the Ld. counsel of the assessee files a Paper Book (P/B) containing (i) Details of Heads of Income, (ii) The status of taxability of Capital Gains based on Orders u/s 143(3), (iii) The status of taxability of Capital Gains based on Oders u/s 153A r.w.s. 143(3), (iv) Analysis of Capital Gains vis- -vis Investment in Shares Capital, (v) Period-wise holding of Short Term Capital Gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR supports the order passed by the Ld. CIT(A) and submits that the assessee has indulged in repetitive transactions in scrips of Bharati Shipyard and Sah Petro and therefore, the Ld. CIT(A) has rightly held that the gains of ₹ 1,29,033/- be treated as business income. Thus, the Ld. DR supports the order passed by the Ld. CIT(A). 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. 7.1 Let us now discuss the case laws relied upon and filed by the Ld. counsel. In Jaya Chheda (supra), it has been held that (i) where in case of 42 out of 86 transactions during the year, holding of shares was only upto 7 days and in respect of 44 transactions, without any examination of details and factual aspects, the Tribunal rejected claim of assessee that it was STCG, since in other transactions, holding period of shares was upto 244 days and entire data of each transaction was available, finding recorded Tribunal will have to be held as perverse and (ii) 30 days holding period could not have been taken as a fixed criteria for determining nature of transaction. In Gopal Purohit (supra), the Hon ble High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll earning to assessee, it would not lead to conclusion that the assessee had no intention to keep shares as investor, but actually intended to trade in shares. In Business Match Services (I) (P.) Ltd. (supra), it is held that where intention of assessee at time of purchase of shares was to hold it as its investment, gains arising on its sale should be assessed under the head capital gains and not business income. In Dr. Rahul Doctor (supra), it is held that the in order to reduce the risk of loss of capital or income, the investor may try diversify the investment. Therefore, there may be a case of reshuffling portfolio by selling some scrips and buying of some scrips to mitigate the scope of law of capital or income. Therefore, the reshuffling in a short period it not necessarily to be taken as an activity of trading when the intention was to reduce the risk of loss of capital. In Naishadh V. Vachharajani (supra), the Tribunal followed the order of ITAT in the case of Janak S. Kangwala v. ACIT 11 SOT 627, wherein it is held that it is the intention of the assessee, which is to be seen to determine the nature of transaction conducted by the assessee. Though the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 Sah Petro 323 05.08.2005 09.08.2005 147 8 Sah Petro 11227 08.08.2005 09.08.2005 -1348 9 Sah Petro 25000 08.08.2005 11.08.2005 -4917 10 Sah Petro 11227 11.08.2005 12.08.2005 -75590 11 Sah Petro 460 11.08.2005 08.12.2005 -8806 In the instant case, the assessee has entered repeatedly in the above scrips which he had already disposed of. The same is done in a systematic and organized manner which is sine qua non of business income. In view of the above repetitive transactions of purchase and sales in the scrips of Bharati Shipyard and Sah Petro, the Ld. CIT(A) has rightly treated the amount of ₹ 1,29,033/- as business income. However, we direct the AO to allow the related business expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1000 25.04.2007 22.06.2007 77,534 9 Orbit Corp 1000 09.08.2007 06.09.2007 39,610 10 JSW Steel Ltd. 500 01.07.2007 10.07.2007 11,921 11 JSW Steel Ltd. 500 21.08.2007 03.10.2007 132,702 12 JSW Steel Ltd. 750 21.08.2007 10.10.2007 203,932 13 Sesa Goa Ltd. 250 27.08.2007 29.08.2007 26,296 14 Sesa Goa Ltd. 250 27.08.2007 03.10.2007 223,792 15 Sesa Goa Ltd. 250 11.09.2007 03.10.2007 158,104 16 Sesa Goa Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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