TMI Blog2019 (9) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... and the proceeds of sales were of a capital asset. However, the assessee has not laid any such material either before the lower authorities or before us. Therefore, no merit in the submissions of the assessee and hence dismiss the appeals. - Decided in favour of revenue. - ITA Nos.1816 & 1817/Chny/2018 - - - Dated:- 13-9-2019 - Shri Duvvuru RL Reddy, Judicial Member And Shri S. Jayaraman, Accountant Member For the Appellant : Shri L.Shibi, C.S For the Respondent : Shri A.R.V. Sreenivasan, JCIT ORDER PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER: The assessee filed these two appeals against the common order of the Commissioner of Income Tax (Appeals)-3, Coimbatore, in ITA No.444/16-17 90/17-18 dated 01.03.2018 for the assessment years (AYs) 2014-15 2015-16, respectively. Since, common issues are involved in these appeals, they are heard together and being disposed together, for convenience sake. 2. Shri Amit Jain, the assessee, an individual, is proprietor of M/s. Amit S Fragrances, which is manufacturing and trading in fragrance supari, trades in textile handloom goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile handloom goods and the Appellant had invested its surplus capital fund in the shares as an investment and not as a business activity. 4. The Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant had been showing the investments in shares as Investments in its books of account and not as Stock-intrade . 5. The Respondent had failed to note that Appellant had earned a dividend Income of ₹ 4,31,405/- during the relevant previous year and the Appellant had not carried on the transactions in shares as full time activity. 6. The Commissioner of Income Tax (Appeals) has erred in holding that-income arising from sale of shares is assessable as business income mainly based on period of holding without considering the intention of the Appellant at the time of purchase and sale of the shares. 7. The Appellant craves leave to file additional ground at the time of hearing. 4. The ld. AR submitted that the ld.CIT (Appeals) has failed to appreciate that the assessee had been showing the investments in shares as Investments in its books of account and not as Stock-intrade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,20,998.00 1,28,12,448.00 2. Profit 6,35,444.00 48,61,982.00 1,22,146.31 4,23,853.27 2,58,795.00 3. Classification by Assessee Business income Capital gains Capital gains Business income Exempt income 4. Classification by AO Business income Business income Capital gains Business income Exempt income Relying on the decision of the Hon ble High Court of Delhi in the case of CIT v. Om Prakash Arora in ITA 539/2012 dt 01.4.2014, the AR submitted that the var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted income from sale on shares (INTRADAY) under the head business and income from profit on sale of shares under the head capital gains also. On examination, the AO found that during the assessment year 2014-15, the assessee admitted income from sale of shares (Intraday) under the head business at ₹ 3,15,809/. In addition to it, out of profit of sale on shares of ₹ 20,21,695/-, the assessee adjusted short term capital loss of ₹ 3,93,622/- and admitted ₹ 16,28,073/- as income from capital gains u/s.111A of the Act. For the assessment year 2015-16 also, the assessee admitted income from sale of shares (Intraday) under the head business at ₹ 6,35,444/. In addition to it, the assessee admitted ₹ 48,61,982/- as income from capital gains u/s. 111A of the Act. After examining the purchases and sales claimed under the head capital gains, the AO found that the assessee has transacted almost in 22 / 23 different scripts, during the assessment years 2014-15 2015-16, respectively, and that the sales were made within few days of purchases. No share was held for more than three months from the date of purchase. Most of the shares have not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and high holdings indicate investment). Another related factor is the duration for which the shares are held. (4)Was the purchase and sale made for realizing profit, or for retention and appreciation in its value. The former indicates the purchases being part of trade; and the latter is indicative of the purchases being an investment. Furthermore, it would be relevant to ask whether the intention behind the purchase was to enjoy dividend, or merely to earn profit on sale of shares. Importantly, a commercial motive is an essential ingredient of trade in this context. (5) Whether the items in question were valued at cost. If so, it would indicate that they were investments. Where they were valued at cost or market value or net realizable value, whichever is less, it will indicate that items were treated as stock-in-trade. (6) Finally, it would be relevant to consider how the assessee is authorized in its Memorandum / Articles. 8. It has also been held that if the business activity of the assessee is trading in shares, there can be a presumption that the amount claimed was derived through trade; the assessee in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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