TMI Blog2022 (6) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ers on tests for distinction between shares held as stock-in-trade and shares held as investment vide office memorandum, dated 13.12.2005 [F. No. 149/287/2005-TPL] and one of the criteria mentioned therein is whether, the purchase is made solely with the intention of resale at a profit or for long-term appreciation and/or for earning dividends and interest and also the typical holding period for securities bought and sold. We see that in instant facts, almost all the shares which the assessee purchased during the year were sold by him. As noted above, out of 34 stocks purchased during the year, the assessee sold 32 of those scripts, which is a clear indicator that the intention at the time of purchase of scripts was to sell them at a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER Per Siddhartha Nautiyal , Judicial Member This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeal-3), Vadodara in Appeal No. CIT(A)-Vadodara-3/10869/2015-16 vide order dated 25/11/2019 passed for the assessment year 2012-13. 2. The assessee has raised following grounds of appeal:- Ground No. 1: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the A.O.'s action of disallowance of setoff under section 70 of the Income Tax Act, 1961 of share trading business loss against income from profession without giving the opportunities of being heard to justify the same as business loss. The appellant prays that the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 4/2007 issued by CBDT dated June 15, 2007, wherein the Board has directed the Department consider the sale of shares held for less than one year as business income. The assessee submitted that it is the first year of share trading and shareholding period is very short. He also contended that the transactions were very frequent. The assessee generated income from share trading business and also incurred certain expenses in relation to the same. Accordingly, in view of the above Circular, the assessee should be allowed the benefit of set off of short-term capital loss against professional income. The learned Ld. CIT(Appeals), however rejected the assessee's appeal on the ground that as per the Circular quoted above, one of the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions made before lower authorities and drew our attention to page 37 of paper book (summary of profit and loss in F O transactions) and submitted that it is evident that he never intended to hold shares by way of investment. The assessee reiterated that the period of holding of each security is very short and the transactions are very frequent. The fact that the assessee has used his own funds for purchase of shares or has reflected shares as investment in the balance sheet cannot solely be a ground to treat loss on purchase and sale of shares as capital loss. In response, the learned DR drew our attention to para 4.2.2 of assessment order wherein the AO has observed that there assessee has reflected the shares as investment in the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the assessee during the first itself indicates that the assessee intended to purchase and sell shares as business activity and not to hold shares on long-term basis for earning capital gains or earning dividend income. The CBDT has also issued guidelines for assessing officers on tests for distinction between shares held as stock-in-trade and shares held as investment vide office memorandum, dated 13.12.2005 [F. No. 149/287/2005-TPL] and one of the criteria mentioned therein is whether, the purchase is made solely with the intention of resale at a profit or for long-term appreciation and/or for earning dividends and interest and also the typical holding period for securities bought and sold. We see that in instant facts, almost all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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